2011 U. S. App. Lexis 24986, 1 of 1 document

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519 U.S. at 462 (internal quotation marks and citation omitted); accord Holowecki, 552 U.S. at 397 (deferring to agency's interpretation of a regulation in an amicus brief); Barrientos, 583 F.3d at 1214 (same). The circumstances in this case are similar [*48] to those in Auer. DOJ is not a party and is not "seeking to defend past agency action against attack." Its "statement of interest" in the district court under 28 U.S.C. § 517 is comparable to an amicus brief because of its interest in ensuring a proper interpretation and application of the integration mandate. Further, we note that DOJ's interpretation of the integration mandate in this case is consistent with its interpretation in another case before this court. The district court, and our dissenting colleague, overlook the Supreme Court's direction about how to treat agency interpretations in such instances.

DOJ's interpretation is not only reasonable; it also better effectuates the purpose of the ADA "to provide clear, strong, consistent, enforceable standards addressing discrimination against individuals with disabilities." 42 U.S.C. § 12101(b)(2). Institutionalization sometimes proves irreversible. Dr. Gardner, Plaintiffs' expert on habilitative mental health care, declared that "[i]nstitutionalization . . . creates an unnecessary clinical risk that the individual will become so habituated to, and so reliant upon, the programmatic and treatment structures that are found in an inpatient [*49] setting that his or her ability to function in less structured, less restrictive, environments may become severely compromised." In recognition of this clinical reality, the cases accord with DOJ's interpretation. See, e.g., V.L., 669 F. Supp. 2d at 1119 ("[P]laintiffs who currently reside in community settings may assert ADA integration claims to challenge state actions that give rise to a risk of unnecessary institutionalization."); Brantley, 656 F. Supp. 2d at 1170-71 ("[T]he risk of institutionalization is sufficient to demonstrate a violation of [the ADA]."); see also, e.g., Fisher v. Okla. Health Care Auth, 335 F.3d 1175, 1182 (10th Cir. 2003) ("Olmstead does not imply that disabled persons who, by reason of a change in state policy, stand imperiled with segregation, may not bring a challenge to that state policy under the ADA's integration regulation without first submitting to institutionalization.").

The district court's second ground for rejecting Plaintiffs' ADA claim was that requiring DSHS to maintain pre-regulation levels of personal care services hours would likely constitute a fundamental alteration of the state's Medicaid plan. We have not previously decided whether [*50] a state may assert a fundamental alteration defense where, as here, the state opposes an injunction that would preserve a preexisting program that complies with the ADA. The text of the regulation suggests that the defense is available only to excuse prospective modifications to programs. See 28 C.F.R. § 35.130(b)(7) ("A public entity shall make reasonable modifications in policies, practices, or procedures . . . unless the public entity can demonstrate that making the modifications would fundamentally alter the nature of the service, program, or activity."). Here, Plaintiffs argue that they are seeking to preserve the status quo and prevent modifications to the state's preexisting program. The Tenth Circuit rejected a fundamental alteration defense in similar circumstances, observing, "[n]or is it clear why the preservation of a program as it has existed for years and as approved by the federal government would fundamentally alter the nature of the program." Fisher, 335 F.3d at 1183 (internal quotation marks omitted). However, we need not decide whether the fundamental alteration defense applies in these circumstances because, even if it does, Plaintiffs have at least raised a serious [*51] question on the merits about the validity of the defense on the facts.

