Katie A., ex rel. Ludin v. Los Angeles County

481 F.3d 1150

KATIE A., by & through her next friend Michael LUDIN; Mary B., by & through her next friend Robert Jacobs; Janet C., by & through her next friend Dolores Johnson; Henry D., by & through his next friend Gillian Brown; Gary E., by & through his next friend Michael Ludin, individually & on behalf of others similarly situated, Plaintiffs-Appellees, v. LOS ANGELES COUNTY; Los Angeles County Department of Children and Family Services; Does, I thru 100 inclusive; David Sanders, Defendants, and Diana Bontá, Director of CA Dept of Health Services; Rita Saenz, Director of CA Dept of Social Services, Defendants-Appellants.

No. 06-55559.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 24, 2006.

Filed March 23, 2007.

Sandra L. Goldsmith, Deputy Attorney General, Los Angeles, CA, for the defendants-appellants.

Robert D. Newman, Esq., Western Center for Law and Poverty, Los Angeles, CA, for the plaintiffs-appellees.

Appeal from the United States District Court for the Central District of California; A. Howard Matz, District Judge, Presiding. D.C. No. CV 02-05662 AHM.

Before EUGENE E. SILER, JR.,^* TASHIMA, and BEA, Circuit Judges.

TASHIMA, Circuit Judge.

Defendants, the Director of the California Department of Health Services ("DHS") and the Director of the California Department of Social Services ("DSS"), appeal from the district court's grant of a preliminary injunction ordering them to screen members of a statewide class of foster children¹ and, where medically necessary, provide the children with the forms of mental health care known as wraparound services and therapeutic foster care. The district court found that "the early and periodic screening, diagnostic, and treatment services" ("EPSDT") provisions of the Medicaid Act obligate the State of California ("State") to provide wraparound services and therapeutic foster care to Medicaid-eligible children under 21, and that the State does not currently provide those forms of assistance, "as such."

On appeal, defendants argue that the district court abused its discretion in granting a preliminary injunction against them and in denying their motion for reconsideration. Specifically, they contend that the court: (1) failed to make findings of fact and conclusions of law, as required by Federal Rule of Civil Procedure 52(a); (2) committed clear error in its factual findings; (3) applied the wrong legal standard both as to the standard for issuance of a mandatory preliminary injunction against a state agency and as to the underlying legal questions; and (4) failed to comply with Federal Rule of Civil Procedure 65(d)'s requirement that an injunction be specific in its terms. We have jurisdiction to review the district court's order granting the preliminary injunction and the court's denial of the motion for reconsideration under 28 U.S.C. § 1292(a)(1).

Because the district court applied an erroneous interpretation of the Medicaid Act, we reverse and remand. We reject defendants' remaining contentions of error regarding the factual findings and legal standard relied on by the district court.

BACKGROUND

I. The Katie A. Class Action

In July 2002, a class of children who were in Los Angeles County foster care or at risk of being placed into foster care (Katie A., et al.) filed a complaint seeking declaratory and injunctive relief against the Director of DHS and the Director of DSS,² as well as Los Angeles County, the Los Angeles County Department of Children and Family Services ("DCFS"), and the Director of DCFS ("LA County Defendants"). The complaint alleged that the class was entitled to and had not received "medically necessary mental health services in a home-like setting." Separate claims were alleged under 42 U.S.C. § 1983, based on violations of the children's rights under the Medicaid Act, 42 U.S.C. § 1396 et seq., and the Due Process Clause of the federal Constitution; under the Americans with Disabilities Act and the Rehabilitation Act; under the Due Process Clause of the California Constitution; and under California statutory law.

The complaint was later amended to include a state-wide class of children in foster care or at risk of being placed in foster care. The district court certified the class under Federal Rule of Civil Procedure 23(b)(2),³ and approved a settlement agreement between the plaintiff class and LA County Defendants.

Plaintiffs then moved for a preliminary injunction to require the Director of DHS and the Director of DSS ("defendants") to provide wraparound services ("wraparound") and therapeutic foster care ("TFC") to members of the class. Plaintiffs described wraparound and TFC as highly effective "integrated community-based interventions for children with emotional, behavioral, and mental health disorders." Plaintiffs argued that the EPSDT provisions obligate the State to provide wraparound and TFC to them. In particular, they alleged that MediCal policies impeding access to wraparound services or TFC violated the Medicaid statute. They alleged that MediCal covered only some components of wraparound and TFC, and that State policies made it difficult to access either type of care.

