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Steimel v. Wernert

United States Court of Appeals, Seventh Circuit

May 10, 2016

Karla Steimel, Plaintiff-Appellant,
John J. Wernert, Secretary of the Indiana Family and Social Services Administration, et al., Defendants-Appellees. and Thomas Maertz, et al., Intervening Plaintiffs-Appellants, Michael Beckem and Lois Beckem, Plaintiffs-Appellants,
Indiana Family and Social Services Administration, and John J. Wernert, Secretary of the Indiana Family and Social Services Administration, Defendants-Appellees.

Argued January 5, 2016

Appeals from the United States District Court for the Southern District of Indiana, Indianapolis Division. Nos. 13-cv-00957, 14-cv-00668 - Jane E. Magnus-Stinson, Judge.

Before Wood, Chief Judge, and Kanne and Rovner, Circuit Judges.

Wood, Chief Judge.

No one would accuse the Medicaid program of simplicity. Our task in this appeal is to consider whether Indiana has chosen an acceptable way to deliver certain homeand community-based services. It does so through so-called waiver programs that are operated by state Medicaid agencies. The word "waiver" is used because the default assumption under Medicaid is that these kinds of services will be delivered in institutions. Congress has recognized, however, that many people are better served by and prefer community-based care. For these people, it uses waiver programs under which the state (and the federal government) will pick up the tab.

The Indiana Family and Social Services Administration (the Agency) runs three waiver programs relevant to this case: the Aged and Disabled Medicaid Waiver Program (A&D waiver), the Community Integration and Habilitation Medicaid Waiver Program (CIH waiver), and the Family Supports Medicaid Waiver Program (FS waiver). Importantly for our case, the programs vary in how much money each client can receive, what must be demonstrated to qualify for aid, and who is entitled to assistance. Because Indiana has closed most of its institutional facilities, these waiver programs serve the vast majority of people with disabilities in Indiana. The state's total institutional capacity can accommodate only one quarter of the number of people on the CIH waiver alone.

Until 2011, the Agency placed many people with developmental disabilities on the A&D waiver, which has no cap on services. That changed when the Agency decided that it had not been adhering to certain A&D rules. In order to fix its mistakes, it enacted a policy change that rendered many developmentally disabled persons, including the plaintiffs, ineligible for care under the A&D waiver. These people were moved to the FS waiver, under which they may receive services worth no more than $16, 545 annually. Developmentally disabled people who were switched from the A&D waiver to the FS waiver may apply for the CIH waiver, which is uncapped. But not everyone qualifies for the CIH waiver, and so this possibility is an empty one for many.

The plaintiffs in the two cases we have consolidated for disposition are developmentally disabled persons who were moved from the A&D waiver to the FS waiver. They argue that their new assignment violates the integration mandate of the Americans with Disabilities Act (ADA), 42 U.S.C. §§ 12101 et seq., because it deprives them of community interaction and puts them at risk of institutionalization. They also seek class certification.

The district court granted summary judgment to the defendants on the integration-mandate claims and denied class certification. We conclude that there is a genuine dispute of material fact with respect to the individual claims based on the integration mandate, and so judgment for the defendants to that extent was premature. The district court did not abuse its discretion, however, in declining to certify the class, because the proposed class is too vague.



In 1981, Congress enacted Section 1915(c) of the Social Security Act (SSA), 42 U.S.C. § 1396n, which established the Home and Community-Based Care Waiver Program. See Andrew I. Batavia, A Right to Personal Assistance Services: "Most Integrated Setting Appropriateʺ Requirements and the Independent Living Model of Long-Term Care, 27 Am. J.L. & Med. 17, 24 (2001). The program allowed states to diverge from the traditional Medicaid structure by providing community-based services to people who would, under the traditional Medicaid structure, require institutionalization. Its purpose was to "provid[e] real choices and opportunities to control their lives for individuals who wish to live in the community" and allow deviation from Medicaid's traditional "institutional bias." Id.

