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Court deals blow to plaintiffs in Managed Care Suit
By: Alison Cohen: Special to The New Hampshire Challenge

Judge Gillian L Abramson delivered bad news and good news at the end of September to the 13 individuals with developmental disabilities, their families and the 10 area agencies that provide them with essential long-term supports and services. The judge dismissed their motion seeking a ruling that DHHS does not have the right to plan for or attempt to force long-term care services into the Medicaid managed care system, but gave them an additional 30 days to revise their pleadings to overcome the technical flaws.

“The decision is very legalese, very procedural,” explained Attorney Thomas Quarles. “When you want to sue the State, there are a lot of barriers. Basically, they can only be sued if they waive sovereign immunity.”

The additional good news for plaintiffs is that the ruling applies only to the request for a declaratory judgment and not on the merits of their case.

“There is enough reason for us to expect the Court will say we can go forward for a decision on the merits,” Quarles said.
At the heart of the Judge’s ruling are two main issues: does the doctrine of “sovereign immunity” preclude them from bringing suit against the state at all, and will the state’s planned course of action present a genuine threat or prejudice to their rights and interests. 

Sovereign immunity means that a state cannot be sued unless it explicitly waives its right to immunity. Quarles had expected an earlier revision had overcome the sovereign immunity problem when they had added Department of Health and Human Services Commissioner Nicholas Toumpas as defendant. The court found that the motion submitted by the plaintiffs did not prove that Toumpas, in moving toward implementation of Phase 2, was engaging in actions that were “arbitrary, unreasonable and capricious and beyond his authority.”

The standing issue is a bit trickier. To get the courts to issue a declaratory judgment, plaintiffs must demonstrate that they personally face a present concrete harm to their person or legal interests. This requires both standing and a determination that the claim is ready – or “ripe” – for litigation.

Plaintiffs relied on the statutory language creating Managed Medicaid Care that limited the program to the mandatory services covered by Medicaid. They argued that long-term supports and services are waivered rather than mandatory services and therefore not part of the managed care services.

They also made reference to RSA 171-A which created the Area Agency system for delivery of services to persons with developmental disabilities and argued that Phase 2 would constitute a breach of contract by requiring plaintiffs to contract with managed care organizations for future care.

Abramson found several problems with the plaintiffs’ case regarding standing. First, there is the lack of any firm evidence that there is a clear and present harm to the plaintiffs’ rights. Secondly, ruled that the State has the right to deliver Medicaid-funded services through whatever means they find appropriate, whether directly by the State or the Area Agencies as in the past or by contracting with outside managed care organizations. The Court held that the Area Agencies have no substantive right to provide long term supports and services, stating, “The area agencies participate in the program by virtue of an agreement between them and the State, and … this agreement is terminable by either party upon 60 days’ notice.”

The Court also found that RSA 171-A does not guarantee individuals with developmental disabilities or acquired brain disorders a right to have their services provided by area agencies. The law merely guarantees that they are given certain rights in regard to the quality and nature of the services to which they are entitled. Abramson held that the plaintiffs have not made a case that managed care organizations will provide inadequate care, merely the fear that they will do so.

Despite the rejection of their claims, Abramson gave plaintiffs the opportunity to amend their complaint to cure the defects. Her grounds for giving them a third chance was that plaintiffs had offered their status as taxpayers as one of the grounds that gave them standing to bring suit. Abramson said that because “of the New Hampshire Supreme Court’s recent decision finding the taxpayer standing provision …unconstitutional, the Court shall permit plaintiffs one final opportunity to amend their complaint.”

Although disappointed by the unexpected ruling, Quarles isn’t deterred. He’ll amend his motion and continue to plan for a full hearing on the merits of the case at some point in the near future. He doesn’t expect a ruling on his new motion until after the first of the year, putting off a court action on the merits even farther into 2015.

Quarles believes that the State’s decision to put Phase 2 on hold “indefinitely” was a factor in Abramson’s ruling.

“So far the judge does not think that the scenario we face is sufficient for a determination of standing. We are not helped by the fact that there is no longer a target date for implementation,” he explained, adding, “We think there is enough present threatened injury for the Court to reach a decision on the merits.”