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2:16-cv-10936-AJT-APP Doc # 1 Filed 03/15/16 Pg 1 of 46 Pg ID 1

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN








DEREK WASKUL, by his guardian, Cynthia Waskul; CORY SCHNEIDER,
by his guardians, Martha and Wendy Schneider; KEVIN WIESNER,
by his guardian, Kerry Kafafian; and WASHTENAW
ASSOCIATION FOR COMMUNITY ADVOCACY,




















SOUTHERN DIVISION












Plaintiffs,

v.



























Case No. 2:16-cv-10936

Hon.

TRISH CORTES, in her official capacity as
Director of Washtenaw County Community
Mental Health; WASHTENAW COUNTY COMMUNITY
MENTAL HEALTH; NICK LYON in his official
capacity as Director of Michigan Department of
Health and Human Services; JANE TERWILLIGER
in her official capacity as director of Community
Mental Health Partnership of Southeast Michigan; and
COMMUNITY MENTAL HEALTH PARTNERSHIP OF
SOUTHEAST MICHIGAN,






























Defendants.







MICHIGAN POVERTY LAW PROGRAM
Lisa Ruby (P46322)
Attorney for Plaintiffs
220 E. Huron #600A
Ann Arbor, MI 48104





(734) 998-6100 ext. 117


__________________________________________________________________________/
LEGAL SERVICES OF SOUTH
CENTRAL MICHIGAN
Nicholas A. Gable (P79069)
Attorney for Plaintiffs
420 N. Fourth Ave.

Ann Arbor, MI 48104

(734) 665-6181 ext. 127 [email protected]
[email protected]

MICHIGAN PROTECTION AND
ADVOCACY SERVICE, INC.
Mark A. Cody (P42695)
Attorney for Plaintiffs
4095 Legacy Pkwy Ste. 500
Lansing, MI 48911-4264
(517) 487-1755
[email protected]
[email protected]________/






COMPLAINT

Plaintiffs, through their attorneys, state as follows:

PRELIMINARY STATEMENT

1. Plaintiffs bring this action pursuant to 42 U.S.C. § 1983 based on

violations of their rights expressly conferred by the Social

1






2:16-cv-10936-AJT-APP Doc # 1 Filed 03/15/16 Pg 2 of 46 Pg ID 2

Security Act and United States Constitution. Plaintiffs bring

additional state claims pursuant to Michigan's Mental Health Code.

2. Plaintiffs are three severely developmentally-disabled adults

receiving medically-necessary Community Living and Support (CLS)

Services through Washtenaw County Community Mental Health

(WCCMH), which allow them to avoid institutionalization.

3. Plaintiffs filed this action after their medically-necessary CLS

services were reduced.

JURISDICTION AND VENUE

2.

3.

4.

This Court has jurisdiction over Plaintiffs' federal and

constitutional claims under 28 U.S.C. § 1331.

This Court has supplemental jurisdiction over Plaintiffs’ state

law claims under 28 U.S.C. § 1367.

Venue in the Eastern District is proper because Plaintiffs reside

in Washtenaw County, Michigan, and because all the events

complained of herein occurred in Washtenaw County, Michigan.

5.

Individual plaintiffs, Derek Waskul (guardian Cynthia Waskul),

PARTIES

Cory Schneider (guardians Martha Schneider and Wendy Schneider),

and Kevin Wiesner (guardian Kerry Kafafian) are residents of

Washtenaw County, Michigan. At all relevant times, they have been

participants in the Community Living and Support (CLS) services

program offered under Michigan’s Habilitation Supports Waiver

(HSW) and administered by Washtenaw County Community Mental

Health.

6.

Guardians for the individual Plaintiffs are suing on Plaintiffs’

behalf pursuant to Fed. R. Civ. P. 17(c)(1)(A).



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7.

Washtenaw Association for Community Advocacy brings this action

on its own behalf and on behalf of its members who have been

directly affected by Defendants’ unlawful policies and practices.

8.

Defendant Washtenaw County Community Mental Health (WCCMH) was

established by Public Act 258. It provides mental health services

to Washtenaw County adults with a severe and persistent mental

illness, children with a severe emotional disturbance, and

individuals with a developmental disability.

9.

Trish Cortes is the Director of WCCMH and is being sued in her

official capacity.

10.

Nick Lyon is the Director of Michigan’s Department of Health and

Human Services (MDHHS, or The Department) and is being sued in

his official capacity.

11.

The Department is the single state agency responsible for

administering Medicaid. 42 U.S.C. § 1396a(a)(5).

12.

Jane Terwilliger is the Executive Director of the Community

Mental Health Partnership of Southeast Michigan (CMHPSM) and is

being sued in her official capacity.

13.

The CMHPSM is a specialty prepaid health plan considered a

Medicaid managed care organization under MCL 400.109f.

14.

Medicaid managed care organizations are responsible for making

medical assistance available and accessible to Medicaid

beneficiaries within their region. 42 U.S.C. § 1396b(m).











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A. Medicaid Program and Habilitation Supports Waiver

FACTS

15.

The Medicaid program is jointly funded and administered by the

state and federal governments under Title XIX of the Social

Security Act.

16.

The Medicaid program provides medical assistance for certain low

income children, families, pregnant women, disabled adults, and

elderly people.

17.

Michigan must operate its Medicaid program in compliance with

federal Medicaid statutes and regulations.

18.

MDHHS contracts with CMHPSM, a Medicaid managed care organization,

to provide or arrange for services for enrollees in its region. 42

U.S.C. § 1396u-2(a)1(B); MCL 400.109f.

19.

CMHPSM contracts with WCCMH, an organization statutorily required

to provide and arrange for mental health services to individuals

with developmental disabilities in Washtenaw County, to provide or

arrange services for Medicaid enrollees.

20.

CMHPSM, as a Medicaid managed care organization, is responsible for

"providing defined inpatient services, outpatient hospital

services, physician services, other specified Medicaid state plan

services, and additional services approved by the centers for

Medicare and Medicaid services under section 1915(b)(3) of title

XIX of the social security act, 42 U.S.C. § 1396n." MCL 400.109f.

21.

The relationship between MDHHS, CMHPSM, and WCCMH is represented in

the following graphic published by the University of Michigan and

Blue Cross Blue Shield of Michigan’s Center for Healthcare Research

& Transformation:



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22.

States submit a plan to Centers for Medicare and Medicaid Services

(CMS) for how the Medicaid program will be administered. This is

called the State Plan. 42 U.S.C. § 1396a(a).

23.

The State Plan contains and describes the nature and scope of the

State's Medicaid program. 42 C.F.R. § 430.10.

24.

Michigan's State Plan includes the provision of home and community

based services to approved Medicaid beneficiaries under a waiver,

"granted under 42 C.F.R. Part 441, subpart G," who would otherwise

require services in a facility. Attachment 2.2-A to the Michigan

State Plan. This waiver is called the Habilitation Supports Waiver

(HSW) in Michigan.

5



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25.

CMS grants waivers to "permit states to offer, under a waiver of

statutory requirements, an array of home and community-based

services that an individual needs to avoid institutionalization."

42 C.F.R. § 441.300.

26.

Michigan elected, applied, and was approved to receive funding to

furnish waiver services under 42 U.S.C. § 1396n to assist

individuals with developmental disabilities with activities of

daily living necessary to permit them to live in their own home or

rental unit in a community supported living arrangement setting.

27.

Federal law lists the type of community living arrangement services

which must be offered under the waiver. 42 U.S.C. § 1396u and 42

C.F.R. § 440.180.

28.

Michigan elected to make all Medicaid home and community-based

living arrangement services under 42 U.S.C. § 1396u and 42 C.F.R. §

440.180 available to individuals on the HSW. MCL 400.109c.1

29.