Participating states have significant discretion in how they craft their waiver programs. Nonetheless, the programs must conform to several restrictions: the average annual cost of a state's waiver programs cannot exceed that of institutional services, id.; states must inform eligible persons of their options and allow those qualified to take advantage of waiver slots up to the number available, id.; and states must comply with the ADA's integration mandate, which dictates that states "shall administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities, " 28 C.F.R. § 35.130(d) (1998).


States submit detailed applications for each waiver program to the Centers for Medicare and Medicaid Services (CMS). CMS approves waiver programs for an initial term of three years, after which it may re-approve them for five-year periods. The A&D waiver, the FS waiver, and the CIH waiver all fall under SSA § 1915(c), 42 U.S.C. § 1396n(c), and have been approved by CMS. (That approval is not at issue here.) The Agency oversees all of Indiana's waiver programs, through different subdivisions for each one.

Under Indiana law, the A&D waiver is meant "to provide homeand community-based services to individuals who, but for the provision of such services, would require nursing facility level of care." The FS waiver provides "waiver services to participants of any age residing in a range of community settings as an alternative to care in an intermediate care facility for individuals with intellectual disabilities … or related conditions." The CIH waiver provides services to a similar population that meets additional criteria. While the FS waiver caps services at $16, 545 per year, there is no cap on services under the A&D or CIH waivers. Different services are available under each waiver, and the rules for reimbursement vary by program.

Waive r participants may also use services provided through the state's traditional Medicaid plan. These include "prior-authorization services, " which are services that the state has pre-approved as medically necessary. 405 Ind. Admin. Code § 5-3-13. There is one type of prior-authorization service relevant to this case: "home health services." Id. § 5-3-13(a)(9). Home-health services include "[s]killed nursing, " "[h]ome health aid services, " "[p]hysical and occupational therapies, " "[s]peech pathology services, " "[r]enal dialysis, " and "[t]elehealth services." Id. § 1-4.2-3(a). Homehealth services, as the name suggests, "must be performed in the home." Id. § 1-4.2-3. If a service is available under both the relevant waiver and the state Medicaid programs, participants must generally use prior-authorization services before tapping into their waiver funds.

The Agency assigns a case manager to each waiver participant. The case manager works with the participant and his or her guardian to determine the appropriate services for that participant. Certain services are available under some waivers but not under others. After the case manager, participant, and guardian create an individualized plan, the case manager submits it for approval to the appropriate Agency subdivision.


In 2006, the state opened the A&D waiver to persons with developmental disabilities, so long as they had either "skilled medical need" or substantial functional limitations. In 2011, it reversed this policy, and thereafter allowed only people who could demonstrate both a skilled medical need and substantial functional limitations to participate in the A&D waiver. As space became available on the FS waiver, the state moved A&D waiver participants to the FS waiver.

The plaintiffs are developmentally disabled people who rely on Indiana's homeand community-based Medicaid waiver programs. Karla Steimel suffers from cerebral palsy, while Thomas Maertz has been diagnosed with both cerebral palsy and mental retardation. Colton and Cody Cole are twin brothers; they both suffer from cerebral palsy. Timothy Keister has been diagnosed with mental retardation. Michael and Lois Beckem are siblings; Michael has been diagnosed with mild mental retardation, and Lois has Down's syndrome.

Before 2013, the plaintiffs were served under Indiana's A&D waiver. Under the A&D waiver, they were able to enjoy community activities such as eating in restaurants, visiting flea markets, and window-shopping. Michael and Lois Beckem attended day services, which allowed them to go into the community and interact with people without disabilities. While all of the plaintiffs suffer from severe conditions, none of them needs the skilled medical services necessary to meet the prerequisites of the A&D waiver, as it has been structured since 2011. All were shifted to the FS waiver in 2013. Later, Karla Steimel and Timothy Keister were moved to the CIH waiver; they concede that their claims are ...

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