SETTLEMENT AGREEMENT

I.

GENERAL PROVISIONS

A. This Agreement (the “Agreement”) is entered into between the United States (“United States”) and the State of North Carolina (the “State”) (hereinafter collectively “the Parties”).

B. This Agreement resolves the investigation conducted by the United States concerning alleged violations by the State of title II of the Americans with Disabilities Act of 1990 (“ADA”), 42 U.S.C. § 12131, et seq., as interpreted by the United States Supreme Court in Olmstead v. L.C., 527 U.S. 581 (1999), and Section 504 of the Rehabilitation Act of 1973 (“Rehab Act”), 29 U.S.C. § 794(a). The Agreement addresses the corrective measures set forth by the United States in its letter to the State dated July 28, 2011 (“Findings Letter”). This Agreement does not serve as an admission by the State that corrective measures are necessary to meet the requirements of the ADA, the Rehab Act, or the Olmstead decision, or that the State is not currently complying with the ADA or the Rehab Act. The State specifically does not agree that any citizen or resident of the State is entitled to housing or a housing subsidy under the United States or North Carolina Constitutions, the ADA, the Rehab Act, the Olmstead decision, or any other federal or State law or regulation.

C. This Agreement is intended to ensure the State will willingly meet the requirements of the ADA, the Rehab Act, and the Olmstead decision, which require that, to the extent that the State offers services to individuals with disabilities, such services shall be provided in the most integrated setting appropriate to meet their needs. Accordingly, through this Agreement, the Parties intend that the goals of community integration and self-determination will be achieved.

D. Since the United States issued the Findings Letter, the State has cooperated fully with the United States in reviewing the findings and working with the United States to resolve the findings, even though the State disputes many of the findings and conclusions. The Parties agree that it is in their mutual interest to avoid litigation.

E. Nothing in this Agreement shall be construed as an acknowledgment, an admission, or evidence of liability of the State under the ADA, the Rehab Act, the holding in Olmstead, the Constitution or any federal or State law, and this Agreement may not be used as evidence of liability in this or any other civil or criminal proceeding.

F. The signatures below of officials representing the United States and the State signify that these parties have given their final approval to this Agreement. Each

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Party to this Agreement represents and warrants that the person who has signed this Agreement on behalf of his or her entity is duly authorized to enter into this Agreement and to bind that Party to the terms and conditions of this Agreement.
G. This Agreement is binding upon the Parties, by and through their officials, agents, employees, and successors for the term of this Agreement. If the State contracts with an outside provider for any of the services provided in this Agreement, the Agreement shall be binding on all contracted parties, including agents and assigns. The State shall ensure that all contracted parties and agents take all actions necessary for the State to comply with the provisions of this Agreement.
H. No person or entity is intended to be a third party beneficiary of the provisions of this Agreement for purposes of any civil, criminal, or administrative action, and, accordingly, no person or entity may assert any claim or right as a beneficiary or protected class under this Agreement in any civil, criminal, or administrative action. Neither third parties, nor the Court, shall have the ability to modify the terms set out in this Agreement without consent of the Parties, subject to the enforcement provisions set forth in Sections V(F) and (G), below.
I. This Agreement and any documents incorporated by reference constitute the entire integrated Agreement of the Parties. No prior contemporaneous communications, oral or written, or prior drafts shall be relevant or admissible for purposes of determining the meaning of any provisions herein in any litigation or any other proceeding. Any amendment to this Agreement shall be in writing and signed by both Parties.
J. This Agreement may be executed in counterparts, each of which shall be deemed an original, and the counterparts shall together constitute one and the same Agreement, notwithstanding that each Party is not a signatory to the original or the same counterpart. All references to signature or execution of the Agreement shall be calculated from the date on which the last Party executed the Agreement.
K. The State, while empowered to enter into and implement this Agreement, does not have the legal authority to bind the North Carolina General Assembly, which has the authority under the North Carolina Constitution and laws to appropriate funds for, and amend laws pertaining to, the State’s system of services for people with mental illness. The State agrees to seek funding necessary to implement and complete the terms of this Agreement. In the event the State fails to attain necessary appropriations to implement and complete the terms of this Agreement this year or in a future fiscal year, this Agreement shall become null and void and the United States has the right to revive any claims otherwise barred by operation of this Agreement. Any question of whether the amount of the appropriations is adequate to implement and complete the terms of the Settlement Agreement is solely for determination by the State, and the State’s determination may not be challenged by the United States in any forum, unless the United States can show it was not made in good faith.
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L. During the pendency of this Agreement, the United States is barred from bringing an action against the State of North Carolina under the ADA or the Rehab Act for any claim or allegation set forth in the Findings Letter.
M. The Parties represent and acknowledge that this Agreement is the result of extensive, thorough and good faith negotiations. The Parties further represent and acknowledge that the terms of this Agreement have been voluntarily accepted, after consultation with counsel, for the purpose of making a full and final compromise and settlement of any and all claims or allegations set forth in the Findings Letter.
N. The United States and the State will bear the cost of their own fees and expenses incurred in connection with this Agreement.
O. This Agreement shall be interpreted in accordance with federal law and the laws of the State of North Carolina. The venue for all legal actions concerning this Agreement shall be in the United States District Court for the Eastern District of North Carolina, Western Division (the “Court”).

II.

DEFINITIONS

A. “Housing Slot(s)” are defined as State or federal housing vouchers and/or rental subsidies for community-based supported housing. Each Housing Slot includes a package of tenancy support, transition support and rental support.

B. The term “individual” shall mean the individual, or, in situations where a guardian of the person or general guardian has been appointed because the individual has been declared legally incompetent, the individual and his or her guardian. Guardians shall seek to preserve for the individual who has been declared legally incompetent the opportunity to exercise those rights that are within his or her comprehension and judgment, allowing for the possibility of error to the same degree as is allowed to persons who have not been declared legally incompetent, in accordance with N.C. Gen. Stat. § 35A-1201(a)(5). Guardians shall permit individuals who have been declared legally incompetent to participate as fully as possible in treatment discussions and discharge planning, to the maximum extent of the individual’s capabilities, in accordance with N.C. Gen. Stat. § 35A1201(a)(5). Any decisions made by the guardian about where the individual will live should reflect the individual’s preferences, to the extent possible, in accordance with guidance issued by the Division of Aging and Adult Services. The State shall conduct in-reach and education with county Departments of Social Services and Clerks of Court to ensure that guardians of individuals with Serious Mental Illness and Serious and Persistent Mental Illness, as defined below, who have been declared legally incompetent understand these requirements.

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C. An individual with “Serious Mental Illness” (“SMI”) is defined, consistent with North Carolina’s Local Management Entity (“LME”) Operations Manual, as an individual who is 18 years of age or older with a mental illness or disorder (but not a primary diagnosis of Alzheimer’s disease or dementia) that is described in the Diagnostic and Statistical Manual of Mental Disorders, 4th Edition, that impairs or impedes functioning in one or more major areas of living and is unlikely to improve without treatment, services and/or supports.

D. An individual with “Serious and Persistent Mental Illness” (“SPMI”) is defined, consistent with North Carolina’s LME Operations Manual, as a person who is 18 years of age or older:

1. with a mental illness or disorder (but not a primary diagnosis of Alzheimer’s disease or dementia or acquired brain injury) so severe and chronic that it prevents or erodes development of functional capacities in primary aspects of daily life such as personal hygiene and self care, decision-making, interpersonal relationships, social transactions, learning and recreational activities; or

2. who is receiving Supplemental Security Income (“SSI”) or Social Security Disability Income (“SSDI”) due to mental illness.