Community supported living arrangement services is defined as

approved services that assist a developmentally disabled individual

in activities of daily living necessary to permit them to live in

their own apartment in a community supported living arrangement

setting. 42 U.S.C. § 1396u. It also includes personal assistance

and "support services necessary to aid an individual to participate

in community activities." 42 U.S.C. § 1396u(a)(7).


1 “The department of community health shall include, as part of its
program of medical services under this act, home- or community-based
services to eligible persons whom the department of community health
determines would otherwise require nursing home services or similar
institutional care services under section 109. MCL 400.109(c)(1). The
minimum list of required services includes home delivered meals, chore
services, homemaker services, respite care, personal care, adult day care,
private duty nursing, mental health counseling, caregiver training,



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30.

“Community Living Supports facilitate an individual’s independence,

productivity, and promote inclusion and participation.” Michigan

Medicaid Provider Manual (MPM) § 15.1.

31.

Plaintiffs receive services under the HSW when, "if not for the

availability of the home and community-based services, [he or she

would] require the level of care provided in an intermediate care

facility for the mentally retarded (ICF/MR)." HSW Eligibility

Certification.

32.

The Social Security Act and federal regulations make clear that,

for state waiver plans like the HSW, “lack of adequate funds from

local sources will not result in lowering the amount, duration,

scope, or quality of care and services available under the plan.”

42 U.S.C. § 1396a(a)(2); 42 C.F.R. § 433.53.

33.

Michigan has a long history of authorizing CLS services under the

HSW (the provision authorizing the HSW was first added to the

Social Security Act in 1981), which are seen as a more humane and

cost-effective alternative to institutionalization.

B. Right to Self-Determination Under the Habilitation Supports Waiver

34.

The core of the Community Living Supports program is the

participant’s right to self-determination. Exhibit A, HSW,

Appendix E-2. This means that the participant structures his or

her own plan of service according to medical need.

35.

States decide whether to allow participant-directed services. If

so, the state must complete Appendix E of the HSW and specify

which aspects of the services are participant-directed. See CMS


emergency response systems, home modification, transportation, and medical
equipment and supply services.” MCL 400.109(c)(2).



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Instructions, Technical Guide, and Review Criteria, page 213 et

seq.

36.

Medical necessity criteria is defined in Michigan’s Medicaid

Provider Manual as supports, services, and treatment “intended to

treat, ameliorate, diminish or stabilize the symptoms of mental

illness, developmental disability, or substance use disorder.”

MPM § 2.5.A.

37.

Medical necessity criteria also includes supports, services, and

treatment “designed to assist the beneficiary to attain or

maintain a sufficient level of functioning in order to achieve

his goals of community inclusion and participation, independence,

recovery, or productivity.” Id.

38.

The determination of a medically-necessary support, service, or

treatment must be based on 1) information provided by the

beneficiary and/or his family, 2) clinical information from the

beneficiary’s primary care physician or other qualified health

care professionals who have evaluated the beneficiary, and 3)

person centered planning. MPM § 2.5.B.

39.

In accordance with 42 C.F.R. § 441.301(b)(1)(i), a participant-

centered service plan (of care) is developed for each participant

employing the procedures specified in Appendix D of the HSW.

40.

In accordance with 42 CFR § 431.51, a participant may select any

willing and qualified provider to furnish waiver services

included in the service plan.

41.

In the HSW application, the state has the option to check this

box: "There is a limit on the maximum dollar amount of waiver

services authorized for each specific participant."



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42.

Michigan’s application provides: "Not applicable- The State does

not impose a limit on the amount of waiver services…" Exhibit B,

HSW Appendix C-4(a).

43.

This is in accordance with state policy, which prohibits services

from being denied “solely on preset limits of the cost, amount,

scope, and duration of services.” MPM § 2.5.C., pg. 14.

44.

Only after the participant's medical needs have been determined

can the plan be budgeted. Exhibit A, HSW Appendix E-2(b)(ii).

45.

"An individual budget includes the expected or estimated costs of

a concrete approach of obtaining the mental health services and

supports included in the [Individual Plan of Service (IPOS)] (SD

Guideline II.C.). Both the IPOS and the individual budget are

developed in conjunction with one another through the person-

centered planning process (PCP) (SD Guideline II).” Exhibit A,

HSW Appendix E-2(b)(ii).

46.

“The amount of the individual budget is determined by costing out

the services and supports in the IPOS, after a IPOS that meets

the participant’s needs and goals has been developed. In the

IPOS, each service or support is identified in amount, scope and

duration (such as hours per week or month). The individual budget

should be developed for a reasonable period of time that allows

the participant to exercise flexibility (usually one year).” Id.

(emphasis added).

47.

The participant can hire and fire staff, schedule staff, and

“determine staff wages and benefits subject to State limits.”

Exhibit A, HSW, Appendix E-2(a)(ii).

48.

There are no State limits for staff wages under the HSW.



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49.

Michigan specifically gives participants the right to reallocate

funds among services included in the budget, as well as to

determine the amount paid for services. Exhibit A, HSW, Appendix

E-2(b)(i).

50.

“Both the participant and the PIHP must agree to the amounts in

the individual budget before it is authorized for use by the

participant. This agreement is based not only on the amount,

scope and duration of the services and supports in the IPOS, but

also on the type of arrangements that the participant is using to

obtain the services and supports. Those arrangements are also

determined primarily through the PCP process. Michigan uses a

retrospective zero-based method for developing an individual

budget.” Exhibit A, SW Appendix E-2(b)(ii) (emphasis added). See

also 42 C.F.R. § 441.301(c)(2)(ix).

51.

“The mental health agency (PIHP or designee) must provide the

participant with information on how to request a Medicaid Fair

Hearing when the participant’s Medicaid-funded services are

changed, reduced or terminated as a result of a reduction in the

individual budget or denial of the budget adjustment.” Exhibit A,

HSW Appendix E-2(b)(iv).

C. Defendant WCCMH and the WCHO: Reformation and Budget Crisis

52.

Until January 2014, the Washtenaw County Health Organization

(WCHO) was the PIHP for Washtenaw County.

The WCHO was dissolved around October 2015.

WCCMH, when it operated as the WCHO, contracted with Community

Support and Treatment Services (CSTS) to provide services.

10

53.

54.



2:16-cv-10936-AJT-APP Doc # 1 Filed 03/15/16 Pg 11 of 46 Pg ID 11

55.

CSTS oversaw the development of participants’ IPOS, and the plan

of service’s budget was managed by a fiscal intermediary.

56.

The fiscal intermediary allows participants to employ their own

staff directly without managing administrative details such as

payroll, taxes, and W2s.

57.

Plaintiffs’ fiscal intermediary is the Community Living Network

(CLN), which operates under the d/b/a of Community Alliance of

Southeastern Michigan.

58.

In summer 2014, the WCHO informed Washtenaw County that it was

facing a shortfall of several million dollars. Exhibit C –

Behavioral Health Task Force, Final Report.

59.

A Behavioral Health Task Force issued a recommendation in

February 2015, in which it recommended dissolving the WCHO and

creating a new Community Mental Health Agency.

60.

The Behavioral Health Task Force also specifically recommended

targeting Community Living Support services in order to reduce

the deficit. Exhibit C.

61.

In October 2015, CSTS and the WCHO merged to create Defendant

WCCMH.

62.

Due to the budget crisis, an outside consultant, Health

Management Associates (HMA), was brought in around the time of

the merger to review WCCMH’s budget.

63.

In a draft report dated December 17, 2015, HMA wrote: "The

Community Living Supports program area is another with cost

metrics that bear scrutiny. WCCMH leadership has indicated to HMA

that they already have made changes that will reduce costs in

this area and that they will continue to evaluate and explore



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options for improved cost effectiveness while maintaining

quality. We encourage these continuing efforts." HMA Draft

Report, page 12. Exhibit D.

64.

In a letter sent to PIHP executive directors on October 22, 2015,

MDHHS had notified Defendants CMHPSM and WCCMH that the “changes

that will reduce costs” mentioned in the HMA letter were illegal.

