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Harrison v. Phillips

United States District Court, N.D. Texas, Dallas Division

July 3, 2019

BARBARA HARRISON, by her next friend and guardian, MARGUERITE HARRISON, Plaintiff,
v.
COURTNEY N. PHILLIPS, in her official capacity as THE EXECUTIVE COMMISSIONER, TEXAS HEALTH AND HUMAN SERVICES COMMISSION, Defendant.

          MEMORANDUM OPINION AND ORDER

          JANE J. BOYLE UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff Barbara Harrison's motion for a preliminary injunction against Courtney N. Phillips, in her official capacity as the Executive Commissioner of the Texas Health and Human Services Commission (“HHSC”). Doc. 3. This is the second time Harrison, a disabled individual, has sued HHSC in this Court for failing to approve sufficient funds to cover her health care in a community setting as opposed to in an institution. See Harrison v. Young (“Harrison I”), No. 3:18-cv-1730-B. The last case was voluntarily dismissed so that the parties could try to resolve their dispute through the administrative process. They returned to this Court after HHSC again terminated Harrison's 24-hour licensed vocational nursing care.

         The parties continue to dispute the proper level of care that Harrison needs, how that care should be funded, and where it should take place. The parties also dispute whether HHSC's process for making these determinations is legal under the ADA and the Constitution. The Court finds that Harrison has met her burden of showing the four factors required for a preliminary injunction and GRANTS in PART and DENIES in PART Harrison's motion: the Court orders that HHSC continue funding Harrison's 24-hour licensed nursing care while the parties return to the agency as described below.

         I. BACKGROUND

         At the core, this dispute is about the process the state uses to allocate funding for medical services for disabled individuals. Plaintiff Barbara Harrison is a forty-three year old woman with severe disabilities. Doc. 1, Compl., ¶¶ 1, 4. She has been medically diagnosed with, among other things, cerebral palsy, epilepsy, obstructive sleep apnea, severe dysphagia, gastrostomy tube dependence, scoliosis, and profound intellectual disability. Id. ¶ 4; id. Exs. A-F. Marguerite Harrison, the mother of Plaintiff, is her next friend and guardian. Id. ¶ 1. Defendant Courtney N. Phillips is the Executive Commissioner of the Texas Health and Human Services Commission (HHSC). Id. ¶ 16. She is named as Defendant in her official capacity.[1]

         Each state participating in the joint federal- and state-funded Medicaid program must submit a plan to the Secretary of the United States Department of Health and Human Services for approval. 42 U.S.C. § 1396. Texas has designated HHSC to administer and supervise the state's Medicaid plan. Tex. Gov't Code § 531.021. Through a federally-approved waiver, states have the option of covering home and community-based services (HCS) for persons with physical or mental disabilities who would otherwise require institutional care that would be paid for by Medicaid. 42 U.S.C. § 1396n(c)(1). HHSC also operates this waiver program in Texas. Every year HHSC reevaluates whether an individual still qualifies for the waiver program based on the cost of her care. Doc. 9-2, Kenneally Decl., ¶¶ 11-12. And up until April 2018, both parties agreed that Harrison qualified for the HCS program, and she received care through a HCS provider, Berry Family Services.

         But in 2018, Harrison alleges that her health worsened. Doc. 14, Pl.'s P.I. Br., 4. Her doctors determined that instead of needing just a few licensed vocation nurse (LVN) hours per year, she would require 24-hour LVN care, or risk aspiration and death. Id. at 2-4. LVN services are available through the HCS waiver program, but if HHSC finds that an individual is requesting a level of care above the waiver's cost cap, that person may be removed from the waiver program entirely. See 40 Tex. Admin. Code § 9.155 (describing the eligibility criteria of the HCS program). HHSC has discretion to apply additional funds from the state's general revenue funds (Section 23 GR funds), but if it does not, then the individual will no longer be able to receive services at home or in the community, and will likely be institutionalized. See 40 Tex. Admin. Code § 40.1; General Appropriations Act, 85th Leg., R.S., art. II-128, § 23(b), Use of General Revenue Funds for Services. HHSC currently offers a fair hearing review process to appeal findings that an individual's plan exceeds the cost cap, but not for a denial of Section 23 GR funds. See Doc. 14-15, Ex. O (GR Final Determination), 2.