E. SPMI and SMI specifically include individuals who otherwise satisfy the relevant criteria and who have a co-occurring condition, such as a substance abuse disorder, developmental disability, acquired brain injury or other condition.

F. “Tenancy Rights” are defined as rights created by a landlord/tenant relationship, whether through a direct lease or a sublease.

III.

SUBSTANTIVE PROVISIONS

A. The State agrees to develop and implement effective measures to prevent inappropriate institutionalization and to provide adequate and appropriate public services and supports identified through person centered planning in the most integrated setting appropriate to meet the needs of individuals with SMI, who are in or at risk of entry to an adult care home, pursuant to the details and timelines set forth below.

B. COMMUNITY-BASED SUPPORTED HOUSING SLOTS

1. The State will develop and implement measures to provide individuals outlined in Section III(B)(2)(a)-(e) access to community-based supported housing. Nothing in this Agreement will require the State to forgo federal funding or federal program participation, for housing that meets all the criteria in Section III(B)(7), to provide community placements for individuals pursuant to this Agreement.

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2. Priority for the receipt of Housing Slots will be given to the following individuals:
a. Individuals with SMI who reside in an adult care home determined by the State to be an Institution for Mental Disease (“IMD”);
b. Individuals with SPMI who are residing in adult care homes licensed for at least 50 beds and in which 25% or more of the resident population has a mental illness;
c. Individuals with SPMI who are residing in adult care homes licensed for between 20 and 49 beds and in which 40% or more of the resident population has a mental illness;
d. Individuals with SPMI who are or will be discharged from a State psychiatric hospital and who are homeless or have unstable housing; and
e. Individuals diverted from entry into adult care homes pursuant to the preadmission screening and diversion provisions of Section III(F) of this Agreement.
3. The State will provide access to 3,000 Housing Slots in accordance with the following schedule:
a. By July 1, 2013 the State will provide Housing Slots to at least 100 and up to 300 individuals.
b. By July 1, 2014 the State will provide Housing Slots to at least 150 additional individuals.
c. By July 1, 2015 the State will provide Housing Slots to at least 708 individuals.
d. By July 1, 2016 the State will provide Housing Slots to at least 1,166 individuals.
e. By July 1, 2017 the State will provide Housing Slots to at least 1,624 individuals.
f. By July 1, 2018 the State will provide Housing Slots to at least 2,082 individuals.
g. By July 1, 2019 the State will provide Housing Slots to at least 2,541 individuals.
h. By July 1, 2020 the State will provide Housing Slots to at least 3,000 individuals.
4. The State shall develop rules to establish processes and procedures for
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determining eligibility for the Housing Slots consistent with this Agreement. Until such time, Housing Slots will be allocated on a first come, first served basis based on geographic housing availability and individual preference in accordance with the priorities set forth in III(B)(2), above. Housing Slots will only be offered to individuals who are Medicaid eligible, Special Assistance eligible in an adult care home, would be Special Assistance eligible in an adult care home though no longer residing in an adult care home, or have a gross income equal to or less than 100% of the Federal Poverty Guidelines for a single individual. The State may elect to revise the criteria in this Paragraph subject to the approval of the Independent Reviewer.
5. Over the course of this Agreement, two thousand of the above Housing Slots will be provided to individuals described in Section III(B)(2)(a), (b), and (c) of this Agreement, and one thousand of the Housing Slots will be provided to individuals described in Section III(B)(2)(d) and (e) of this Agreement. The State will determine each year the proportionate allocation of slots, giving priority to individuals described in Section III(B)(2)(a), (b), and (c).
6. The State currently has ongoing programs for housing assistance that will continue in effect. The State may utilize those programs to fulfill its obligations under this Agreement to provide Housing Slots to individuals, so long as the Housing Slots provided using those ongoing programs meets all the criteria in III(B)(7)(a)-(g).
7. Housing Slots will be provided for individuals to live in settings that meet the following criteria:
a. They are permanent housing with Tenancy Rights;
b. They include tenancy support services that enable residents to attain and maintain integrated, affordable housing. Tenancy support services offered to people living in supported housing are flexible and are available as needed and desired, but are not mandated as a condition of tenancy;
c. They enable individuals with disabilities to interact with individuals without disabilities to the fullest extent possible;
d. They do not limit individuals’ ability to access community activities at times, frequencies and with persons of their choosing;
e. They are scattered site housing, where no more than 20% of the units in any development are occupied by individuals with a disability known to the State, except as set forth below:
i. Up to 250 Housing Slots may be in disability-neutral developments, that have up to 16 units, where more than 20%
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of the units are occupied by individuals with a disability known to the State;
f. They afford individuals choice in their daily life activities, such as eating, bathing, sleeping, visiting and other typical daily activities;
g. The priority is for single-occupancy housing.
i. If single-occupancy housing is not available when a person is ready to transition to community-based housing, he or she can choose to either live with a roommate, or wait for singleoccupancy housing. If an individual chooses to live with a roommate, after being fully informed about his or her options as described in Section III(B)(9) below, each roommate must have his or her own bedroom and the individual must have the opportunity to choose his or her roommate. If an individual chooses to wait for single-occupancy housing or housing with a particular roommate, after being fully informed about his or her options as described in Section III(B)(9), he or she will receive the in-reach and discharge planning services described in Section III(E), and will remain eligible to receive a Housing Slot in single-occupancy housing or with a particular roommate once one is available.
ii. Single-family housing is not preferred; however, Housing Slots may be in single-family houses, if the individual, after being fully informed about his or her options as described in Section III(B)(9), affirmatively seeks to rent a house or room in a house. Additionally, such single family houses must meet all other criteria listed in Section III(B)(7). Housing Slots may not be offered in a home in which the owner is the service provider unless the home has no more than two bedrooms, and the transition team has obtained assurances that the individual is offered choice of service provider and that his or her right to reside in the home is not contingent on the service provider the individual chooses. The State will also make efforts to minimize use of homes in which the owner is the service provider when located in an area where there are other available housing providers. If an individual chooses to live in a single-family house because no other housing is available, that individual will receive the in-reach services described in Section III(E) and will remain eligible to receive a Housing Slot in single-occupancy housing once one is available.
8. Housing Slots made available under this Agreement cannot be used in adult care homes, family care homes, group homes, nursing facilities, boarding homes, assisted living residences, supervised living settings, or any setting required to be licensed.
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9. Individuals will be free to choose other appropriate and available housing options, after being fully informed of all options available. Being fully informed means that an individual has been provided information about the option of transitioning to supported housing, its benefits, and the array of services and supports available as set out in this Agreement. However, housing that does not meet the criteria set forth in Section III(B)(7) will not be considered a Housing Slot for purposes of this Agreement. If an individual chooses a housing option that does not meet the criteria of Section III(B)(7) because a Housing Slot is not available, that individual will receive the inreach services and discharge planning services described in Section III(E) and will remain eligible to receive a Housing Slot as soon as one is available.
C. COMMUNITY-BASED MENTAL HEALTH SERVICES
1. The State shall provide access to the array and intensity of services and supports necessary to enable individuals with SMI in or at risk of entry in adult care homes to successfully transition to and live in community-based settings. The State shall provide each individual receiving a Housing Slot under this Agreement with access to services for which that individual is eligible that are covered under the North Carolina State Plan for Medical Assistance, the Centers for Medicare and Medicaid Services (“CMS”) approved Medicaid 1915(b)/(c) waiver, or the State-funded service array.
