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Western Illinois Service Coordination v. Illinois Department of Human Services

United States District Court, C.D. Illinois, Springfield Division

June 25, 2019

WESTERN ILLINOIS SERVICE COORDINATION; CENTRAL ILLINOIS SERVICE ACCESS; DAYONE PACT; F.L., by his guardian and next friend, JEANETTE GATHMAN; C.H., by her guardian and next friend, YVONNE HALL; and A.H., by her guardian and next friend, CHRISTINE PROPHETER, Plaintiffs,
v.
ILLINOIS DEPARTMENT OF HUMAN SERVICES; GRACE B. HOU, Secretary of Illinois Department of Human Services; DIVISION OF DEVELOPMENTAL DISABILITIES; KATHLEEN R. WARD, Acting Director of IDHS-DDD; GARY KRAMER, Chief Accountability Officer of Reimbursements and Program Support for IDHS-DDD; and MELISSA WRIGHT, Former Director of IDHS-DDD, Defendants.

          OPINION

          RICHARD MILLS, UNITED STATES DISTRICT JUDGE:

         This is a civil rights action pursuant to 42 U.S.C. § 1983, wherein Plaintiffs seek to vindicate rights secured by the federal Medicaid statutes and implementing regulations. The amended complaint also includes state law claims arising under the Grant Accountability and Transparency Act (“GATA”), 30 ILCS §§ 707/1- 708/99, and the Illinois Administrative Procedures Act (“IAPA”), 5 ILCS 100/5-5 and its implementing regulations.

         Pending is the Plaintiffs' motion for preliminary injunction [Doc. No. 16] pursuant to Federal Rule of Civil Procedure 65.

         The Defendants have filed a response [Doc. No. 30] in opposition to the motion for preliminary injunction.

         Also pending is a motion by Prairieland Service Corporation, Inc., to intervene as of right in this action pursuant to Federal Rule of Civil Procedure 24(a).

         Service Inc. of Illinois f/k/a Service of Will, Grundy and Kankakee Counties also moves to intervene as of right pursuant to Rule 24(a).

         On June 21, 2019, the Court held a hearing on the motion for preliminary injunction. The Parties and Intervenor movants were present.

         I. BACKGROUND

         A. Plaintiff's allegations

         As alleged in their amended complaint, Plaintiffs Western Illinois Service Coordination (“WISC”), Central Illinois Service Access (“CISA”) and DayOne PACT are independent service coordination agencies that have contracted with the State of Illinois for the past several decades to provide case management and coordination services to persons with developmental disabilities. Their consumers include individual Plaintiffs F.L., C.H., and A.H., who are persons with disabilities. As of July 1, 2018, there were 17 independent service coordination agencies operating in 17 regions throughout the State of Illinois.

         The Plaintiffs allege that on September 1, 2016, Defendant Illinois Department of Human Services (“DHS”) met with representatives from the 17 independent service coordination agencies and informed them of the Department's intent to seek competitive proposals for future independent service coordination contracts. Prior to September 2018, all independent service coordination funding was provided through a noncompetitive, annual fiscal year renewal process referred to as a “Community Service Agreement.”

         The Plaintiffs allege that during the next two years, DHS refused to provide any information or details about the competitive bid process to independent service coordination directors during their quarterly meetings. While the competitive funding scheme represented a major departure from prior DHS policies and procedures, DHS never proposed a formal rule or went through the rulemaking process, as required by the Illinois Administrative Procedures Act (“APA”). Instead, independent service coordination directors were told to submit questions for review and comment through the DHS website. DHS invited the independent service coordinators to participate in a request for information in July 2018. Independent service coordination agencies were invited to share statistical and geographic information about their service areas with the state via the request for information. In the request for information, DHS indicated it intended to issue a notice of funding opportunity grant in late summer or early fall 2018 and use it to redefine the geographic boundaries to which independent service coordination agencies are currently assigned and reduce the number of distinct independent service coordination agencies currently under contract. On September 20, 2018, DHS and Illinois Division of Developmental Disabilities Department (“DDD”) issued the notice of funding opportunity.

         The Plaintiffs allege that in November 2018, 33 statewide agencies and associations signed a letter that was sent to Defendant Melissa Wright, then Secretary of DHS, voicing their serious concerns with the process. Representatives from 13 of 17 independent service coordinators signed the letter. The letter identified technical issues with the process, raised concerns about the lack of clear information in the process and described the widespread, systemic disruption that would result from the process. Wright responded by stating, “I always think one should be very careful about what words one chooses when writing documents of this nature.”

         WISC, CISA and DayOne PACT submitted timely applications for the notice of funding opportunity grant funding on November 8, 2018. On January 2, 2019, Defendants DHS/DDD notified Plaintiffs WISC and DayOne PACT that their applications for funding under the independent service coordination notice of funding opportunity for fiscal year 2020 had been denied. The same day, CISA was notified that it received grant funding for region “I, ” but was denied the bid for area “H.” CISA had formerly served consumers in both regions. The State did not provide any explanation for these denials.