         The waiver program has a $168, 615 cost cap for individuals like Harrison. 40 Tex. Admin. Code § 9.155(a)(3)(B). There is no dispute that on April 23, 2018, she requested services that exceed the cost cap as the medical professionals from Berry had determined that Harrison now needed around-the-clock LVN care for the remainder of the 2018 plan year.[2] Doc. 14, Pl.'s P.I. Br., 4-5. Because providing this type and amount of service costs more than the cost cap allows, Berry asked the Commission to dip into Texas's Section 23 GR funds to make up the difference. Id. After reviewing Harrison's Individual Service Plan (ISP) and other documents, HHSC denied her request for 24/7 LVN care, but after some back-and-forth approved her for 8 LVN hours per day for the remainder of the year at a cost below the cap. Id. at 4-5; Doc. 9-2, Kenneally Decl., ¶ 15. Because this was a level of care below that which her doctors had determined was medically necessary to keep her alive, on July 2, 2018, Harrison brought suit in this Court for the first time, seeking relief. See Harrison v. Young (“Harrison I”), No. 3:18-cv-1730.

         In that first litigation last summer, Harrison voluntarily dismissed her claims after the Commission agreed to continue fully funding Harrison's health care pending the results of the administrative process. Doc. 3, TRO Mot., 6; No. 3:18-cv-1730, Doc. 32, Notice of Dismissal. The dismissal came after this Court granted a temporary restraining order on July 16, 2018, requiring the Commission to “provide funding for Plaintiff's twenty-four hour one-on-one licensed nursing care” until a preliminary-injunction hearing. Harrison I, No. 3:18-cv-1730, Doc. 18, Order Granting TRO. The preliminary-injunction hearing never happened, as Harrison dismissed her claims only a few days before, on August 28, 2018.[3]

         The parties had agreed to continue Harrison's 24-hour LVN care as they went back to the administrative process. Originally Harrison pursued a fair hearing on HHSC's 2018 decision, which by that point was 12 LVN hours per day for the remainder of the service year. Doc. 9-2, Kenneally Decl., ¶¶ 15-17. But once Harrison's yearly renewal came due, the parties agreed that the fair hearing would address only the 2019 service request, which was also for 24-hour LVN care and also exceeded the cost cap. Id. ¶ 17. That fair hearing was conducted on January 23, 2019. Doc. 3, Mot. for TRO, 7. While a decision was pending, HHSC denied her request for general revenue funding. Id. at 7-8; Doc. 14-15, Ex. O, 2.

         Meanwhile, at the fair hearing in January, Harrison had requested that the hearings officer weigh in on whether general revenue funds were appropriate for Harrison. Doc. 14-13, Ex. M (Transcript), 19. HHSC strenuously objected, saying that the hearings officer did not have jurisdiction to opine on the general revenue funds, only on whether Harrison's requested level of care was over the cost cap-a point neither party disputed. Id. at 16-17, 36, 39. In the final opinion, dated May 1, 2019, the hearings officer did not mention whether he considered the availability of general revenue funding to cover the excess cost, or any of the constitutional, federal, or state law issues Harrison raised, and simply concluded that Harrison:

was no longer eligible to receive services in the Home and Community Services (HCS) program because [Harrison's] proposed 2018-2019 Individual Plan of Care (IPC) exceeded $168, 615.00. Therefore, the Agency's action is SUSTAINED.

Doc. 14-11, Ex. K, 6 (reviewing an IPC cost of $327, 923.10). HHSC then terminated Harrison's services. On May 8, 2019, Berry sent Harrison its letter indicating it could no longer provide services for Harrison because HHSC would no longer pay for it. Doc. 1, Compl., Ex. L. This suit ensued.

         Specifically, Plaintiff requests a declaratory judgment that:

(a) HHSC's denial of the necessary funding for nursing services for Barabara Harrison in her group home violates 42 U.S.C. § 12132 and 29 U.S.C. § 794(a) and their implementing regulations, 28 C.F.R. § 35.130(d) and 41.51(d); and (b) HHSC's failure to offer Plaintiff a fair hearing and an opportunity to appeal HHSC's decision to deny her general revenue funding without such a hearing violates her due process rights to an administrative hearing to challenge her ongoing request for state general revenue funds and her right under the Medicaid Act to request the continuation of HCS program services pending the hearings officer's final decision

as well as a temporary restraining order, a preliminary injunction, and a permanent injunction enjoining HHSC from denying Harrison funding for medically necessary nursing services in her group home and enjoining HHSC from denying her request for a fair hearing on HHSC's denial of general revenue funds. Doc. 1, Compl, 21-23.