2. The State shall also provide individuals with SMI in or at risk of entry to adult care homes who do not receive a Housing Slot under this Agreement with access to services for which that individual is eligible that are covered under the North Carolina State Plan for Medical Assistance, the CMS-approved Medicaid 1915(b)/(c) waiver, or the State funded service array. Services provided with State funds to non-Medicaid eligible individuals who do not receive a Housing Slot shall be subject to availability of funds and in accordance with State laws and regulations regarding access to those services.
3. The services and supports referenced in Sections III(C)(1) and (2), above, shall:
a. be evidence-based, recovery-focused and community-based;
b. be flexible and individualized to meet the needs of each individual;
c. help individuals to increase their ability to recognize and deal with situations that may otherwise result in crises; and
d. increase and strengthen individuals’ networks of community and natural supports, as well as their use of these supports for crisis prevention and intervention.
4. The State will rely on the following community mental health services to
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satisfy the requirements of this Agreement: Assertive Community Treatment (“ACT”) teams, Community Support Teams (“CST”), case management services, peer support services, psychosocial rehabilitation services, and any other services as set forth in Sections III(C)(1) and (2) of this Agreement.
5. All ACT teams shall operate to fidelity to either, at the State’s determination, the Dartmouth Assertive Community Treatment (“DACT”) model or the Tool for Measurement of Assertive Community Treatment (“TMACT”). All providers of community mental health services shall adhere to requirements of the applicable service definition.
6. A person-centered service plan shall be developed for each individual, which will be implemented by a qualified professional who is clinically responsible for ensuring that all elements and components of the plan are arranged for the recipient in a coordinated manner. Individualized service plans will include psychiatric advance directives and/or crisis plans so that such measures can be incorporated into the response to any behavioral health crisis.
7. The State is in the process of implementing capitated prepaid inpatient health plans (“PIHPs”) as defined in 42 C.F.R. Part 438 for Medicaid-reimbursable mental health, developmental disabilities and substance abuse services pursuant to a 1915(b)/(c) waiver under the Social Security Act. These plans are currently operated by LMEs. The State will monitor services and service gaps and, through contracts with PIHP and/or LMEs, will ensure that the number and quality of community mental health service providers is sufficient to allow for successful transition of individuals with SMI, who are in or at risk of entry to an adult care homes, to supported housing, and for their long-term stability and success as tenants in supported housing. The State will hold the PIHP and/or LMEs accountable for providing access to community-based mental health services in accordance with 42 C.F.R. Part 438, but the State remains ultimately responsible for fulfilling its obligations under the Agreement.
8. Each PIHP and/or LME will provide publicity, materials and training about the crisis hotline, services, and the availability of information for individuals with limited English proficiency, to every beneficiary consistent with federal requirements at 42 C.F.R. § 438.10 as well as to all behavioral health providers, including hospitals and community providers, police departments, homeless shelters, and department of corrections facilities. Peer supports, enhanced ACT, including employment support from employment specialists on ACT teams for individuals with SMI, Transition Year Stability Resources, Limited English Proficiency requirements, crisis hotlines and treatment planning will be implemented in coordination with the current PIHP implementation schedule. Finally, each PIHP and/or LME will comply with federal requirements related to accessibility of services provided under the Medicaid State Plan that they are contractually required to provide. The State will remain accountable for implementing and fulfilling the terms of this
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Agreement.
9. Assertive Community Treatment Team Services: ACT teams will be expanded according to the below timelines, contingent upon timely CMS approval of a State Plan Amendment (“SPA”) requiring all ACT teams to comply with a nationally recognized fidelity model (e.g., DACT or TMACT), if one is necessary. By July 1, 2013, all individuals receiving ACT services will receive services from employment specialists on their ACT teams. If it is necessary, the State will initiate the process of submitting a SPA within 45 days after the Agreement is signed.
a. By July 1, 2013, all ACT teams in the State will operate in accordance with a nationally recognized fidelity model and the State will increase the number of individuals served by ACT teams to 33 teams serving 3,225 individuals at any one time.
b. By July 1, 2014, the State will increase the number of individuals served by ACT teams to 34 teams serving 3,467 individuals at any one time, using the DACT or TMACT model.
c. By July 1, 2015, the State will increase the number of individuals served by ACT teams to 37 teams serving 3,727 individuals at any one time, using the DACT or TMACT model.
d. By July 1, 2016, the State will increase the number of individuals served by ACT teams to 40 teams serving 4,006 individuals at any one time, using the DACT or TMACT model.
e. By July 1, 2017, the State will increase the number of individuals served by ACT teams to 43 teams serving 4,307 individuals at any one time, using the DACT or TMACT model.
f. By July 1, 2018, the State will increase the number of individuals served by ACT teams to 46 teams serving 4,630 individuals at any one time, using the DACT or TMACT model.
g. By July 1, 2019, the State will increase the number of individuals served by ACT teams to 50 teams serving 5,000 individuals at any one time, using the DACT or TMACT model.
10. Crisis Services
a. The State shall require that each PIHP and/or LME develops a crisis service system that includes crisis services sufficient to offer timely and accessible services and supports to individuals with SMI experiencing a behavioral health crisis. The services will include mobile crisis teams, walk-in crisis clinics, community hospital beds, and 24-hour-per-day/7-
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day-per-week crisis telephone lines.
b. The State will monitor crisis services and identify service gaps. The State will develop and implement effective measures to address any gaps or weaknesses identified.
c. Crisis services shall be provided in the least restrictive setting (including at the individual’s residence whenever practicable), consistent with an already developed individual community-based crisis plan or in a manner that develops such a plan as a result of a crisis situation, and in a manner that prevents unnecessary hospitalization, incarceration or institutionalization.
D. SUPPORTED EMPLOYMENT
1. The State will develop and implement measures to provide Supported Employment Services to individuals with SMI, who are in or at risk of entry to an adult care home, that meet their individualized needs. Supported Employment Services are defined as services that will assist individuals in preparing for, identifying, and maintaining integrated, paid, competitive employment. Services offered may include job coaching, transportation, assistive technology assistance, specialized job training, and individuallytailored supervision.
2. Supported Employment Services will be provided with fidelity to an evidencebased supported employment model for supporting people in their pursuit and maintenance of integrated, paid, competitive work opportunities. Supported Employment Services will be assessed by an established fidelity scale such as the scale included in the Substance Abuse and Mental Health Services Administration supported employment toolkit.
3. By July 1, 2013, the State will provide Supported Employment Services to a total of 100 individuals; by July 2, 2014, the State will provide Supported Employment Services to a total of 250 individuals; by July 1, 2015, the State will provide Supported Employment Services to a total of 708 individuals; by July 1, 2016 , the State will provide Supported Employment Services to a total of 1,166 individuals; by July 1, 2017, the State will provide Supported Employment Services to a total of 1,624 individuals; by July 1, 2018, the State will provide Supported Employment Services to a total of 2,082 individuals; and by July 1, 2019, the State will provide Supported Employment Services to a total of 2,500 individuals.
E. DISCHARGE AND TRANSITION PROCESS
1. The State will implement procedures for ensuring that individuals with SMI in, or later admitted to, an adult care home or State psychiatric hospital will be accurately and fully informed about all community-based options, including
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the option of transitioning to supported housing, its benefits, the array of services and supports available to those in supported housing, and the rental subsidy and other assistance they will receive while in supported housing.