Exhibit E, Letter from Thomas Renwick to PIHP Executive

Directors.

65.

Specifically, MDHHS condemned “PIHPs and/or their provider

networks [implementing] a practice of using assessments or

screening tools to determine, limit or restrict the amount,

scope, or duration of a service.” Id.

66.

The letter states that “it is the person-centered planning

process and medical necessity criteria that determine the amount,

scope and duration of services.” Id.

67.

Moreover, MDHHS stated: “it also bears reminding that the PIHP is

obligated to ensure that medically necessary supports, services

or treatments or treatment are sufficient in amount, scope and

duration to reasonably achieve their purpose.” Id.

68.

The “changes that will reduce costs,” criticized by MDHHS in the

letter and affecting the named Plaintiffs’ CLS services, went

into effect in May 2015, and have not been reversed despite

several individual administrative law decisions reversing the

reductions.

D. The May 2015 Cuts

69.

Prior to May 15, 2015, the IPOS budget for CLS services

participants was calculated as follows: an hourly pay rate for



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the paid CLS providers was established, and additional line items

were then added to the budget.

70.

For example, a participant’s CLS providers might be paid $13.88

an hour, and then additional costs for transportation, community

activities, worker’s compensation, and training were added to the

budget.

71.

After a fiscal intermediary fee (billed to Medicaid separately)

was subtracted from this total budget amount, the total budget

was then divided by the annual number of CLS hours, and then

divided by four to arrive at the quarterly-hour CLS billing rate

(billed as H2015).

72.

For example, Plaintiff Waskul’s CLS providers made $13.88 per

hour in March 2015, but the CLS billing rate per hour was $16.56

($4.14 X 4).

73.

This method of calculating the budget created a CLS provider pay

rate that took into account additional medically-necessary budget

line items, but did not cap the participant’s overall CLS

services budget.

74.

All budget items were based on the medically-necessary services

established in the participants’ IPOS.

75.

A letter dated April 9, 2015 was sent to all participants

receiving CLS services, notifying them that the CLS rate would be

set at $13.88 for all participants effective May 15, 2015.

Exhibit F, Letter to CLS Participants from Sally Amos O-Neal.

76.

Sally Amos O’Neal, Interim Executive Director of the WCHO,

claimed in the letter that the rate change was not a reduction in

services.



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77.

Specifically, Ms. Amos O’Neal wrote, “The new rate will be $13.88

an hour, which includes worker’s compensation, transportation,

community participation, taxes, and training. While this is not a

reduction in your current level of services, it may reduce the

amount you can pay your staff.” Id.

78.

The rate reduction was not simply a new set rate for CLS

providers. Rather, participants’ IPOS budgets were reduced and

entirely recalculated.

79.

Instead of adding separate budget line items for transportation

and community activities in addition to the CLS providers’ pay

rate, the WCHO began subtracting those items from the providers’

annual pay.

80.

The WCHO also began subtracting budget line items for training

and “unbillable expenses” from the CLS providers’ hourly rate.

81.

Moreover, the WCHO also began including respite hours in the CLS

provider pay rate calculation.

82.

Respite is a type of support available to families of children

with developmental disabilities or serious emotional disturbance,

and is designed to temporarily relieve the unpaid primary

caregiver.

83.

Respite services are billed separately from CLS services under

the HSW, and therefore should not be included with CLS hours in

determining a CLS budget.

84.

Defendant WCCMH also reduced the hourly rate participants could

pay their CLS providers for training.

85.

The result of the new budget calculation was that, effective May

15, 2015, CLS participants’ budgets were significantly reduced,



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upon information and belief often by around $10,000 per

participant annually.

86.

87.

The paid CLS providers’ hourly rate was consequently reduced.

Moreover, participants’ budgets were effectively capped because

budgeting for additional medically-necessary services would

further reduce the CLS providers’ pay, making it impossible to

find and maintain paid CLS providers at such a low rate.

88.

For example, Plaintiff Waskul’s budget dated February 12, 2015

was calculated as follows:

1. The total number of annual authorized hours (32.5 per week

at the time) was multiplied by the agreed upon CLS hourly

provider rate of $13.88 to create a starting budget amount

of $23,457.20.

2. From there, $1,027.12 was added for the annual cost of

training (74 annual hours X the training rate of $13.88).

3. An additional $2,100 was then added for annual

transportation expenses.

4. $199.08 per CLS provider was then budgeted for worker’s

compensation, for a total of $398.26.

5. $720 was then added for annual community participation.

6. $280.08 was added for an annual recreation pass.

7. An annual fiscal intermediary fee of $1,200 was added to

the total costs but billed separately to Medicaid under the

code T2025.

8. The total costs of $29,182.56, minus the fiscal

intermediary fee of $1,200, created a total budget of

$27,982.56.



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9. The total budget of $27,982.56 was then divided again by

the annual number of authorized CLS hours to create an

hourly CLS rate of $16.56.

10.

This rate was then divided by four to create the fifteen

minute CLS variable rate of $4.14, billed to Medicaid as

H2015.

89.

After the May 15, 2015 reduction, with the same number of CLS

hours per week, Plaintiff Waskul’s total budget amount was only

$18,672.55, nearly $10,000 less than before May 15, 2015.

90.

Plaintiff Waskul’s budget created May 18, 2015 was calculated as

follows:

1. The weekly number of authorized CLS hours was multiplied by

four to get a “unit” of 130, which was then multiplied by

the new quarterly hour rate of $3.47 ($13.88 per hour).

2. This was multiplied by fifty-two weeks to create a total

starting CLS budget of $23,457.20.

3. A similar calculation was done for respite hours, and a

total respite annual starting budget of $3,500 was then

improperly added to the CLS starting budget to create a

universal “beginning budget amount” of $26,957.20.

4. From here, $3,369.65 in taxes was subtracted.

5. $905 for worker’s compensation was then subtracted.

6. An estimated training cost of $270 was subtracted.

7. “Unbillable expenses” of $1,200 were subtracted.

8. Transportation costs of $2,100 were subtracted.

9. Community activity expenses of $720 were subtracted.



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10.

Finally, a recreational center pass expense of $280 was

subtracted.

11.

The “total left after expenses” was $18,672.55.2

12.

This total was then divided by the number of CLS and

respite hours (improperly) to get $9.63, the “max rate for

employee wage.”

91.

This budget reduction affected all CLS participants in Washtenaw

County.

92.

Upon information and belief, as of November 30, 2015, there were

169 participants receiving CLS services under the HSW in

Washtenaw County.

93.

The April 2015 letter from Ms. Amos O’Neal failed to give notice

to participants of their right to request a Medicaid fair

hearing. Id.

94.

The April 2015 letter did not give any reason for the intended

action or cite any specific regulation supporting the action. Id.

95.

The April 2015 letter did not provide an explanation of the

participant's right to request a hearing. Id.

96.

The April 2015 letter was not based on medical necessity

criteria, and did not provide an explanation of the circumstances

under which benefits would be maintained should a hearing be

requested. Id.

97.

In a January 2016 administrative pleading, Defendant WCCMH

admitted that it did not provide CLS participants adequate notice

of hearing rights in the April 2015 letter. Exhibit G, WCCMH’s


2 The numbers in the budget appear to be calculated incorrectly: the
“total left after expenses” is really $18,112.55.



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Response to Appellant Waskul’s Motion for Summary Disposition,

page 2.

E. Post-June 4, 2015 Notice of Hearing Rights

98.

MDHHS sent notice to Defendant WCCMH on June 4, 2015, warning

Defendant WCCMH that its decision to reduce CLS participants’

provider rate did not conform to the approved budget authority

process in the Habilitation Supports Waiver application. Exhibit

H, Letter from Jeffrey Wieferich to Sally Amos O’Neal.

99.

MDHHS noted that “Medicaid-funded services are changed, reduced,

or terminated as a result of a reduction in the individual

budget…” Id.