Defendants argued that the Medicaid statute does not require them to provide services in the wraparound or TFC forms demanded by plaintiffs,⁴ and that MediCal provides all required services. They characterized wraparound and TFC as processes or approaches, rather than services, and argued that the Medicaid Act does not create obligations to provide either. Defendants also disputed plaintiffs' contention that all of the components of wraparound and TFC are health care services properly covered by Medicaid.

On March 14, 2006, the district court entered an order granting a mandatory preliminary injunction against defendants, ordering them to provide medically necessary wraparound services⁵ and TFC⁶ to class members on a consistent, statewide basis within 120 days of the order's entry. Stating that defendants did not dispute that they did not provide wraparound and TFC as such, the court found that "wraparound services and therapeutic foster care fall within the EPSDT obligations of Medicaid-participating states."⁷ The court also cited what it described as plaintiffs' undisputed evidence that wraparound and TFC are medically necessary for children with serious mental health needs. On this basis, the court concluded that plaintiffs had shown a strong likelihood of succeeding on the merits of their Medicaid Act claim. The court also described the potential for irreparable harm to plaintiffs in the form of unnecessary institutionalization and unmet mental health needs, if the injunction were not issued.

The court denied defendants' motions for clarification and reconsideration, but subsequently issued an Addendum to the order, which contained short answers to defendants' questions from their motion for clarification. The Addendum also contained appendices ("Appendices A and B") listing the components of wraparound and TFC for purposes of compliance with the order.

II. The Medicaid Framework and the EPSDT Obligation

Medicaid is a cooperative federal-state program that directs federal funding to states to assist them in providing medical assistance to low-income individuals. 42 U.S.C. § 1396. States choose whether to participate in Medicaid. Once a state enters the program, the state must comply with the Medicaid Act and its implementing regulations. Alexander v. Choate, 469 U.S. 287, 289 n. 1, 105 S.Ct. 712, 83 L.Ed.2d 661 (1985); see generally 42 U.S.C. § 1396 et seq. California has chosen to participate in Medicaid.

To participate in Medicaid, a state must submit and have approved by the Secretary of Health and Human Resources a state plan for medical assistance. 42 U.S.C. § 1396. The Medicaid Act requires that each state plan "provide for making medical assistance available, including at least the care and services listed in paragraphs (1) through (5), (17) and (21) of section 1396d(a) of this title, to all individuals[listed under certain statutory provisions]." 42 U.S.C. § 1396a(a)(10). "[E]arly and periodic screening, diagnostic, and treatment services . . . for individuals who are eligible under the plan and are under the age of 21" are among the mandatory categories of medical assistance. 42 U.S.C. § 1396d(a)(4)(B).⁸

Thus, California, like all other states participating in Medicaid, is required to provide EPSDT care to eligible children under the age of 21.⁹ EPSDT services are defined in § 1396d(r). The EPSDT services at issue in this case, wraparound and TFC, are claimed to fall under subsection (r)(5) as "[s]uch other necessary health care, diagnostic services, treatment, and other measures described in subsection (a) of this section to correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services, whether or not such services are covered under the State plan." 42 U.S.C. § 1396d(r)(5).

Under § 1396d(r)(5), states must "cover every type of health care or service necessary for EPSDT corrective or ameliorative purposes that is allowable under § 1396d(a)." S.D. ex rel. Dickson v. Hood, 391 F.3d 581, 590 (5th Cir.2004) (citing Collins v. Hamilton, 349 F.3d 371 (7th Cir.2003); Pediatric Specialty Care, Inc. v. Ark. Dep't of Human Servs., 293 F.3d 472 (8th Cir.2002); Pittman v. Sec'y, Fla. Dep't of Health & Rehab., 998 F.2d 887 (11th Cir.1993); Pereira v. Kozlowski, 996 F.2d 723 (4th Cir.1993)).¹⁰ Although states have the option of not providing certain "optional" services listed in § 1396d(a) to other populations, they must provide all of the services listed in § 1396d(a) to eligible children when such services are found to be medically necessary. Section 1396d(a) contains a list of 28 categories of care or services; these categories are fairly general, including descriptions such as "inpatient hospital services" and "private duty nursing services." 42...