Elder v. Gillespie

54 F.4th 1055

Ginger P. ELDER; Benjamin Taylor; Jacquelyn A. Dearmore Plaintiffs - Appellees

v.Cindy GILLESPIE, Director, Arkansas Department of Human Services, in her official and individual capacity; Jerald Sharum, Director, Division of Provider Services and Quality Assurance, Arkansas Department of Human Services, in his official capacity; Richard Rosen, Managing Attorney, Office of Chief Counsel, Arkansas Department of Human Services, in his official and individual capacity; David W. Sterling, Chief Counsel, Arkansas Department of Human Services, in his official and individual capacity; Craig Cloud, Former Director, Division of Provider Services and Quality Assurance, Arkansas Department of Human Services, in his individual capacity; Mark White, Deputy Director, Division of Aging, Adult and Behavioral Health Services/Chief of Staff to Gillespie and Chief Legislative and Intergovernmental Affairs Officer, Arkansas Department of Human Services, in his official and individual capacity Defendants - Appellants

John Does, in their official and individual capacities Defendant

No. 21-1826

United States Court of Appeals, Eighth Circuit.

Submitted: January 13, 2022

Filed: December 9, 2022

Counsel who presented argument on behalf of the appellants and appeared on the brief was Kat Hodge, AAG, of Little Rock, AR.

Counsel who presented argument on behalf of the appellees was Kevin Robert De Liban, of West Memphis, AR. The following attorney also appeared on the appellee brief; Trevor Scott Hawkins, of Jonesboro, AR.

Before SMITH, Chief Judge, WOLLMAN and ERICKSON, Circuit Judges.

SMITH, Chief Judge.

Ginger Elder, Jacqueline Dearmore, and Benjamin Taylor (collectively, "plaintiffs") sued various officials of the State of Arkansas alleging that these officials¹ (collectively, "ADHS defendants") violated their due process rights under the Fourteenth Amendment. The officials moved to dismiss the complaint with prejudice. The district court² denied the motion. We affirm.

I. Background

Medicaid is a federal medical insurance program available to individuals with limited economic resources. The federal Center for Medicaid and Medicare Services (CMS) is the agency charged with administering the federal Medicaid program. Arkansas has elected to participate in the federal Medicaid program.

Arkansas's Medicaid program is administered solely through ADHS. The Medicaid program includes other optional services provided through Home and Community-Based Services (HCBS) programs. The HCBS programs provide an alternative for individuals who, without such programs, would likely require placement in a long-term care facility. The premiere HCBS program in Arkansas is ARChoices. ARChoices provides attendant-care services, home-delivered meals, and a personal-emergency response system. It also provides a range of state plan Medicaid services.

At least annually, ADHS conducts an eligibility assessment to determine whether individuals remain eligible for its services and the amount of services to allocate to them. Historically, ADHS relied on the professional discretion of an ADHS registered nurse to determine an individual's eligibility. In January 2016, ADHS switched to a computer-based system that used an algorithm called Resource Utilization Groups (RUGs). Following the switch, almost half of the ARChoices beneficiaries received a service reduction in their benefits.

Beginning in January 2019, ADHS began using a new assessment tool known as the Arkansas Independent Assessment (ARIA).³ After completing the assessment, an ARChoices Person-Centered Service Plan (PCSP) is generated to allocate the appropriate services to eligible individuals. Beneficiaries and applicants are notified of their eligibility results once they receive a copy of the PCSP along with a Notice of Action from an ADHS nurse. The Notice of Action triggers a person's right to an appeal.

Federal and state Medicaid regulations require ADHS to notify beneficiaries of an adverse action at least ten days before the date that the adverse action takes effect. And if the beneficiary timely appeals, then ADHS may not reduce or terminate their benefits until after the outcome of a hearing.

The plaintiffs each have different disabilities but were all beneficiaries of the ARChoices Medicaid program; they all received in-home care services for many years.⁴ Prior to implementation of ARIA, each of the plaintiffs received between 30 to 33 hours of in-home care services per week. After its implementation, Dearmore's and Taylor's services were reduced, while Elder's services were terminated completely. The plaintiffs allege that the Notice of Actions provide insufficient notice and lack rationality for the reductions imposed. They assert that ADHS's computer systems are programmed to terminate or reduce beneficiaries’ benefits either immediately or no later than the tenth day following notification of an adverse action.