100. In response to MDHHS’s letter, Defendant WCCMH claimed that it

was “collaborating with the individual and/or guardian to review

the Individual Plan of Service (IPOS) and the Self Determination

budget. Upon review with all parties, the IPOS will be reviewed

and signed off on by the individual and/or guardian and the

CMHSP…..Through the completion and signature on the updated IPOS,

each individual and/or guardian will be provided Adequate Notice

of Rights.” Exhibit I, WCCMH Response to MDHHS.

101. Starting in late June, Defendant WCCMH began reopening

participants’ IPOS to incorporate the budget reductions.

102. Upon information and belief, contrary to MDHHS’s demand that

Defendant WCCMH comply with the person centered planning process

when reopening the IPOS, Defendant WCCMH often simply had

clinical staff telephone participants and notify them that their

IPOS would be redone.



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103. Upon information and belief, Defendant WCCMH’s clinical staff

usually showed up at participants’ homes with an IPOS reflecting

the reduction already incorporated, and asked them to sign it.

104. When Defendant WCCMH incorporated the CLS budget reduction into

participants’ IPOS, it provided a notice of hearing rights with

the new IPOS.

105. These later notices of hearing rights described the action taken

as “adequate,” and were not negative advance action notices.

Exhibit J, Post-June 4, 2015 Notice of Hearing Rights (for

Plaintiff Schneider).

106. These later notices did not cite any statute or policy

authorizing the reduction in services.

107. These notices did not state what was reduced or why.

108. Because these later notices did not acknowledge the reduction in

services, no reason for the reduction was given in the notices.

109. Upon information and belief, Defendant WCCMH told participants at

the time the hearing notice was provided that the CLS budget

reduction was not appealable.

110. At two local dispute meetings held in late summer and early fall

2015, Defendant WCCMH continued to argue that the budget

reduction was not an appealable issue, and argued that the

Michigan Administrative Hearing System (MAHS) did not have

jurisdiction to hear the named Plaintiffs’ cases.

111. Defendant WCCMH continued to assert that MAHS did not have

jurisdiction to hear CLS budget reduction appeals through

February 2016.



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112. Upon information and belief, only about 10 of around 170 CLS

participants in Washtenaw County reached administrative hearings

by an appeal based on this later notice of hearing rights.

113. Although Defendant WCCMH also assured MDHHS that it had “reversed

the CLS rate retroactive to May 15, 2015 pending results of the

Medicaid Fair Hearings Process scheduled for July 1, 2015,” it

did not do so for every individual. Exhibit I.

114. Upon information and belief, Plaintiff Waskul is the only CLS

participant whose CLS provider rate (only the provider hourly

rate and not the overall CLS budget calculation) was eventually

reversed to the pre-May 15, 2015 amount.

115. For the few CLS participants who requested a hearing, Defendant

WCCMH, instead of reversing the rate to the pre-May 15, 2015

amount, instead attempted to impose a “negotiated” rate of

$14.48, which it borrowed from Michigan’s Children’s Waiver.

116. Upon information and belief, this rate was never “negotiated”;

rather, participants were told they could have the $14.48 rate or

the $13.88 rate.

117. Both the $14.48 rate and $13.88 rate were calculated according to

the post-May 15, 2015 method, which reduces and caps

participants’ CLS budgets.

118. The harm to Plaintiffs is irreparable. Plaintiffs have no

adequate remedy at law to prevent the continuing wrong and

irreparable injury caused by Defendants' acts.









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PLAINTIFFS’ FACTS

DEREK WASKUL

119. Plaintiffs incorporate all paragraphs above.

A. Mr. Waskul’s Disabilities; Effect of the May 15, 2015 Cuts.

120. Plaintiff Derek Waskul (Mr. Waskul) suffers from a developmental

disability and severe autism.

121. He is in his mid-thirties but cannot function independently.

122. Cynthia Waskul, his mother and legal guardian, provides unpaid

natural support on weekends and evenings, but Mr. Waskul depends

on two paid CLS providers seven and a half hours a day, Monday

through Friday.

123. Mr. Waskul receives CLS services under the HSW.

124. Through his guardian, Mr. Waskul participates in the CLS self-

determination process.

125. Prior to May 15, 2015 Mr. Waskul’s CLS providers were paid $13.88

an hour.

126. Mr. Waskul’s budget included separate items for training,

transportation, community activities, and worker’s compensation.

127. Mr. Waskul’s pre-May 15, 2015 IPOS budget was developed based on

the medically-necessary services authorized by his IPOS.

128. Mr. Waskul received the April 9, 2015 letter from Sally Amos

O’Neal, described above and attached as Exhibit F.

129. The April 9, 2015 letter did not notify Mr. Waskul of his right

to request a Medicaid fair hearing.

130. As explained above at paragraphs 88-90, Mr. Waskul’s budget was

reduced and entirely recalculated effective May 15, 2015.



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131. As discussed above, MDHHS sent notice to Defendant WCCMH on June

4, 2015, warning Defendant WCCMH that its decision to reduce CLS

participants’ provider rate did not conform to the approved

budget authority process in the Habilitation Supports Waiver

application. Exhibit H, Letter from Jeffrey Wieferich to Sally

Amos O’Neal.

132. Katie Snay, Fair Hearings Officer for Defendant WCCMH, confirmed

that the rate was reversed around June 30, 2015.

133. With that assurance, Mr. Waskul withdrew his pending request for

a Medicaid fair hearing, a hearing he had requested when his

hours were illegally reduced by Defendant WCCMH before the May

15, 2015 budget reduction.

134. Mr. Waskul’s CLS provider rate had been reduced between May 15,

2015 and the June 12, 2015 meeting, at which time Defendant WCCMH

temporarily reversed the budget reduction and convinced Mr.

Waskul to withdraw his hearing request.

135. Despite Defendant WCCMH’s assurance that it had reversed the

budget reduction and would comply with person centered planning,

Defendant WCCMH subsequently reduced Mr. Waskul’s budget again by

a notice dated July 20, 2015, despite the fact that Michigan

policy allows the IPOS and budget to be developed only through

the person-centered planning process. MPM, § 15, page 975.

136. The notice of action sent to Mr. Waskul stated that the reduction

would be imposed, even explicitly acknowledging that Mr. Waskul

did not agree. Exhibit K, Notice of Hearing Rights, July 20,

2015.



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137. This time, the WCHO admitted that the change was a “reduction in

services” and sent a negative advance action notice. Id.

138. Defendant WCCMH claimed at the subsequent administrative law

hearing that this notice was a mistake, and that no notice with

hearing rights (or an adequate action notice) should have been

given on the basis that there was no reduction in services.

139. Upon information and belief, this was the only negative advance

action notice subsequently sent to CLS participants who had

received the April letter.

140. The only justification provided in the July notice was that the

new imposed rate of $14.48 was the maximum state rate allowed

under the Children’s Waiver. Id.

141. The Children’s Waiver is a separate waiver program that is not

relevant to Mr. Waskul.

142. Although there is a maximum rate set by the state under the

Children’s Waiver, there is no such rate under the HSW.

143. Mr. Waskul requested a local dispute hearing and a Medicaid fair

hearing after receiving the notice of reduction dated July 20,

2015.

144. After a local dispute resolution meeting, Defendant WCCMH issued

a decision affirming the reduction in services, citing its need

“to be good stewards of Medicaid dollars.” Exhibit L, August 24,

2015 Local Dispute Resolution Committee Report of Findings.

145. This new notice unilaterally set Mr. Waskul’s CLS providers’ pay

rate at $14.48 with additional budget line items subtracted.

146. As discussed above, instead of adding additional budget line

items for transportation and community activities to the CLS



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providers’ pay rate, Defendant WCCMH continued subtracting those

budget items from the providers’ annual pay.

147. Defendant WCCMH continued subtracting training costs, worker’s

compensation, and “unbillable expenses” from the budget.