When evaluating a fundamental alteration defense, a court must consider "not only the cost of providing community-based care to the litigants, but also the range of services the State provides others with mental disabilities, and the State's obligation to mete out those services equitably." Olmstead, 527 U.S. at 597. That is, the ADA requires home or community-based placement of disabled persons only if "the placement can be reasonably accommodated, taking into account the resources available to the State and the needs of others with . . . disabilities." Id. at 607; see also 28 C.F.R. § 35.130(b)(7); Sanchez, 416 F.3d at 1067-68; Arc of Wash. State, 427 F.3d at 618-19. But budgetary concerns do not alone sustain a fundamental alteration defense. See Fisher, 335 F.3d at 1181 ("If every alteration in a program or service that required the outlay of funds were tantamount to a fundamental alteration, the ADA's integration mandate would be hollow indeed."); see also, e.g., Townsend, 328 F.3d at 520 ("[E]ven if extension of community-based long term care services to the medically needy were to generate greater expenses [*52] for the state's Medicaid program, it is unclear whether these extra costs would, in fact, compel cutbacks in services to other Medicaid recipients."); Pa. Prot. & Advocacy, Inc. v. Pa. Dep't of Pub. Welfare, 402 F.3d 374, 380 (3d Cir. 2005); Radaszewski v. Maram, 383 F.3d 599, 614 (7th Cir. 2004); Frederick L., 364 F.3d at 495-96; Cota, 688 F. Supp. 2d at 995. DSHS must show how "fund-shifting . . . would disadvantage other segments of the . . . disabled population." Frederick L., 364 F.3d at 497; see Townsend, 328 F.3d at 520.

At this point in the litigation, it is highly speculative that preliminary injunctive relief for Plaintiffs will compromise care for the rest of Washington's disabled community to such an extent that Washington's Medicaid program would be fundamentally altered. Dreyfus, DSHS's director, filed a declaration in the district court stating that if an injunction were granted the agency "would need to eliminate the Optional State Plan Service of Medicaid Personal Care and put a limit on the number of recipients . . . served under the Long Term Care [42 U.S.C. § 1396n(c)] waivers including COPES and New Freedom." It is difficult to assess Dreyfus's dire predictions [*53] and to determine, even if they are borne out, whether they would constitute a fundamental alteration. Washington's legislature has mandated that the state Medicaid plan include the provision of personal care services for the categorically needy, and DSHS has touted COPES as the centerpiece of the legislatively mandated commitment to deinstitutionalization. Wash. Rev. Code § 74.09.520(2). In its briefs, DSHS did not identify specific programs that would necessarily be cut if all or part of the challenged regulation were preliminarily enjoined, nor was counsel able to identify such programs at oral argument. Indeed, DSHS counsel was unable to say with certainty whether the cuts would necessarily come from the Medicaid program, or whether cuts could be made to some other portion of Washington's budget if Plaintiffs were to prevail in this litigation. See Townsend, 328 F.3d at 520 (to make out fundamental alteration defense, state must show that the "provision of community-based services to medically needy disabled Washingtonians might fundamentally alter its Medicaid programs" (emphasis added)). The state must make a more particularized showing of harm to others in the disabled community [*54] in order to eliminate serious questions on the merits concerning the validity of the fundamental alteration defense. See Frederick L., 364 F.3d at 497; Townsend, 328 F.3d at 520.
C. Balance of Hardships

We conclude that the balance of hardships tips sharply in favor of Plaintiffs. As discussed above, the record in this case establishes that the named Plaintiffs suffer severe hardship, made still more severe by the challenged regulation, resulting in a serious risk of institutionalization in violation of the ADA and the Rehabilitation Act. Set against Plaintiffs' hardship are diffuse and nonspecific hardships asserted by the State. It is clear that money spent on behalf of the Plaintiffs is money that will not be spent on other programs. But it is not clear from the evidence in the record or from the arguments made to us precisely what those other programs are and the extent to which they would be cut. See, e.g., Harris, 366 F.3d at 766 ("The County suggests that the injunction forces it to cut other important programs . . . . But whether any or all of those programs will actually be impacted by the court's injunction is much more speculative than the probable injury the chronically ill [*55] plaintiffs face absent preliminary injunctive relief.").