2. In-Reach: The State will provide or arrange for frequent education efforts targeted to individuals in adult care homes and State psychiatric hospitals. The State will initially target in-reach to adult care homes that are determined to be IMDs. The State may temporarily suspend in-reach efforts during any time period when the interest list for Housing Slots exceeds twice the number of Housing Slots required to be filled in the current and subsequent fiscal year. The in-reach will include providing information about the benefits of supported housing; facilitating visits in such settings; and offering opportunities to meet with other individuals with disabilities who are living, working and receiving services in integrated settings, with their families, and with community providers. The in-reach will be provided by individuals who are knowledgeable about community services and supports, including supported housing, and will not be provided by operators of adult care homes. The State will provide in-reach to adult care home residents on a regular basis, but not less than quarterly.
3. The State will provide each individual with SMI in, or later admitted to, an adult care home, or State psychiatric hospital operated by the Department of Health and Human Services, with effective discharge planning and a written discharge plan. The goal of discharge planning is to assist the individual in developing a plan to achieve outcomes that promote the individual’s growth, well being and independence, based on the individual’s strengths, needs, goals and preferences, in the most integrated setting appropriate in all domains of the individual’s life (including community living, activities, employment, education, recreation, healthcare and relationships).
4. Discharge planning will be conducted by transition teams that include:
a. persons knowledgeable about resources, supports, services and opportunities available in the community, including community mental health service providers;
b. professionals with subject matter expertise about accessing needed community mental health care, and for those with complex health care needs, accessing additional needed community health care, therapeutic services and other necessary services and supports to ensure a safe and successful transition to community living;
c. persons who have the linguistic and cultural competence to serve the individual;
d. peer specialists when available; and
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e. with the consent of the individual, persons whose involvement is relevant to identifying the strengths, needs, preferences, capabilities, and interests of the individual and to devising ways to meet them in an integrated community setting.
5. For individuals in State psychiatric facilities, the PIHP and/or LME transition coordinator will work in concert with the facility team. The PIHP and/or LME transition coordinator will serve as the lead contact with the individual leading up to transition from an adult care home or State psychiatric hospital, including during the transition team meetings and while administering the required transition process.
6. Each individual shall be given the opportunity to participate as fully as possible in his or her treatment and discharge planning.
7. Discharge planning:
a. begins at admission;
a. is based on the principle that with sufficient services and supports, people with SMI or SPMI can live in an integrated community setting;
b. assists the individual in developing an effective written plan to enable the individual to live independently in an integrated community setting;
c. is developed and implemented through a person-centered planning process in which the individual has a primary role and is based on the principle of self-determination.
8. The discharge planning process will result in a written discharge plan that:
a. identifies the individual’s strengths, preferences, needs, and desired outcomes;
b. identifies the specific supports and services that build on the individual’s strengths and preferences to meet the individual’s needs and achieve desired outcomes, regardless of whether those services and supports are currently available;
c. includes a list of specific providers that can provide the identified supports and services that build on the individual’s strengths and preferences to meet the individual’s needs and achieve desired outcomes;
d. documents any barriers preventing the individual from transitioning to a more integrated setting and sets forth a plan for addressing those barriers;
i. Such barriers shall not include the individual’s disability or the severity of the disability.
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ii. For individuals with a history of re-admission or crises, the factors that led to re-admission or crises shall be identified and addressed.
e. sets forth the date that transition can occur, as well as the timeframes for completion of all needed steps to effect the transition; and
f. prompts the development and implementation of needed actions to occur before, during, and after the transition.
9. The North Carolina Department of Health and Human Services (“DHHS”) will create a transition team at the State level to assist local transition teams in addressing and overcoming identified barriers preventing individuals from transitioning to an integrated setting. The members of the DHHS transition team will include individuals with experience and expertise in how to successfully resolve problems that arise during discharge planning and implementation of discharge plans.
10. The DHHS transition team will ensure that transition teams (both State hospital facility staff and leadership and PIHP and/or LME Transition Coordinators) are adequately trained. It will oversee the transition teams to ensure that they effectively inform individuals of community opportunities. The training will include training on person-centered planning. The DHHS transition team will assist local transition teams in addressing identified barriers to discharge for individuals whose teams recommend that an individual remain in a State hospital or adult care home, or recommend discharge to a less integrated setting (e.g., congregate care setting, family care home, group home, or nursing facility). The DHHS transition team will also assist local transition teams in addressing identified barriers to discharge for individuals whose teams cannot agree on a plan, are having difficulty implementing a plan, or need assistance in developing a plan to meet an individual’s needs.
11. If the individual chooses to remain in an adult care home or State psychiatric hospital, the transition team shall identify barriers to placement in a more integrated setting, describe steps to address the barriers and attempt to address the barriers (including housing). The State shall document the steps taken to ensure that the decision is an informed one and will regularly educate the individual about the various community options open to the individual, utilizing methods and timetables described in Section III(E)(2).
12. The State will re-assess individuals with SPMI who remain in adult care homes or State psychiatric hospitals for discharge to an integrated community setting on a quarterly basis, or more frequently upon request; the State will update the written discharge plans as needed based on new information and/or developments.
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13. Implementation of the In-Reach, Discharge and Transition Process
a. Within 90 days of signing this Agreement, the State will work with PIHP and/or LMEs to develop requirements and materials for in-reach and transition coordinators and teams.
b. Within 180 days after the Agreement is signed, PIHP and/or LMEs will begin to conduct ongoing in-reach to residents in adult care homes and State psychiatric hospitals, and residents will be assigned to a transition team, consistent with Section III(E)(2).
c. Transition and discharge planning for an individual will be completed within 90 days of assignment to a transition team. Discharge of an individual will occur within 90 days of assignment to a transition team provided that a Housing Slot, as described in Sections II(A) and III(B), is then available. If a Housing Slot is not available for an individual within 90 days of assignment to the transition team, the transition team will maintain contact and work with the individual on an ongoing basis until the individual transitions to community-based housing as described in Section III(B)(7).
d. The State will undertake the following procedures with respect to individuals with SMI in an adult care home that has received a notice that it is at risk of a determination that it is an IMD, in addition to any other applicable requirements under this Agreement:
i. Within one business day after any adult care home is notified by the State that it is at risk of being determined to be an IMD, the State will also notify the Independent Reviewer, Disability Rights North Carolina, and the applicable LME or PIHP and county Departments of Social Services of the at-risk determination.
ii. The LME and/or PIHP will connect individuals with SMI who wish to transition from the at-risk adult care home to another appropriate living situation. The LME and/or PIHP will also link individuals with SMI to appropriate mental health services. For individuals with SMI who are enrolled in a PIHP, the PIHP will implement care coordination activities to address the needs of individuals who wish to transition from the at-risk adult care home to another appropriate living situation.