148. Additionally, the WCHO continued to include respite hours with

CLS hours in determining the CLS caregivers’ pay rate.

149. The result of the WCHO’s unilateral interference with Mr.

Waskul’s budget was that Mr. Waskul’s providers’ hourly rate was

lowered from $13.88 per hour to around $9.50 per hour.

150. As explained above in paragraphs 88-90, during the period when

Mr. Waskul’s hours were improperly reduced from 37.5 to 32.5 per

week, his total yearly budget amount was $29,182.56. Exhibit M –

Budget Created February 12, 2015.

151. After the May 15, 2015 reduction, Mr. Waskul’s total budget

amount was only $18,672.55. Exhibit N – Budget Created May 18,

2015.

152. Defendant WCCMH has never offered any justification based on

medical need for the reduction of Mr. Waskul’s budget.

153. Although Mr. Waskul’s primary care provider wrote a letter

stating that “a lowering of Derek’s self-determination budget

would be devastating to Derek,” Defendant WCCMH did not take this

into account. Exhibit O, Letter from Maria Heck, DO.

154. Doctor Heck also wrote, “As a young man with severe cognitive

impairment and autism, Derek needs stability, consistency and

dependability. With the proposed changes, which would lower the

staff wage, Derek will lose his current staff whom he has

developed relationships with. Derek's current staff have



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facilitated and helped Derek to develop meaningful relationships

in the community. Social interaction with others is a very

important piece in the purpose of the self-determination

arrangement.” Id.

155. “Without constancy, Derek will inevitably have increased anxiety,

increased behavior problems, and increased autism symptoms.

Autism is a disorder that requires a need for sameness. As his

doctor, I ask that you consider Derek's specific medical needs

when making this decision.” Id.

156. Despite Doctor Heck’s clear direction, Defendant WCCMH

nevertheless ignored Mr. Waskul’s medical needs and reduced his

CLS budget.

B. Administrative Law Hearing and Subsequent Developments.

157. Mr. Waskul requested a Medicaid Fair Hearing shortly after

receiving the July 20, 2015 notice of hearing rights.

158. When Mr. Waskul requested the Medicaid hearing, his CLS provider

hourly rate (but not the overall method of calculating the

budget) was reinstated to the full pre-May 15, 2015 amount.

159. A Medicaid Fair Hearing was held by the Michigan Administrative

Hearing System (MAHS) on October 14, 2015.

160. Mr. Waskul’s two paid CLS providers both testified under oath

that they could not continue to work at the reduced rate.

161. Medical evidence was admitted stating that losing any of his

current CLS providers would be detrimental to Mr. Waskul’s

health.

162. Despite Mr. Waskul’s evidence that the rate reduction would force

his CLS staff to quit and lead to harm, at the urging of



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Defendant WCCMH ALJ Steven Kibit issued a dismissal order

claiming that he had no jurisdiction on the basis that there had

been no reduction in the amount, scope, and duration of Mr.

Waskul’s services. Exhibit P, Order of Dismissal.

163. For unknown reasons, Mr. Waskul’s hourly provider rate was not

reduced again after the dismissal, but stayed at the pre-May 15,

2015, where it remains today.

164. On November 25, 2015, ALJ Kibit sua sponte issued an Order

Vacating Dismissal, ruling that MAHS did in fact have

jurisdiction to hear the case. Exhibit Q.

165. Specifically, ALJ Kibit ruled that MAHS had jurisdiction because

the reduction in Mr. Waskul’s CLS budget did confer the right to

a Medicaid Fair Hearing, and ordered a new hearing.

166. After ALJ Kibit dismissed the case for lack of jurisdiction, Mr.

Waskul’s provider Christina Pulcifer quit, and Mr. Waskul

currently does not have enough staff to provide the medically-

necessary services required by his IPOS.

167. It will take significant time to find a suitable replacement for

Ms. Pulcifer, because Mr. Waskul must be familiar with the

provider and have established a certain level of trust.

168. Mr. Waskul is at risk of losing his other paid CLS provider as

well because of the uncertainty surrounding her job.

169. On February 18, 2016, ALJ Kibit granted Mr. Waskul’s Motion for

Summary Disposition and ordered Defendant WCCMH to reverse the

budget reduction.



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170. On February 29, 2016, Defendant WCCMH sent Mr. Waskul an Order

Certification, certifying that ALJ Kibit’s Order had been

implemented.

171. Despite its representations in the Order Certification, Defendant

WCCMH notified Mr. Waskul’s counsel on March 10, 2016 that it

intended to appeal ALJ Kibit’s decision.

172. Counsel for Plaintiffs received Defendant WCCMH’s Claim of Appeal

on March 14, 2016.

173. Upon information and belief, Defendant WCCMH has not reversed Mr.

Waskul’s budget reduction, despite its representations in the

Order Certification.

174. Defendant WCCMH has also refused to reverse the CLS reductions

for all recipients in Washtenaw County.

CORY SCHNEIDER

175. Plaintiffs incorporate all paragraphs above.

A. Mr. Schneider’s Disabilities and Staffing; Before the May 15, 2015

Cuts.

176. Plaintiff Cory Schneider (Mr. Schneider) has been diagnosed with

autism and a developmental disability, and he suffers from an

undiagnosed behavior disorder.

177. He is twenty years old but cannot function independently.

178. Mr. Schneider has received CLS services under the HSW since he

turned eighteen.

179. Due to his extremely limited speech and the likelihood of self-

inflicted harm, Mr. Schneider requires 24/7 care.

180. Mr. Schneider’s CLS providers are necessary to help Mr. Schneider

lead as normal a life as possible and avoid institutionalization.

27





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181. Among other things, the CLS providers help Mr. Schneider to cross

the street, engage in basic social interactions, remind him to

use the bathroom, and monitor his aggression.

182. Because of Mr. Schneider’s behavioral disorder, the CLS providers

must also prevent Mr. Schneider from hurting others or himself;

when angry, Mr. Schneider has been known to become aggressive

toward others and bang his head against the wall.

183. Caring for Mr. Schneider is a strenuous job involving constant

monitoring. Mr. Schneider is over six feet tall and has

aggressive tendencies resulting from his behavioral disorder,

which CLS staff need to control.

184. Mr. Schneider’s IPOS provides for 93 hours of CLS services per

week, and Mr. Schneider’s grandmother provides unpaid natural

support for any of Mr. Schneider’s unmet needs.

185. Prior to May 15, 2015, Mr. Schneider’s IPOS budget was calculated

as follows: an hourly pay rate for his paid CLS providers was

established, and additional line items were then added to the

budget.

186. Mr. Schneider had around four paid CLS providers prior to May 15,

2015.

187. Before May 15, 2015, Mr. Schneider’s lead CLS provider, Stacey

Rozsa, who has been with Mr. Schneider for at least six years,

was paid around $13.50 per hour.

188. Mr. Schneider’s other three CLS providers were paid around $10.00

per hour.







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B. Effect of the May 15, 2015 Cuts.

189. Mr. Schneider received the April 9, 2015 letter stating that his

community living support provider rate would be set at $13.88 per

hour effective May 15. Exhibit F.

190. The letter did not give notice to Mr. Schneider of his right to a

Medicaid fair hearing.

191. Only after receiving a notice of hearing rights (which was not an

advance notice and stated that the action taken was “adequate”)

following an IPOS “progress review” was Mr. Schneider able to

request an administrative hearing.

192. This notice, dated November 18, 2015, was given well after the

budget reduction was implemented in Mr. Schneider’s IPOS.

193. The notice stated that it was “given to Marti Schneider on

11/18/2015.” Exhibit G.

194. The notice stated that the action taken was effective on October

19, 2015, the effective date of the new IPOS, nearly a month

before the date of the notice of hearing rights. Id.

195. Because the notice described the action taken as “adequate,” the

notice on its face did not provide Mr. Schneider an opportunity

to request a timely hearing and receive benefits pending, because

pending benefits require “a termination, reduction, or suspension

of a service that was previously authorized.” Id.

