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Tenth Circuit Holds Risk Of Being Institutionalized Was Not Relevant To Determination Of ADA Claim


HLD, v. 31, n. 10 (October 2003)

Tenth Circuit Holds Risk Of Being Institutionalized Was Not Relevant To Determination Of ADA Claim

Oklahoma has a Medicaid waiver program, the Advantage Program, in which it provides an alternative to nursing home care by providing home-based care for certain Medicaid recipients. Oklahoma obtains a waiver for home care by certifying that the placement of an individual in a waiver program will not cost the Medicaid program additional money. Oklahoma provided unlimited prescription coverage for Advantage participants and nursing home residents. The Medicaid program does not have a prescription benefit.

In September 2002, Oklahoma notified Advantage participants that the number of prescriptions it would cover would be capped at five due to a budgetary shortfall. Three participants (plaintiffs) in the Advantage Program sued the Oklahoma Health Care Authority (OHCA), which administers the Medicaid program, and Mike Fogarty, the chief executive officer of OHCA, (defendants) claiming the cap would force them into nursing homes and seeking declaratory and injunctive relief against the imposition of the cap. The district court held plaintiffs did not have a claim under the Americans with Disabilities Act (ADA) because they were not currently institutionalized and granted summary judgment to defendants. Plaintiffs appealed.

The Tenth Circuit reversed and remanded the district court's judgment on the ground the plaintiffs may have an ADA claim. The appeals court explained that two regulations implementing the ADA are of importance in this case. First, 23 C.F.R. � 35.130(d) provides that any public services will be provided "in the most integrated setting appropriate" to the disabled, which is know as the "integration mandate." In Olmstead v. Zimring, 527 U.S. 581 (1999), the Supreme Court held under the integration mandate the ADA forbids "[u]njustified isolation" of the disabled. The second regulation at 23 C.F.R. � 35.130(b)(7), also know as the "fundamental alteration regulation," provides that a public entity is not required to fundamentally alter its services to accommodate the disabled. Thus, if home placement is appropriate for a disabled individual, and the services are not a "fundamental alteration," a state is required to provide the home placement under the ADA.

Plaintiffs argued the prescription cap violated Olmstead's interpretation of the integration regulation because they could have all of their prescriptions paid for if they entered a nursing home, but not if they stayed at home. The appeals court found the district court's reading of Olmstead incorrect because nothing in the ADA integration mandate limits its protection to individuals who are institutionalized. While finding plaintiffs had raised a genuine issue of material fact about a violation of the integration mandate, the appeals court found it had to look further to determine if the state's modification to the program was appropriate depending on whether the prescription benefit for the plaintiffs would be a "fundamental alteration" of the state's program. The fact the Advantage Program was optional, said the appeals court, did not support a defense by the state of fundamental alteration.

The appeals court then turned to the issue of the state's explanation that it had to reduce the program because of a fiscal crisis. The appeals court rejected the district court's finding that Oklahoma's decision to institute the cap was reasonable because the alternative was elimination of the program. There was no evidence the program would have been eliminated, said the appeals court, because the elimination of the program would drive participants into nursing homes, which would be significantly more costly for the state. The district court's analysis of the program failed to consider if the preservation of the program would result in cutbacks to the Medicaid program and it was not clear why the preservation of the Advantage Program would fundamentally alter the nature of the program, which had been in existence for several years. The appeals court noted the district court failed to determine why there was a fundamental difference between paying for all prescriptions for nursing home residents and paying for a limited number of prescriptions for those who stay at home. Concluding the district court had ignored disputed issues of fact, the appeals court remanded the issue for further consideration.

The state also argued that plaintiffs were not entitled to any injunctive relief because they failed to show the cap would harm them. Specifically, defendants claimed plaintiffs could reduce their prescription costs by scheduling drugs and discontinuing drugs with potentially harmful interactions. The appeals court found plaintiffs could potentially suffer harm because the cap places them at "high risk for premature entry into a nursing home" because less medication would be available to them. Therefore, the appeals court held plaintiffs had raised a genuine issue of material fact that they might suffer irreparable harm because of the prescription cap.

Plaintiffs also raised a number of issues related to Medicaid for the first time in a supplemental memorandum, and the district court did not rule on those issues. The appeals court remanded those issues to the district court for a determination of whether they were properly raised and whether plaintiffs were entitled to relief. Accordingly, the appeals court reversed the district court's judgment and remanded the case for further proceedings.

Fisher v. Oklahoma Health Care Auth., No. 02-5192 (10th Cir. July 15, 2003).            

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