Nor is it clear that the state, on balance, will save money by cutting the services at issue in this case, given the cost to the state of institutionalizing Plaintiffs. We have several times held that the balance of hardships favors beneficiaries of public assistance who may be forced to do without needed medical services over a state concerned with conserving scarce resources. See, e.g., Indep. Living Ctr., 572 F.3d at 659 ("State budgetary considerations do not therefore, in social welfare cases, constitute a critical public interest that would be injured by the grant of preliminary relief."). The balance of hardships favors plaintiffs challenging cuts to state programs "in light of evidence in the record that suggests that [the action sought to be enjoined] may have an adverse, rather than beneficial, effect on the State's budget, such that it would actually save the State money if it maintained [the status quo]." Dominguez v. Schwarzenegger, 596 F.3d 1087, 1098 (9th Cir. 2010); see also Rodde, 357 F.3d at 999-1000. Plaintiffs have advanced such evidence in this case by showing that if program beneficiaries currently treated [*56] in their homes transition to more costly institutional care, the state will not realize its anticipated cost savings.
D. Public Interest

The Washington legislature has expressly found that "the public interest would best be served by a broad array of long-term care services that support persons who need such services at home or in the community whenever practicable and that promote individual autonomy, dignity, and choice." Wash. Rev. Code § 74.39A.005. "[T]here is a robust public interest in safeguarding access to health care for those eligible for Medicaid, whom Congress has recognized as 'the most needy in the country.'" Indep. Living Ctr., 572 F.3d at 659 (quoting Schweiker v. Hogan, 457 U.S. 569, 590, 102 S. Ct. 2597, 73 L. Ed. 2d 227 (1982)); see also Cal. Pharmacists Ass'n, 596 F.3d at 1114-15 (rejecting the argument that the public interest required that the legislature be able to "exercise its considered judgment in a manner that serves the best interests of both [Medicaid] recipients and the State as a whole," despite the state's argument that "injunctions against payment reductions have forced the State to eliminate many optional [Medicaid] services").

We recognize that a preliminary injunction is an "extraordinary [*57] remedy never awarded as of right." Winter, 555 U.S. at 24. But given the likelihood of irreparable harm to Plaintiffs, the serious questions on the merits raised by their suit, the balance of hardships that tips sharply in their favor, and the statutorily declared policy of the state in favor of the services they seek to preserve, we conclude that the public interest is served by preserving the status quo by means of a preliminary injunction. See Rodde, 357 F.3d at 999 n.14 (that Plaintiffs seek "to preserve, rather than alter, the status quo while they litigate the merits of this action also strengthens their position").
E. Scope of the Injunction

Our conclusion with respect to irreparable injury and risk of institutionalization is limited to the named Plaintiffs. We have stated that "[s]ystem-wide [injunctive] relief is required if the injury is the result of violations of a statute . . . that are attributable to policies or practices pervading the whole system (even though injuring a relatively small number of plaintiffs), or if the unlawful policies or practices affect such a broad range of plaintiffs that an overhaul of the system is the only feasible manner in which to address [*58] the class's injury." Armstrong v. Davis, 275 F.3d 849, 870 (9th Cir. 2001). The challenged regulation obviously establishes such a policy for a system of care. But Armstrong involved a certified class. Subject to exceptions not applicable here, "[w]ithout a properly certified class, a court cannot grant relief on a class-wide basis." Zepeda v. INS, 753 F.2d 719, 728 n.1 (9th Cir. 1984). The district court stayed its decision on class certification pending our ruling on appeal. We conclude that the regulation must be preliminarily enjoined as to the named Plaintiffs. We leave it to the district court to determine on remand whether, in light of this opinion, broader preliminary injunctive relief is appropriate.


The named Plaintiffs have shown a likelihood of irreparable injury because the regulation puts them at serious risk of institutionalization. For the same reason, they have raised a serious question going to the merits of their ADA/Rehabilitation Act claim. They have also raised a serious question on the merits about the validity of the fundamental alteration defense. The balance of hardships tips sharply in Plaintiffs' favor, and the public interest favors a preliminary [*59] injunction. We therefore reverse and remand for further proceedings consistent with this opinion.

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