196. The specific regulation cited in the notice simply stated that

the amount, scope, and duration of an IPOS must be sufficient,

and that the Medicaid agency “may not arbitrarily deny or reduce

the amount, duration, or scope of a required service under §§



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440.210 and 440.220 to an otherwise eligible beneficiary solely

because of the diagnosis, type of illness, or condition.” Id.

197. For the reasons outlined above, the rate reduction was not simply

a new set rate for paid CLS providers. Rather, the budget was

reduced and entirely recalculated.

198. Instead of adding the additional budget line items to the CLS

providers’ pay rate, Defendant WCCMH began subtracting those

items from the providers’ annual pay.

199. Defendant WCCMH also began subtracting training costs and

“unbillable expenses” from the budget.

200. Defendant WCCMH reduced Ms. Rozsa’s pay rate, which then

fluctuated for no apparent reason in subsequent months between

$11.50 and $12.00 per hour.

201. Both Ms. Rozsa’s and the other three CLS providers’ take home pay

was further reduced, because WCCMH began subtracting additional

budget line items from the starting provider rate.

202. Besides reducing the overall budget, this recalculation capped

Mr. Schneider’s CLS budget.

203. After the May 15, 2015 budget recalculation, the pay rate for Mr.

Schneider’s CLS providers was frozen at around $10 per hour for

new providers.

204. Because of the frozen budget imposed by Defendant WCCMH, Mr.

Schneider is unable to maintain his current paid CLS providers or

find suitable replacement providers, and consequently is not

receiving the medically-necessary services required by his IPOS.



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205. Since May 15, 2015, Mr. Schneider’s grandmother has made numerous

attempts to find replacement CLS providers, posting at Eastern

Michigan University and on care.com.

206. Due to the low pay rate and the difficult nature of the work

involved, Mr. Schneider has been unable to find suitable

replacement CLS staff.

207. Mr. Schneider can only currently employ two paid CLS providers

for about sixty-five of his ninety-three scheduled hours a week.

208. Although Mr. Schneider’s IPOS specifically requires him to have

five days out in the community, Mr. Schneider is now unable to

budget for medically necessary items like transportation and

community activities without further reducing his CLS providers’

pay.

209. Mr. Schneider’s grandmother, Martha Schneider, has been paying

out of pocket for transportation and community activity expenses.

210. On December 4, 2015, Mr. Schneider requested $400 monthly for

transportation and $200 monthly for community activities.

211. Mr. Schneider’s amended IPOS from December 4, 2015 states that

“these costs are above what the current self-determination budget

covers.”

212. Defendant WCCMH did not provide Mr. Schneider notice of his

hearing rights when it denied this request for medically-

necessary services.

213. Mr. Schneider’s grandmother has been caring for Mr. Schneider the

remaining 103 hours of the week.

214. Ms. Schneider is seventy-five years old and underwent heart

surgery within the last year.



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215. On February 18, 2016, ALJ Kibit granted Mr. Schneider’s Motion

for Summary Disposition and ordered Defendant WCCMH to reverse

the budget reduction.

216. On March 4, 2016, Defendant WCCMH sent Mr. Schneider an Order

Certification, certifying that ALJ Kibit’s Order had been

implemented.

217. Upon information and belief, Defendant WCCMH has not reversed Mr.

Schneider’s budget reduction, despite its representations in the

Order Certification.

218. Defendant WCCMH has appealed ALJ Kibit’s decision in Plaintiff

Waskul’s administrative law case.

219. Defendant WCCMH has also refused to reverse the CLS reductions

for all recipients in Washtenaw County.

KEVIN WIESNER

220. Plaintiffs incorporate all paragraphs above.

A. Mr. Wiesner’s Disabilities; Background.

221. Plaintiff Kevin Wiesner (Mr. Wiesner) is an eighteen-year old

with severe developmental delays who suffers from seizures.

222. Mr. Wiesner collapses during seizures and risks striking his head

on objects while falling. In addition to preventing him from

collapsing during seizures, his paid CLS providers must also pass

a magnet over his Vagus Nerve Stimulator, which sends an electric

charge to his brain. CLS staff must also ensure that Mr. Wiesner

coughs up food to prevent blockage of his airways during

seizures.

223. Mr. Wiesner receives about 85 hours of care a week in his IPOS.



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224. Mr. Wiesner requires at least two CLS staff with him at all times

in public.

225. Mr. Wiesner has been receiving CLS services under the HSW since

he turned eighteen.

226. Mr. Wiesner’s pre-May 15, 2015 hourly CLS provider rate of $12.00

per hour allowed for transportation and community activities to

be budgeted outside of the caregiver rate, although he did not

have a written budget between the time he transitioned from the

Children’s Waiver and the May 15, 2015 cuts.

B. Effect of the May 15, 2015 Cuts.

227. Mr. Wiesner’s IPOS requires medically-necessary community

activities.

228. Mr. Wiesner’s guardian was prepared to ask that medically-

necessary transportation and community activity expenses be

budgeted when she received the April 9, 2015 letter from Sally

Amos O’Neal.

229. The April 2015 letter and subsequent discussions with Defendant

WCCMH convinced Mr. Wiesner’s guardian that she could not budget

for those medically-necessary services without reducing Mr.

Wiesner’s CLS providers’ pay rate to an unlivable wage.

230. On May 15, 2015, Mr. Wiesner’s CLS budget was reduced and

recalculated.

231. The result was that the CLS providers’ hourly rate was lowered to

$11.50 per hour.

232. This reduction caused Mr. Wiesner to breach his employment

contracts with his CLS staff.



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233. Instead of adding additional budget line items to the CLS

providers’ pay rate, Defendant WCCMH began subtracting those

items from the providers’ annual pay.

234. Defendant WCCMH also began subtracting training costs and

“unbillable expenses” from the budget.

235. Additionally, Defendant WCCMH began including respite hours with

CLS hours in determining the CLS providers’ pay rate.

236. The result was that Mr. Wiesner’s overall CLS budget was reduced

and effectively capped.

C. Improper Notice of Hearing Rights and Lack of Benefits Pending.

237. Mr. Wiesner received no notice of hearing rights either in April

2015, when the letter was sent, or on May 15, 2015, when the

budget reduction was instituted.

238. Mr. Wiesner refused to sign an amended IPOS in July 2015, which

would have implemented the reduced budget in his IPOS.

239. At that time, Mr. Wiesner received a notice of his hearing

rights, dated July 7, 2015 (a notice of “adequate action”), and

requested a hearing.

240. Defendant WCCMH reduced Mr. Wiesner’s services before providing

the July 7, 2015 notice, which was not a negative advance action

notice.

241. Because the July 7 notice described the action taken as

“adequate,” the notice on its face did not provide Mr. Wiesner an

opportunity to request a timely hearing and receive benefits

pending, because pending benefits require “a termination,

reduction, or suspension of a service that was previously

authorized.”



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242. Mr. Wiesner was forced to pay his CLS providers reduced wages for

two months.

243. When Mr. Wiesner requested the hearing in August 2015, Defendant

WCCMH raised his CLS provider rate, but not to the full prior

amount.

244. Instead, this was a “compromised” rate of $14.48, which WCCMH

borrowed from the Children’s Waiver.

245. Mr. Wiesner received no retroactive benefits for his CLS

providers.

246. An administrative mix-up concerning Mr. Wiesner’s guardian

paperwork prevented his hearing request from being properly

processed until December 2015.

247. Upon information and belief, it was only in December 2015 that

Mr. Wiesner was told by Katie Snay, Fair Hearings Officer for

WCCMH, that Defendant WCCMH had restored his CLS provider rate to

the full $12.00.3

248. Moreover, the pre-May 15, 2015 method of calculating the budget

was not reinstated pending the Medicaid fair hearing.

249. Mr. Wiesner’s guardian has been paying out of pocket for

community activity and transportation expenses.