         A temporary restraining order hearing was held on May 15, 2019, and the Court ordered that Harrison's 24-hour LVN care be continued until a preliminary-injunction hearing could be held. Doc. 13, TRO. In the interim, the Court requested and was given additional briefing on the issues. At the preliminary-injunction hearing, held June 10, 2019, the Court concluded that Harrison's 24hour LVN care should be continued, and that it was necessary to order HHSC to conduct additional administrative hearings. The Court solicited proposed orders, which it received, along with objections filed by HHSC. Doc. 33, Pl.'s Proposed Order; Doc. 34, Def.'s Am. Objections. Having reviewed the extensive briefing filed by both sides, the Court memorializes the following findings.

         II. LEGAL STANDARD

         There are four prerequisites for the extraordinary relief of preliminary injunction. A court may grant such relief only when the movant establishes that:

(1) there is a substantial likelihood that the movant will prevail on the merits; (2) there is a substantial threat that irreparable harm will result if the injunction is not granted; (3) the threatened injury [to the movant] outweighs the threatened harm to the defendant; and (4) the granting of the preliminary injunction will not disserve the public interest.

Clark v. Prichard, 812 F.2d 991, 993 (5th Cir. 1987); Canal Auth. of the State of Florida v. Callaway, 489 F.2d 567, 572 (5th Cir. 1974) (en banc). The party seeking such relief must satisfy a cumulative burden of proving each of the four elements enumerated before a temporary restraining order or preliminary injunction can be granted. Mississippi Power & Light Co. v. United Gas Pipeline, 760 F.2d 618, 621 (5th Cir. 1985); Clark, 812 F.2d at 993. Otherwise stated, if a party fails to meet any of the four requirements, the court cannot grant the preliminary injunction.

         III. DISCUSSION

         To be entitled to a preliminary injunction, Harrison first must demonstrate a substantial likelihood of success on the merits. She must also demonstrate a substantial likelihood that abstention principles will not preclude relief. See Sierra Club v. City of San Antonio, 112 F.3d 789, 793 (5th Cir. 1997) (holding that “whether the [district] court properly entered a preliminarily injunction . . . turns on whether the [plaintiff] established a substantial likelihood of success on the merits in the face of the Burford abstention doctrine”); Lone Star Chapter Paralyzed Veterans of Am. v. City of San Antonio, 2010 WL 1780353, at *7 (W.D. Tex. May 3, 2010) (citing Sierra Club approvingly in the context of a TRO). If abstention is not warranted, the Court need only consider whether Harrison has shown a substantial likelihood of success on the merits of one of her claims. See Ramada Franchise Sys. Inc. v. Jacobcart, Inc., 2001 WL 540213, at *1 (N.D. Tex. May 17, 2001). Thus, the Court first addresses whether abstention under Burford is proper before proceeding to address the four preliminary-injunction elements.

         A. Burford Abstention Does Not Apply Here

         HHSC argues that the Court should abstain from hearing this case, citing Burford abstention, which takes its name from Burford v. Sun Oil Co., 319 U.S. 315 (1943). “The general thrust of Burford-type abstention can be well captured by saying that abstention is ordered in order to avoid needless conflict with the administration by a state of its own affairs[.]” § 4244 Needless Conflict with States-When Abstention Required, 17A Fed. Prac. & Proc. Juris. § 4244 (3d ed.). Under Burford, abstention is proper “where the issues ‘so clearly involve basic problems of [State] policy' that the federal courts should avoid entanglement.” Aransas Project v. Shaw, 775 F.3d 641, 649 (5th Cir. 2014) (quoting Burford, 319 U.S. at 332). Otherwise, “[t]he federal courts have a virtually unflagging obligation . . . to exercise the jurisdiction given them.” Id. (internal quotations omitted)

         The Supreme Court has explained:

Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are “difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar”; or (2) where the “exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.