         The Plaintiffs allege all independent service coordinators that were denied funding under the notice of funding opportunity will be immediately disqualified from providing home and community-based case management services, including the Plaintiffs in this matter, on July 1, 2019. WISC will lose all funding and staff and cease to exist on July 1, 2019 because of the notice of funding opportunity process. CISA will lose one-third of its funding and staff on July 1, 2019 and will no longer be allowed to provide case management services to consumers residing in region H, after having been the sole provider of independent service coordination case management services for many consumers in that region for the past 25 years, because of the notice of funding opportunity process. On July 1, 2019, services to persons with developmental disabilities in service areas that were not awarded funding will be provided by new independent service coordination agencies. When CISA attempted to retain customers by sending them a choice of provider form letter, Kathy Ward, Acting DDD Director, informed CISA that the ability to change providers was “never intended to be as unfettered choice to all families” and that CISA should “refrain from offering [] families this kind of choice at this time.”

         The Plaintiffs allege Individual Plaintiffs A.H. and C.H. received a letter from DHS around the end of March 2019 or beginning of April 2019. The letter stated there would be a change in their independent service coordination provider but did not provide further details. The letter also indicated DHS would send more correspondence with additional information in “mid-March, ” though the Individual Plaintiffs did not receive further information from DHS regarding the change. Plaintiff F.L. never received any correspondence from DHS. A.H. and C.H. were not told they had a choice or the ability to appeal this decision. The replacement independent service coordination agencies have not contacted the Individual Plaintiffs and have not provided any information about transitioning to the new independent service coordinators. On July 1, 2019, thousands of people with developmental disabilities across the State of Illinois will be assigned a new provider of independent service coordination and individualized service and support advocacy case management services without their input and without any opportunity to appeal the decision.

         The Plaintiffs allege each Individual Plaintiff has a longstanding and secure relationship with the case manager assigned by their independent service coordination agency. The case managers have gone above and beyond for the families and guardians of the Individual Plaintiffs and have become indispensable to the Individual Plaintiffs. The Individual Plaintiffs trust and rely on their case managers because of his longstanding relationship and because case managers are intimately familiar with the Individual Plaintiffs and understand their goals and needs. New case managers will not readily have the level of understanding and expertise of the Individual Plaintiffs' current case managers. The Plaintiffs contend gaps in continuity of care caused by the notice of funding opportunity process and changing of independent service coordinators will damage progress made by Individual Plaintiffs.

         The Defendants contend that the Independent Service Coordination Plaintiffs are simply disappointed bidders who were not selected to receive grant funding for the upcoming fiscal year. The Individual Plaintiffs are Medicaid recipients who have been receiving services from the Independent Service Coordination Plaintiffs and who will continue to receive services from the succeeding independent service coordination entities.

         B. Motions to intervene

         (1)

         Prairieland Service Coordination, Inc. (“PSCI”) seeks to intervene, claiming it is an indispensable party whose property rights may be adversely affected pending the Court's decision on Plaintiffs' motion for injunctive relief and Plaintiffs' amended complaint. PSCI seeks to assert a claim against WISC for tortious interference with contract.

         In its complaint to intervene, PSCI alleges that on or about September 1, 2016, DHS-DDD held a meeting that PSCI and other independent service coordination executives attended in which plans for a competitive bid notice of funding opportunity would be released, but which release was ultimately delayed.

         On or about July 16, 2018, PSCI completed a request for information for DHS-DDD and, upon submitting the document, began to develop potential program plans and budgets for various regions across Illinois. On or about September 10, 2018, DHS-DDD published the notice of funding opportunity.

         PSCI worked on and submitted notice of funding opportunity bids for several regions on November 8, 2018, including Region G, which includes McDonough, Fulton, Knox, Warren, Henry, Henderson and Stark Counties.

         On or about January 2, 2019, DHS-DDD published a Notice of State Award initially announcing PSCI had won the notice of funding opportunity bid for Regions G, J and K.

         DHS-DDD simultaneously sent PSCI a form letter informing them that their notice of funding opportunity bids for Regions H, I and L were not selected. The letter did not provide any grounds for the denial. PSCI did not appeal any of the determinations made by DHS-DDD.

         PSCI has since been taking steps for a smooth transition for families and individuals that will be resuming their services through PSCI beginning July 1, 2019 in the Region G counties.

         PSCI claims it has an interest in this litigation as its property right in the Region G funding is at stake. There is no party present in this litigation that can adequately represent its interest and any judgment entered disposing of this case would seriously impair or impede PSCI's ability to protect ...


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