250. When Mr. Wiesner’s guardian has requested reimbursement for these

expenses, she is told that additional line items would need to be

added to his IPOS.


3 Although under the HSW a self-determination participant has the right to
hire staff, the fiscal intermediary handles all administrative work
pertaining to the CLS providers’ wages. The participant therefore would
not know what the providers’ rate is without looking at the providers’ pay
stubs or asking the fiscal intermediary directly.



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251. Adding these additional budget line items would only continue to

reduce Mr. Wiesner’s CLS provider pay rate.

252. Since the budget reduction was imposed, Mr. Wiesner has lost one

CLS provider.

253. Mr. Wiesner has suffered and continues to suffer harm as a result

of the illegal reduction in his CLS budget, and as a result of

WCCMH’s refusal to budget for transportation and community

activities.

254. Mr. Wiesner has not yet received a decision in his administrative

law hearing.

255. Defendant WCCMH has appealed Plaintiff Waskul’s favorable ALJ

decision, and has refused to reverse the reductions for all CLS

participants in Washtenaw County.

WASHTENAW ASSOCIATION FOR COMMUNITY ADVOCACY

256. Plaintiffs incorporate all paragraphs above.

257. Washtenaw Association for Community Advocacy (WACA) is a non-

profit organization, established in 1949.

258. Its mission and purpose include advocating for persons with

developmental disabilities and their families.

259. Its service population is comprised mainly of persons with

disabilities and their families.

260. Its members include recipients of Community Living Support

services and their providers.

261. All 169 HSW CLS services recipients in Washtenaw County qualify

for WACA’s services.

262. Many of WACA’s clients, including the named individual Plaintiffs

in this case, have been directly harmed by Defendants' practices.



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COUNT I – FAILURE TO PROVIDE CONSTITUTIONALLY ADEQUATE NOTICE AND RIGHT TO

BE HEARD (Defendants Cortes, Terwilliger, and Lyon)

263. Plaintiffs incorporate all paragraphs above.

264. The right to procedural due process is secured by the 14th

Amendment, and public benefits are a constitutionally-protected

property interest. See Goldberg v Kelly, 397 U.S. 254, 262

(1970).

265. Medicaid participants’ hearing and notice rights under Goldberg

are codified at 42 C.F.R. § 431.205(d): “The hearing system must

meet the due process standards set forth in Goldberg v. Kelly,

397 U.S. 254 (1970), and any additional standards specified in

this subpart.”

266. Under Goldberg, the state must provide “a meaningful notice

stating the basis for the action and, when coverage is to be

reduced or terminated, a pre-termination notice informing the

claimant of the right to continue benefits pending a final

administrative decision.”

267. In this case, Defendant WCCMH simply sent the April 2015 letter

to all CLS participants in the county notifying them that the

reduced rate/budget would be unilaterally imposed effective May

15, 2015. Exhibit F.

268. Plaintiffs were not advised in the letter of their right to

appeal the rate reduction and reduced budget, how to appeal, or

how to obtain continued services pending the outcome of a

hearing.



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269. Defendant WCCMH failed to reinstate Plaintiffs’ CLS budgets to

the full pre-May 15, 2015 amount pending their Medicaid Fair

Hearings.

270. Defendant WCCMH reduced Plaintiffs’ services before providing the

post-June 4, 2015 notices, which were not negative advance action

notices.

271. Because the post-June 4 notices described the action taken as

“adequate,” the notices on their face did not provide

participants an opportunity to request a timely hearing and

receive benefits pending, because pending benefits require “a

termination, reduction, or suspension of a service that was

previously authorized.”

272. The specific regulation cited in the post-June 4, 2015 notices

states only that the amount, scope, and duration of an IPOS must

be sufficient, and that the Medicaid agency “may not arbitrarily

deny or reduce the amount, duration, or scope of a required

service under [42 C.F.R.] §§ 440.210 and 440.220 to an otherwise

eligible beneficiary solely because of the diagnosis, type of

illness, or condition.”

273. Defendants violated Plaintiffs’ constitutional right to due

process, rights secured by the 5th and 14th Amendments and

enforceable by Plaintiffs pursuant to 42 U.S.C. § 1983, when it

did not allow Plaintiffs an opportunity to be heard and contest

the reduction of their CLS services.

274. Defendants’ actions, under color of state law, have harmed

Plaintiffs by depriving them of medically necessary care,

disrupting and diminishing their development and mental health.



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COUNT II – VIOLATION OF STATUTORY RIGHT TO NOTICE AND AN OPPORTUNITY TO BE

HEARD (Defendants Cortes, Terwilliger, and Lyon)

275. Plaintiffs incorporate all paragraphs above.

276. The Medicaid Act requires that “[a] State plan for medical

assistance must . . . provide for granting an opportunity for a

fair hearing before the State agency to any individual whose

claim for medical assistance under the plan is denied or not

acted upon with reasonable promptness.” 42 U.S.C. § 1396a(a)(3).

277. Subpart E of 42 C.F.R. 431 “[i]mplements section 1902(a)(3)

[1396a(a)(3)] of the Act, which requires that a State plan

provide an opportunity for a fair hearing to any person whose

claim for assistance is denied or not acted upon promptly.”

278. 42 C.F.R. § 431.206 provides that the state must provide notice

of a beneficiary’s right to a hearing and instructions on how to

request it “[a]t the time of any action affecting his or her

claim.”

279. Notice given under 42 C.F.R § 431.210 must “contain (a) A

statement of what action the State … intends to take; (b) The

reasons for the intended action; (c) The specific regulations

that support, or the change in Federal or State law that

requires, the action; (d) An explanation of— (1) The individual's

right to request an evidentiary hearing if one is available, or a

State agency hearing; or (2) In cases of an action based on a

change in law, the circumstances under which a hearing will be

granted; and (e) An explanation of the circumstances under which

Medicaid is continued if a hearing is requested.”



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280. If a beneficiary requests a hearing before the date of action,

the State may not terminate or reduce services until a decision

is rendered after the hearing, unless it is determined at the

hearing that the sole issue is one of Federal or State law or

policy, and the agency promptly informs the beneficiary in

writing that services are to be terminated or reduced pending the

hearing decision. 42 C.F.R § 431.230(a)(1) and (2).

281. The budget reductions imposed by Defendant WCCMH are a clear

reduction of a previously authorized service.

282. Defendant WCCMH simply sent out a letter in April 2015 stating

that participants’ CLS rates would be reduced and additional

budget items included in (i.e. subtracted from) that rate.

283. Defendant WCCMH did not provide HSW participants adequate notice

of hearing rights when it reduced their budgets on May 15, 2015.

284. Plaintiffs were and are entitled to continued services under 42

C.F.R § 431.230 and 42 C.F.R § 431.21.

285. The post-June 4, 2015 notices did not provide HSW participants

adequate notice of their hearing rights pursuant to 42 C.F.R §

431.210.

286. Defendant WCCMH reduced Plaintiffs’ services before providing the

post-June 4, 2015 notices, which were not negative advance action

notices.

287. Because the post-June 4 notices described the action taken as

“adequate,” the notices on their face did not provide

participants an opportunity to request a timely hearing and

receive benefits pending, because pending benefits require “a



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termination, reduction, or suspension of a service that was

previously authorized.”

288. The specific regulation cited in the post-June 4, 2015 notices

simply states that the amount, scope, and duration of an IPOS

must be sufficient, and that the Medicaid agency “may not

arbitrarily deny or reduce the amount, duration, or scope of a

required service under §§ 440.210 and 440.220 to an otherwise

eligible beneficiary solely because of the diagnosis, type of

illness, or condition.”

289. Defendant WCCMH also subsequently failed to reinstate Plaintiffs’

CLS budgets to the full pre-May 15, 2015 amount pending their

Medicaid Fair Hearings.

290. Defendant WCCMH violated Plaintiffs’ right to statutory due

process by failing to provide proper notice.