iii. The State will use best efforts to track the location of individuals who move out of an adult care home on or after the date of the atrisk notice. If the adult care home initiates a discharge and the destination is unknown or inappropriate as set forth in N.C. Session Law 2011-272, a discharge team will be convened.
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iv. Upon implementation of this Agreement, any individual identified by the efforts described in Section III(E)(13)(d)(iii) who has moved from an adult care home determined to be at risk of an IMD determination shall be offered in-reach, person-centered planning, discharge and transition planning, community-based services, and housing in accordance with this Agreement. Such individuals shall be considered part of the priority group established by Section III(B)(2)(a).
14. The State and/or the LME and/or the PIHP shall monitor adult care homes for compliance with the Adult Care Home Residents’ Bill of Rights requirements contained in Chapter 131D of the North Carolina General Statutes and 42 C.F.R. § 438.100, including the right to be treated with respect, consideration, dignity, and full recognition of his or her individuality and right to privacy; to associate and communicate privately and without restriction with people and groups of his or her own choice; to be encouraged to exercise his or her rights as a resident and a citizen; to be permitted to make complaints and suggestions without fear of coercion or retaliation; to maximum flexibility to exercise choices; to receive information on available treatment options and alternatives; and to participate in decisions regarding his or her health care. In accordance with 42 C.F.R. § 438.100, the State will ensure that each individual is free to exercise his or her rights, and that the exercise of rights does not adversely affect the way the PIHP, LME, providers, or State agencies treat the enrollee.
F. PRE-ADMISSION SCREENING AND DIVERSION
1. Beginning January 1, 2013, the State will refine and implement tools and training to ensure that when any individual is being considered for admission to an adult care home, the State shall arrange for a determination, by an independent screener, of whether the individual has SMI. The State shall connect any individual with SMI to the appropriate PIHP and/or LME for a prompt determination of eligibility for mental health services.
2. Once an individual is determined to be eligible for mental health services, the State and/or the PIHP and/or LME will work with the individual to develop and implement a community integration plan. The individual shall be given the opportunity to participate as fully as possible in this process. The development and implementation of the community integration plan shall be consistent with the discharge planning provisions in Section III(E) of this Agreement.
3. If the individual, after being fully informed of the available alternatives to entry into an adult care home, chooses to transition into an adult care home, the State will document the steps taken to show that the decision is an informed one. The State will set forth and implement individualized strategies
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to address concerns and objections to placement in an integrated setting, and will monitor individuals choosing to reside in adult care homes and continue to provide in-reach and transition planning services.
G. QUALITY ASSURANCE & PERFORMANCE IMPROVEMENT
1. The State will develop and implement a quality assurance and performance improvement monitoring system to ensure that community-based placements and services are developed in accordance with this Agreement, and that the individuals who receive services or Housing Slots pursuant to this Agreement are provided with the services and supports they need for their health, safety, and welfare. The goal of the State’s system will be that all mental health and other services and supports funded by the State are of good quality and are sufficient to help individuals achieve increased independence, gain greater integration into the community, obtain and maintain stable housing, avoid harms, and decrease the incidence of hospital contacts and institutionalization.
2. A Transition Oversight Committee will be created at DHHS to monitor monthly progress of implementation of this Agreement, and will be chaired by the DHHS Designee (Deputy Secretary). The Division of Medical Assistance, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, Division of State Operated Healthcare Facilities, State Hospital Team Lead, State Hospital Chief Executive Officers, Money Follows the Person Program, and PIHPs and/or LMEs will be responsible for reporting on the progress being made. PIHPs and/or LMEs will be responsible for reporting on discharge-related measures, including, but not limited to: housing vacancies; discharge planning and transition process; referral process and subsequent admissions; time between application for services to discharge destination; and actual admission date to community-based settings.
3. DHHS agrees to take the following steps related to Quality Assurance and Performance Improvement:
a. Develop and phase in protocols, data collection instruments and database enhancements for on-going monitoring and evaluation;
b. Develop and implement uniform application for institutional census tracking;
c. Develop and implement standard report to monitor institutional patients length of stay, readmissions and community tenure;
d. Develop and implement dashboard for daily decision support;
e. Develop and implement centralized housing data system to inform discharge planning;
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f. Develop and utilize template for published, annual progress reports;
g. Develop and utilize monitoring and evaluation protocols and data collection regarding personal outcomes measures, which include the following:
i. number of incidents of harm
ii. number of repeat admissions to State hospitals, adult care homes, or inpatient psychiatric facility
iii. use of crisis beds and community hospital admissions
iv. repeat emergency room visits
v. time spent in congregate day programming
vi. number of people employed, attending school, or engaged in community life; and
vii. maintenance of a chosen living arrangement.
4. Quality Assurance System: The State will regularly collect, aggregate and analyze data related to in-reach and person-centered discharge and community placement efforts, including but not limited to information related to both successful and unsuccessful placements, as well as the problems or barriers to placing and/or keeping individuals in the most integrated setting. The State will review this information on a semi-annual basis and develop and implement measures to overcome the problems and barriers identified.
5. Quality of Life Surveys: The State will implement three quality of life surveys to be completed by individuals with SMI who are transitioning out of an adult care home or State psychiatric hospital. The surveys will be implemented (1) prior to transitioning out of the facility; (2) eleven months after transitioning out of the facility; and (3) twenty-four months after transitioning out of the facility. Participation in the survey is completely voluntary and does not impact the participant’s ability to transition.
6. External Quality Review (“EQR”) Program: As part of the quality assurance system, the State shall complete an annual PIHP and/or LME EQR process by which an EQR Organization, through a specific agreement with the State, will review PIHP and/or LME policies and processes for the State’s mental health service system. EQR will include extensive review of PIHP and/or LME documentation and interviews with PIHP and/or LME staff. Interviews with stakeholders and confirmation of data will also be initiated. The reviews will focus on monitoring services, reviewing grievances and appeals received, reviewing medical charts as needed, and any individual provider follow up. EQR will provide monitoring information related to:
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a. Marketing
b. Program integrity
c. Information to beneficiaries
d. Grievances
e. Timely access to services
f. Primary care provider/specialist capacity
g. Coordination/continuity of care
h. Coverage/authorization
i. Provider selection
j. Quality of care
7. Use of Data: Each year the State will aggregate and analyze the data collected by the State, PIHPs and/or LMEs, and the EQR Organization on the outcomes of this Agreement. If data collected shows that the Agreement’s intended outcomes of increased integration, stable integrated housing, and decreased hospitalization and institutionalization are not occurring, the State will evaluate why the goals are not being met and assess whether action is needed to better meet these goals.
8. Reporting
a. The State will publish, on the DHHS website, an annual report identifying the number of people served in each type of setting and service described in this Agreement.
b. In the annual report, the State will detail the quality of services and supports provided by the State and its community providers using data collected through the quality assurance and performance improvement system, the contracting process, the EQRs, and the outcome data described above.