ADHS terminated or reduced the plaintiffs’ benefits⁵ despite their requests that the benefits continue without interruption, pending the outcome of their hearing. ADHS concedes this occurred but states that it was done mistakenly. ADHS restored the plaintiffs benefits once they sued or their attorney contacted ADHS.

Management and supervision of the ARChoices program involves several ADHS divisions and offices⁶ that handle the termination or reduction of services. All appeal requests are processed through the Office of Appeals and Hearings (OAH). The plaintiffs allege that staff in OAH, OLTC, DMS, and the general counsel section failed to review requests for appeals to determine whether they were filed timely to avoid benefit interruption. The plaintiffs further allege an undue delay before DAAS/DAABHS staff were assigned to review appeal requests. And the plaintiffs maintain that at least 30 beneficiaries timely appealed, but ADHS failed to continue their benefits until legal counsel contacted ADHS.

The plaintiffs brought claims against the ADHS defendants in their official and individual capacities, claiming that their rights under the Due Process Clause of Fourteenth Amendment were violated. Dearmore also brought claims against the ADHS defendants in their official and individual capacities for violations of her right to adequate notice under the Due Process Clause of the Fourteenth Amendment. The plaintiffs requested, among other things, a temporary restraining or preliminary injunction, a declaratory judgment, a permanent injunction, and a money judgment.

The plaintiffs alleged that the ADHS officials are involved in the review and approval process for the ARChoices program. The plaintiffs alleged that "ADHS assesses program participants at least once every year to determine their functional eligibility and, if eligible, to develop an updated person-centered service plan" and that "[b]eneficiaries can be subject to re-assessment more than once a year if they experience a change in status or service needs." R. Doc. 31, at 15–16. The plaintiffs further alleged that "ADHS has no plans to switch to a different assessment tool, allocation methodology, or notice of action than those now used." Id. at 16. However, the plaintiffs acknowledged that the COVID-19 pandemic delayed their reassessment.

The ADHS defendants responded to the complaint with a motion to dismiss. In the motion, they argued that (1) they are entitled to sovereign immunity and that the plaintiffs’ claims against the ADHS defendants in their official capacities are not subject to the Ex Parte Young⁷ exception; (2) the plaintiffs failed to state a claim for relief because the plaintiffs’ benefits were restored pending appeal, meaning that there was no ongoing constitutional violations; (3) the plaintiffs failed to demonstrate future injury and are not entitled to equitable relief; (4) the plaintiffs failed to show that they realistically face a future, temporary interruption of the ARChoices benefits, meaning that they have not met the requirements for seeking injunctive relief in federal court; (5) the allegations in support of Dearmore's due-process and adequate-notice claims are conclusory and insufficient, and Dearmore's request for injunctive relief is not cognizable against the ADHS defendants in their individual capacities; and (6) the ADHS defendants are entitled to qualified immunity in their individual capacities.

The plaintiffs replied that the relief they seek will prevent an ongoing deprivation of constitutional rights. They contended that their complaint allegations regarding ADHS's practices for terminating benefits and processing appeals sufficiently allege entitlement to equitable relief.

The district court denied the motion to dismiss. It concluded that the plaintiffs had alleged sufficient facts in their consolidated complaint to support their claims against the ADHS defendants in their official capacities. According to the court, the complaint adequately alleged entitlement to prospective injunctive relief to remedy ongoing violations of federal law and to overcome the ADHS defendants’ assertion of sovereign immunity. The court also found that the plaintiffs had alleged sufficient facts to support an injury in fact. Specifically, they faced future, temporary interruption of their ARChoices benefits. Thus, the district court found that the plaintiffs have standing to bring their claims, including but not limited to their official-capacity continuation-of-benefits claims.

Applying the principles of Mathews v. Eldridge , 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), the district court also concluded that Dearmore adequately alleged a violation of her due process rights to adequate notice. The district court noted that Dearmore is a Medicaid recipient with limited resources like the plaintiffs in Bliek v. Palmer , 102 F.3d 1472 (8th Cir. 1997), and Goldberg v. Kelly , 397 U.S. 254, 267–68, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). The district court reasoned that Dearmore likely lacks the financial resources...