291. Defendants have violated Plaintiffs’ clearly established rights

under 42 U.S.C. § 1396a(a)(3), rights enforceable by Plaintiffs

pursuant to 42 U.S.C. § 1983. See Gean v Hattaway, 330 F.3d 758

(6th Cir. 2003).

292. Defendants’ actions, under color of state law, have harmed

Plaintiffs by depriving them of medically necessary care,

disrupting and diminishing their development and mental health.

COUNT III – VIOLATION OF SOCIAL SECURITY ACT – FAILURE TO AUTHORIZE

SERVICES IN THE AMOUNT, SCOPE, OR DURATION TO REASONABLY ACHIEVE THEIR

PURPOSE (Defendants Cortes, Terwilliger, and Lyon)

293. Plaintiffs incorporate all paragraphs above.



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294. Under 42 U.S.C. § 1396a(a)(10)(B), Plaintiffs have the right to

services in the amount, scope, and duration akin to those of any

other such individual under Medicaid.

295. Under 42 C.F.R. § 440.230(b), "each service must be sufficient in

amount, duration, and scope to reasonably achieve its purpose."

296. Plaintiffs receive home and community based services to assist

them with participating in community activities and to prevent

institutionalization.

297. CMS waived MDHHS’s obligation to comply with the comparability

requirements of § 1396a(a)(10)(B) in the HSW (implemented by 42

C.F.R. § 440.230(a)), but not the sufficiency requirements set

forth in 42 C.F.R. § 440.230(b).

298. The service group specified in the State’s HSW must still receive

services sufficient in amount, duration, and scope to reasonably

achieve their purpose.

299. Defendants' reduction of Plaintiffs’ IPOS budgets has frustrated

the purpose of the medically-necessary services set forth in

Plaintiffs’ IPOS.

300. Plaintiffs have not received services sufficient in scope to

achieve the services' purpose, in violation of their established

rights under 42 U.S.C. § 1396a(a)(10)(B) and 42 C.F.R. §

440.230(b), rights enforceable by Plaintiffs pursuant to 42

U.S.C. § 1983.

301. Defendants' actions, under color of state law, have harmed

Plaintiffs by depriving them of medically necessary care,

disrupting their development and mental health.



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COUNT IV – VIOLATION OF SOCIAL SECURITY ACT – RIGHT TO RECEIVE SERVICES

WITH REASONABLE PROMPTNESS (Defendants Cortes, Terwilliger, and Lyon)

302. Plaintiffs incorporate all paragraphs above.

303. The Social Security Act, 42 U.S.C. § 1396a(a)(8) and 42 U.S.C. §

1396a(a)(10), requires the State to furnish medical assistance

with reasonable promptness to all eligible individuals.

304. Medical

assistance

includes

"community

supported

living

arrangement services" as defined in 42 U.S.C. § 1396u(a) and 42

U.S.C. § 1396d(a)(23).

305. Community Supported living arrangement services is defined as

approved services which assist a developmentally disabled

individual “in activities of daily living necessary to permit

such individual to live in the individual’s own home, apartment,

family home, or rental unit furnished in a community supported

living arrangement setting.” 42 U.S.C. § 1396u.

306. It also includes "support services necessary to aid an individual

to participate in community activities." 42 U.S.C. § 1396u(a)(7).

307. Plaintiffs’ support services, which allowed them to participate

in the community, have been curtailed because their CLS budgets

have been reduced, and because paid CLS providers cannot be

readily found to work at such low rates.

308. Several of Plaintiffs’ CLS providers have quit.

309. Defendants have failed to make services available to Plaintiffs

by imposing low reimbursement rates and refusing services based

on cost.



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310. Defendants have failed to make services available to Plaintiffs

by capping their budgets and not allowing them to budget for

additional medically-necessary services.

311. This makes it impossible for participants to obtain adequate

medically necessary services with reasonable promptness, in

violation of 42 U.S.C. § 1396a(a)(8) and 42 U.S.C. § 1396

a(a)(10)(A).

312. Defendants have also violated state policy prohibiting services

from being denied “solely on preset limits of the cost, amount,

scope, and duration of services.” Michigan Medicaid Provider

Manual, § 2.5.C., pg. 14.

313. The post-May 15, 2015 budget calculation method and consequent

inadequate provider reimbursement rates have effectively denied

Plaintiffs the right to medical assistance in violation of 42

U.S.C. § 1396a(a)(8) and 42 U.S.C. § 1396a(a)(10)(A).

314. Defendants have violated Plaintiffs’ clearly established rights

under 42 U.S.C. § 1396a(a)(8) and 42 U.S.C. § 1396a(a)(10)(A),

rights enforceable by Plaintiffs pursuant to 42 U.S.C. § 1983.

315. Defendants’ actions, under color of state law, have harmed

Plaintiffs by depriving them of medically necessary care,

disrupting and diminishing their development and mental health.

COUNT V – VIOLATION OF MICHIGAN MENTAL HEALTH CODE – VIOLATION OF MCL

330.1722(1) (Defendants WCCMH and CMHPSM)

316. Plaintiffs incorporate all paragraphs above.

317. The Michigan Mental Health Code provides that no “recipient of

mental health services shall … be subjected to abuse or neglect.”

MCL 330.1722(1).



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318. “Neglect” means “an act or failure to act” by, among others, a

CMH agency, “that denies a recipient the standard of care or

treatment to which he or she is entitled under this act.” MCL

330.1100(b)(19).

319. A recipient is entitled to “mental health services … suited to

his or her condition.” MCL 330.1708(1).

320. Michigan’s Mental Health Code also provides that the responsible

mental health agency for each recipient shall provide a written

individual plan of service addressing, “as either desired or

required by the recipient, the recipient's need for … health care

… transportation, and recreation.” MCL 330.1712(1).

321. Defendants’ failure to provide Plaintiffs with a written IPOS

addressing their needs for health care, transportation, and

recreation amounts to neglect.

322. Defendants’ failure to provide Plaintiffs with mental health

services suited to their condition amounts to neglect.

323. “A recipient of mental health services who is abused or neglected

has a right to pursue injunctive and other appropriate civil

relief.” MCL 330.1722(3).

324. Defendants’ actions, under color of state law, have harmed

Plaintiffs by depriving them of medically necessary care,

disrupting and diminishing their development and mental health.



RELIEF REQUESTED

A. Assume jurisdiction in this case;



B. Declare unlawful the rate reduction and new budget calculation

imposed by Defendant WCCMH;





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C. Declare unlawful Defendant WCCMH’s denial of participants’ right to

self-determination generally;

D. Preliminarily and permanently enjoin Defendant WCCMH from imposing
the rate reduction, new budget calculation method, and unilateral
hours reductions;

E. Preliminarily and permanently enjoin Defendant WCCMH from denying

participants their right to procedural due process;

F. Enjoin Defendant WCCMH from refusing to reinstate the pre-May 15,
2015 level of funding and services to Plaintiffs and to all other
CLS service recipients until lawful IPOS meetings are conducted and
CLS service recipients are offered notice of any proposed cuts and
an opportunity to be heard regarding any objections they may have to
the cuts;

G. Assume continuing jurisdiction as may be necessary to monitor and

enforce any relief granted;

H. Award Plaintiffs costs and reasonable attorney fees under 42 U.S.C.

§ 1988; and













I. Grant such other relief as is just and proper.












/s/ Nicholas A. Gable (P79069)
LEGAL SERVICES OF SOUTH CENTRAL MICHIGAN
Attorney for Plaintiffs

420 N. Fourth Ave.


Ann Arbor, MI 48104
(734) 665-6181 ext. 127
[email protected]

























/s/ Lisa Ruby (P46322)
MICHIGAN POVERTY LAW PROGRAM
Attorney for Plaintiffs
220 E. Huron #600A
Ann Arbor, MI 48104
(734) 998-6100 ext. 117
[email protected]




March 15, 2016























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