IV.

INDEPENDENT REVIEWER

A. The Parties have selected Marylou Sudders as an expert to monitor the State’s implementation of this Agreement (the “Reviewer”). The Reviewer shall have full authority to independently assess, review, and report annually on the State’s implementation of and compliance with the provisions of this Agreement. In the event that the Reviewer resigns or the Parties agree to replace the Reviewer, the

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Parties shall meet and confer within 30 days of the notice of resignation or the Parties’ agreement to select a replacement Reviewer. If they are unable to agree on a replacement Reviewer, the Parties shall each, within 21 days of the meet and confer, nominate two individuals with expertise in the provision of communitybased services to persons with mental illness. The Court will select the replacement Reviewer from among those nominated by the Parties.
B. The annual budget for the Reviewer shall be $250,000.00. All reasonable fees, costs and expenses of the Reviewer, including the cost of any consultants or staff hired by the Reviewer, shall be borne by the State up to the amount of this annual budget. The Reviewer shall provide a monthly accounting justifying the fees, costs and expenses. In no event will the State reimburse the Reviewer for any fees, costs or expenses that exceed the amount of this annual budget. The State shall be the final arbiter of what costs and expenses are considered reasonable.
C. Within the budget described in Section IV(B), above, the Reviewer may hire staff and consultants, in consultation with and subject to reasonable objections by the State, to assist in his or her evaluations of the State’s compliance with this Agreement. The Reviewer and any hired staff or consultants are neither agents nor business associates of the State, the United States, or the Court.
D. The Reviewer will confer regularly and informally with the Parties on matters related to implementation efforts and compliance.
E. The Reviewer, and any hired staff or consultants, may:
1. Have ex parte communications at any time with the Parties, including counsel for the Parties, and employees, agents, contractors and all others working for or on behalf of the State or the United States to implement the terms of this Agreement.
2. Request meetings with either or both Parties. The purpose of these meetings shall include, among other things, prioritizing areas for the Reviewer to review, scheduling visits, discussing areas of concern, and discussing areas in which technical assistance may be appropriate.
3. Speak with stakeholders with such stakeholders’ consent, on a confidential basis or otherwise, at the Reviewer’s discretion.
4. Speak with anyone else the Reviewer and any staff/consultants deem necessary for completing the compliance evaluations and reports required by this Agreement. However, the State has no obligation to require any individual who is not a State employee or contractor to speak with the Reviewer.
5. Provide technical assistance to the State regarding any issue related to compliance with this Agreement.
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6. Attempt to resolve any dispute arising out of a Party’s position with regard to the construction or implementation of this Agreement.
7. Testify in this case regarding any matter relating to the implementation, enforcement, or dissolution of the Agreement, including the Reviewer’s observations, findings and recommendations in this matter. The Reviewer may not voluntarily testify as an expert witness against the State in any other administrative or civil proceeding of whatever nature brought before any federal or state court or other administrative or judicial tribunal. This limitation shall be a required term in the State’s Contract with the Reviewer, which must also meet the State’s Department of Administration, Division of Purchase and Contract Agency Purchasing Manual requirements, N.C. Administrative Code Title 1 Chapter 5, Title 4 Chapter 21 (ITS Home Page), and Articles 3 and 3C of Chapter 143 and Article 3D of Chapter 147 of the North Carolina General Statutes.
F. Throughout the pendency of this Agreement, the Reviewer will pursue a problemsolving approach so that disagreements can be minimized and resolved amicably and the energies of the Parties can be focused on the State’s compliance with the provisions of the Agreement.
G. The Reviewer shall comply with all federal and State patient rights and confidentiality laws and regulations, including, but not limited to: N.C. Gen. Stat. § 122C-52, N.C. Gen. Stat. § 108A-80, the Adult Care Home Residents’ Bill of Rights requirements contained in Chapter 131D of the North Carolina General Statutes, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the Standard for Privacy of Individually Identifiable Health Information and Health Insurance Reform: Security Standards, 45 C.F.R. Part 164, alcohol and drug abuse patient records laws codified at 42 U.S.C. § 290dd-2 and 42 C.F.R. Part 2, the Health Information Technology for Economics and Clinical Health Act (“HITECH Act”) adopted as part of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5).
H. The duties of the Reviewer shall be to observe, review, report findings, and make recommendations to the parties solely with respect to the implementation of and compliance with the Agreement. The State shall direct all agencies, employees and contractors to cooperate fully with the Reviewer. Neither Party shall interfere with the independent functions of the Reviewer. The Reviewer shall devote such time as is necessary to fulfill the purposes of the duties and responsibilities of the Reviewer pursuant to this Agreement, but within the annual budget set forth in Section IV(B).
I. The Reviewer and any staff/consultants will have full access to the people, places, and documents that are necessary to assess the State’s compliance with and/or implementation of this Agreement, as permitted by law and in accordance with the limitations set forth in Section IV(G).
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J. The Reviewer shall consult with the State and shall submit a written plan with regard to the methodologies to be used by the Reviewer to assess compliance with and implementation of the Agreement. The Parties shall approve the plan prior to implementation. The Reviewer’s evaluations will include regular onsite inspection of individuals’ residences and programs; interviews with individuals receiving services under this Agreement who consent to be interviewed and interviews with administrators, professional and direct care staff, contractors, family members, and others who serve or support individuals in the target population; detailed review of pertinent documents and records; and review and assessment of pre-admission screening documents, discharge planning and discharge plans, especially with regard to those pre-admission screenings and discharge plans where the individual’s team has been unable to identify and/or effect an appropriate community placement.
K. The Reviewer shall conduct a baseline evaluation of the State’s compliance with the terms of this Agreement and produce a written report to the Parties with regard to the State’s compliance with particular provisions of the Agreement within 120 days after the Reviewer is engaged by the State. This initial baseline evaluation is intended to inform the parties and the Reviewer of the status of compliance.
L. Following the baseline evaluation, the Reviewer shall conduct evaluations of and issue annual written reports regarding the State’s compliance. The Reviewer shall produce annual reports regarding the State’s compliance with particular provisions of the Agreement to the Parties as soon as possible, but no later than February 1 of every year. The Reviewer will not file these reports with the Court without the express authorization of the Parties, unless submission to the Court is in connection with the process set forth in Sections V(F) and (G). In connection with the evaluations, the State shall establish a schedule of evaluation visits for the upcoming year, to be repeated annually thereafter.
M. The written report shall detail with as much specificity as possible how the State is or is not in compliance with particular provisions of the Agreement. A draft of the Reviewer’s report shall be provided to the Parties for comment at least thirty days prior to issuance of the final report.
N. The Reviewer, including any hired staff or consultants, shall not enter into any new contract with the State or the United States while serving as the Reviewer without the written consent of the other Party.

V.

CONSTRUCTION AND TERMINATION

A. The Parties agree to jointly file this Agreement with the Court, together with a Complaint and a joint motion to conditionally dismiss the Complaint pursuant to Federal Rule of Civil Procedure 41(a). The Parties further agree that this case will remain on the Court’s inactive docket, with the Court retaining jurisdiction to enforce the Agreement in the event of any disputes that may arise between the