New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350, 361 (1989). In considering Burford abstention, the Fifth Circuit weighs the following factors:

(1) whether the cause of action arises under federal or state law; (2) whether the case requires inquiry into unsettled issues of state law, or into local facts; (3) the importance of the state interest involved; (4) the state's need for a coherent policy in that area; and (5) the presence of a special state forum for judicial review.

Romano v. Greenstein, 721 F.3d 373, 380 (5th Cir. 2013) (finding Burford abstention did not apply in a § 1983 suit challenging a state agency's Medicaid benefits determination) (quoting Wilson v. Valley Elec. Membership Corp., 8 F.3d 311, 314 (5th Cir. 1993) (internal quotations omitted)). A court may exercise jurisdiction over a preliminary-injunction matter that ultimately fails to show a substantial likelihood of success on the merits without running afoul of Burford. See Jefferson Cmty Health Care Ctrs, Inc. v. Jefferson Parish Gov't, 849 F.3d 615, 622-23 (5th Cir. 2017) (affirming the district court's decision not to abstain under Burford although ultimately overturning the preliminary injunction).

         Plaintiff relies primarily on two cases to argue that the Burford abstention doctrine does not apply: Romano and Jefferson. Doc. 14, Pl.'s P.I. Br., 21-23. “In Romano, a Medicaid beneficiary sued the Louisiana Department of Health and Hospitals under § 1983, alleging that its decisions, policies, and procedures resulted in an illegal termination of her benefits.” Jefferson, 849 F.3d at 623 (summarizing Romano, 721 F.3d at 374-75). The Romano court rejected the agency's argument that Burford abstention was appropriate, stating that none of the five factors weighed in favor of abstention. Romano, 721 F.3d at 380. Likewise, when reviewing another case involving claims based on Medicaid, the Fifth Circuit rejected the defendant's Burford argument with the same reasoning as in Romano. Jefferson, 849 F.3d at 623. In Jefferson, the Fifth Circuit found that the defendant state agency had not overcome the presumption that the federal court should exercise jurisdiction. See Id. (enumerating the ways the defendant failed to explain how the five factors tilted toward abstention). Notably the Jefferson panel distinguished a case decided by the Second Circuit, which also dealt with the provision of home and community-based services for disabled individuals. Id. (citing Bethphage Lutheran Serv., Inc. v. Weicker, 965 F.2d 1239, 1240 (2d Cir. 1992)).

         In Bethphage, the Second Circuit affirmed abstention under Burford when a nonprofit providing services to persons with mental retardation and other disabilities alleged that the state proposed to fund its service contracts at a level inconsistent with the standards mandated by the Home and Community Based Services Waiver Act. Bethphage, 965 F.2d at 1240 (referring to 42 U.S.C. § 1396n(c)). But in that case, the plaintiff was asking the court to set rates and impose terms on the parties' contracts, a function that was normally given to a “complex state administrative process.” Id. at 1247. The Second Circuit also pointed out that “[i]t is true that Burford does not require abstention whenever there exists a complex state administrative process, or even in all cases where there is a potential for conflict with state regulatory law or policy from federal litigation, but only where there would be ‘undue' federal interference.” Id. The Fifth Circuit in Jefferson distinguished Bethphage in part by the fact that the Bethphage district court had found that setting payment rates “‘necessarily invokes the expertise and best judgment of the [state's] Commissioner of Mental Retardation and does not lend itself to consistent judicial interpretation.'” Jefferson, 849 F.3d at 623 (quoting Bethphage, 965 F.2d at 1243). As described below, the Court likewise finds Bethphage distinguishable.

         Meanwhile, HHSC does not provide any examples in which a court abstained under Burford when healthcare involving Medicaid funding was implicated. See, e.g., Doc. 27, Def.'s Br., 8-11. Indeed, in one other almost factually identical case from this district, the court did not abstain, although it does not appear that the Burford issue was raised at any point. See generally, Knowles v. Horn, 2010 WL 517591 (N.D. Tex. Feb. 10, 2010). HHSC argues generally that federal review of Harrison's case “would disrupt the efforts of the Commission to carry out its obligation[s]” and federal review “could produce a ...


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