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Parties until the Agreement terminates, subject to the limitations set forth in Sections V(F) and (G) of this Agreement. In the event the Court declines to retain jurisdiction, this Agreement shall become null and void and the United States has the right to revive any claims otherwise barred by operation of this Agreement.
B. The implementation of this Agreement shall begin immediately upon execution. The Parties anticipate that the State will have substantially complied with all provisions of this Agreement by July 1, 2020, unless the Agreement is otherwise terminated, cancelled, or extended. Substantial compliance is achieved if any violations of the Agreement are minor and occasional and are not systemic. Any Agreement deadline may be extended by mutual agreement of both Parties or pursuant to the process described in Section V(C) below in the event that the State has not achieved compliance with the Agreement on or before July 1, 2020.
C. The Court shall retain jurisdiction of this action for the purposes specified in Section V(A) until July 1, 2020 unless: (1) the Parties jointly ask the Court to terminate the Agreement before July 1, 2020; or (2) the United States disputes that the State is in substantial compliance with the Agreement as of July 1, 2020. If so, the United States shall inform the Court and the State by January 1, 2020 that it disputes substantial compliance, and the Court may schedule further proceedings as appropriate. In any such proceedings, the burden shall be on the State to demonstrate substantial compliance.
D. Within 60 days after the Agreement is signed, both Parties shall appoint an Agreement Coordinator to oversee compliance with this Agreement and to serve as a point of contact for the Reviewer, and shall provide notice to the Reviewer and to the other Party of the Agreement Coordinator’s name, title, address, telephone number and e-mail address.
E. Throughout the pendency of this Agreement, the United States and the State will coordinate and discuss areas of disagreement and attempt to resolve outstanding differences. In the event of any dispute over the language or construction of this Agreement or its requirements, the Parties agree to meet and confer in an effort to achieve a mutually agreeable resolution prior to terminating the Agreement. Overall, it is intended that the Parties will pursue a problem-solving approach so that disagreements can be minimized and resolved amicably and the energies of the Parties can be focused on the State’s compliance with the provisions of this Agreement.
F. With the exception of conditions or practices that pose an immediate and serious threat to the life, health, or safety of individuals receiving services under this Agreement, if the United States believes the State has failed to fulfill any obligation under this Agreement, the United States shall, prior to initiating any court proceeding, notify the State in writing of any alleged non-compliance with the Agreement and request that the State take action to correct such alleged noncompliance. With the exception of conditions or practices that pose an immediate
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and serious threat to the life, health, or safety of individuals receiving services under this Agreement, the State shall have 45 days from the date of such written notice to respond to the United States in writing by denying that noncompliance has occurred, or by accepting (without necessarily admitting) the allegation of noncompliance and proposing steps that the State will take, and by when, to cure the noncompliance. If the State fails to respond within 45 days or denies that noncompliance has occurred, the United States may seek an appropriate judicial remedy.
G. If the State responds by proposing a curative action by a specified date, the United States may accept the State’s proposal or offer a counterproposal for a different curative action or deadline. If the Parties reach an agreement that varies from the provisions of this Settlement Agreement, the new agreement shall be in writing, signed and filed with the Court. If the Parties fail to reach agreement on a plan for curative action, the United States may seek an appropriate judicial remedy, and shall have the burden of proving such alleged noncompliance, other than as described in Section V(C). The Parties will not seek to have the Court enforce implementation of this Agreement other than through the process set forth in Sections V(F) and (G).
H. Any modification of this Settlement Agreement must be consented to by the Parties, shall be executed in writing by the Parties, shall be filed with the Court, and shall not be effective until the Court enters the modified agreement and retains jurisdiction to enforce it. The Parties shall promptly notify each other of any judicial or administrative challenge to this Agreement or any portion thereof, and shall defend against any challenge to the Agreement.
I. Failure by any Party to enforce this entire Agreement or any provision thereof with respect to any deadline or any other provision herein shall not be construed as a waiver.
J. The State shall maintain sufficient records to document that the requirements of this Agreement are being properly implemented and shall make such records available to the Independent Reviewer or the United States for inspection and copying upon request. The Independent Reviewer or the United States may require additional written reports from the State with regard to the State’s compliance with the terms of this Agreement. The State will cooperate and comply with those requests.
K. The State will work collaboratively with the United States to provide full access to the people, places, and documents that are necessary to assess the State’s compliance with and/or implementation of this Agreement subject to applicable federal and state law.
L. The Parties agree that, as of the date the court enters the order conditionally dismissing the Complaint and retaining jurisdiction, for purposes of the Parties’ preservation obligations pursuant to Federal Rule of Civil Procedure 26, litigation
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is not “reasonably foreseeable” concerning the matters described in the Findings Letter. To the extent that either Party previously implemented a litigation hold to preserve documents, electronically stored information, or things related to the matters described in the Findings Letter, the Party is no longer required to maintain such a litigation hold. Nothing in this paragraph relieves either Party of any other obligations imposed by this Agreement. M. “Notice” under this Agreement shall be provided by overnight courier to the following or their successors:
Chief of the Disability Rights Section United States Department of Justice Civil Rights Division 1425 New York Avenue NW Washington, DC 20005 Attorney General North Carolina Department of Justice 9001 Mail Service Center Raleigh, NC 27699 Secretary of DHHS 101 Blair Drive Adams Building Raleigh, NC 27699
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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R United States Attorney . Eastern District ofNortb. Carolina

THMAS E. PEREZ

&

Assistant Attorney General

Civil Rights Division

EVEL. HILL Senior Counselor to the Assistant Attorney General Civil Rights Division

ALISON N. BARKOFF Special Counsel for Olmstead Enforcement Civil Rights Division

GREGORY B. FRIEL, Acting Chief

CirifJ: SHEILA M. FORAN, Special Legal Counsel

Disability Rights Section

.

n

G. NORMAN ACKER III Assistant United States Attorney Eastern District ofNorth Carolina

ANNE S. RAISH Deputy Chief Disability Rights Section Civil Rights Division
REGAN RUSH JOY LEVIN WELAN TRAVIS W. ENGLAND REGINA KLINE Trial Attorneys Civil Rights Division U.S. Department of Justice

FOR THE STATE OF NORTH CAROLINA:

ALBERT A. DELIA Acting Secretary North Carolina Department of Health and Human Services

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 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION Case No. 5:12-cv-557

THE UNITED STATES OF AMERICA,
Plaintiff, v.
STATE OF NORTH CAROLINA,
Defendant.

)

)

)

) COMPLAINT FOR DECLARATORY

)

AND INJUNCTIVE RELIEF

)

)

)

)

INTRODUCTION 1. Title II of the Americans with Disabilities Act (“ADA”) prohibits the unjustified isolation of persons with disabilities, see 42 U.S.C. § 12132; Olmstead v. L.C., 527 U.S. 581, 597 (1999), and requires states and other public entities to “administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities.” 28 C.F.R. § 35.130(d). Section 504 of the Rehabilitation Act of 1973 (“Rehabilitation Act”) similarly prohibits recipients of federal financial assistance from discriminating against individuals with disabilities, and requires that they provide services and supports in the most integrated setting appropriate to the needs of individuals with disabilities. 29 U.S.C. § 794, 45 C.F.R. § 84.4. 2. In North Carolina, thousands of people with mental illness (“the Residents”) are unnecessarily in institutional settings called adult care homes, even though they could be more appropriately served in community-based settings. 3. More integrated and appropriate alternatives for persons with mental illness exist within North Carolina’s mental health service system. These alternatives include supported housing—

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integrated, community-based housing that provides tenants with all the rights of tenancy—and an array of mental health services to support people with mental illness living in the community. If administered appropriately, these community-based services are well able to meet the needs of people with mental illness.
JURISDICTION 4. This Court has jurisdiction of this action under title II of the ADA, 42 U.S.C. § 12133, Section 504 of the Rehabilitation Act, 29 U.S.C. § 794a, and 28 U.S.C. §§ 1331 and 1345. The Court may grant the relief sought in this action pursuant to 28 U.S.C. §§ 2201-2202. 5. Venue is proper in this district pursuant to 28 U.S.C. § 1391, given that a substantial part of the acts and omissions giving rise to this action occurred in the Eastern District of North Carolina. 28 U.S.C. § 1391(b).
PARTIES 6. Plaintiff is the United States of America. 7. Defendant State of North Carolina is a “public entity” within the meaning of the ADA, 42 U.S.C. § 12131(1), and is, therefore, subject to title II of the ADA, 42 U.S.C. § 12131 et seq., and its implementing regulations, 28 C.F.R. Part 35. 8. At all times relevant to this action, the State of North Carolina has been a “recipient” of “federal financial assistance,” including Medicaid funds, and is, therefore, subject to the Rehabilitation Act, 29 U.S.C. § 794, and its implementing regulations, 34 C.F.R. Part 104.
STATUTORY AND REGULATORY BACKGROUND 9. Congress enacted the ADA in 1990 “to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities[.]” 42 U.S.C. § 12101(b)(1). It found that “historically, society has tended to isolate and segregate individuals
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with disabilities, and, despite some improvements, such forms of discrimination against individuals with disabilities continue to be a serious and pervasive social problem[.]” 42 U.S.C. § 12101(a)(2). 10. For those reasons, Congress prohibited discrimination against individuals with disabilities by public entities: “[N]o qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs, or activities of a public entity, or be subjected to discrimination by any such entity.” 42 U.S.C. § 12132. 11. Congress directed the Attorney General to issue regulations implementing title II of the ADA. 42 U.S.C. § 12134. The title II regulations require public entities to “administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities.” 28 C.F.R. § 35.130(d). The preamble discussion of the “integration regulation” explains that “the most integrated setting” is one that “enables individuals with disabilities to interact with nondisabled persons to the fullest extent possible[.]” 28 C.F.R. § 35.130(d), App. B at 673 (2011). 12. Regulations implementing title II of the ADA further prohibit public entities from utilizing “criteria or methods of administration” that have the effect of subjecting qualified individuals with disabilities to discrimination or “that have the purpose or effect of defeating or substantially impairing accomplishment of the objectives of the public entity’s program with respect to individuals with disabilities[.]” 28 C.F.R. § 35.130(b)(3); accord 45 C.F.R. § 84.4(b)(4) (Rehabilitation Act). 13. Discrimination on the basis of disability is also prohibited by Section 504 of the Rehabilitation Act, 29 U.S.C. § 794(a): “No otherwise qualified individual with a disability in the United States…shall, solely by reason of her or his disability, be excluded from the
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participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance or under any program or activity….” 14. The Rehabilitation Act’s implementing regulations provide that recipients of federal funds “shall administer programs and activities in the most integrated setting appropriate to the needs of qualified handicapped persons.” 28 C.F.R. § 41.51(d); see also 45 C.F.R. § 84.4. 15. In Olmstead v. L.C., 527 U.S. 581, 597 (1999), the Supreme Court held that title II prohibits the unjustified segregation of individuals with disabilities. Under Olmstead, public entities are required to provide community-based services when (a) such services are appropriate, (b) the affected persons do not oppose community-based treatment, and (c) community-based services can be reasonably accommodated, taking into account the resources available to the entity and the needs of other persons with disabilities. Id. at 607.
FACTUAL ALLEGATIONS A. North Carolina’s Mental Health Service System 16. North Carolina has a mental health service system through which it delivers services to persons with mental illness. State law requires North Carolina “to provide mental health . . . services through a delivery system designed to meet the needs of clients in the least restrictive, therapeutically most appropriate setting available” and “to provide community-based services when such services are appropriate, unopposed by the affected individuals, and can be reasonably accommodated within available resources and taking into account the needs of other persons for mental health, developmental disabilities, and substance abuse services.” N.C. Gen. Stat. § 122C-2 (2010). 17. The North Carolina Department of Health and Human Services (“DHHS”) is the State agency responsible for developing and implementing the State plan for the delivery of mental
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health services, including setting strategic goals and determining how state, local, and federal resources will be deployed. N.C. Gen. Stat. §§ 122C-102, -112.1(b)(4) (2010). 18. Within DHHS, the Division of Mental Health, Developmental Disabilities and Substance Abuse Services (“DMH”) manages the mental health service system, and, in doing so, enforces policies and regulations, allocates public funds, and manages the community mental health system. The Division of Medical Assistance (“DMA”) within DHHS manages the State’s Medicaid program, which includes coverage of mental health, developmental disabilities, substance abuse, and other services to Medicaid-eligible individuals in adult care homes and other settings. 19. In carrying out these roles and responsibilities, the State determines what mental health services to provide, who will provide them, in what settings to provide them, and how to allocate funds among various services and settings. See id. §§ 122C-102, -112.1(b)(4). 20. Among the State’s mental health programs and services are community support and residential care services. Community support services include case management services, psychosocial rehabilitation services, Assertive Community Treatment (“ACT”) teams, Community Support Teams, peer support services, supported employment, and a range of crisis services. 21. Residential services include supported housing, group homes, and residential treatment services. North Carolina also delivers publicly subsidized inpatient psychiatric services through its State-operated psychiatric hospitals. 22. Thousands of individuals with mental illness also receive services in adult care homes— facilities licensed by DHHS to provide room and board, housekeeping, and personal care services for two or more unrelated adults—even though these facilities are not designed to
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provide for the mental health needs of their residents, and are prohibited by State law from admitting individuals for the purpose of mental health treatment. See N.C. Gen. Stat. §§ 131D2.1, -2.4; 10A N.C. Admin. Code § 13F.0701; see also STUDY OF ISSUES RELATED TO PERSONS WITH MENTAL ILLNESS IN LONG-TERM CARE FACILITIES, at 4 (Dec. 1, 2005). 23. By virtue of the manner in which North Carolina has administered its service system, adult care homes have become a major part of the State’s mental health service system. See SHORT- AND LONG-TERM SOLUTIONS FOR CO-LOCATION IN ADULT AND FAMILY CARE HOMES: A REPORT OF THE NCIOM TASK FORCE ON THE CO-LOCATION OF DIFFERENT POPULATIONS IN ADULT CARE HOMES, North Carolina Institute of Medicine, at 11 (January 2011). 24. North Carolina subsidizes a portion of the cost of providing care to most residents of adult care homes. 25. North Carolina also licenses, inspects, monitors, and regulates adult care homes, and has the power to determine their capacity. N.C. Gen. Stat. § 131D-2.4; see N.C. Gen. Stat. § 131E178(a). New adult care home beds cannot be developed without a certification from the State that a need for those beds exists. N.C. Gen. Stat. § 131E-178(a); see N.C. Gen. Stat. § 131E-176 (including adult care homes in definition of health service facility and health service facility bed). 26. Additionally, the State uses adult care homes as places to discharge persons leaving its psychiatric hospitals. From 2001 to 2010, the State discharged 7,595 individuals with mental illness from psychiatric hospitals directly to adult care homes and family care homes. ADULT CARE HOME REPORT: HOSPITAL DISCHARGES 2000-2010, DHHS Div. of State Operated Healthcare Facilities, at 1-2.
6 Case 5:12-cv-00557-F Document 1 Filed 08/23/12 Page 6 of 15

27. Similarly, Residents have reported that employees within the State’s Division of Social Services have also placed persons with mental illness in adult care homes. 28. As the State has acknowledged, “many with mental illnesses continue to live in long term care settings because there are not yet more appropriate alternatives available to them in their communities.” STUDY OF ISSUES RELATED TO PERSONS WITH MENTAL ILLNESS IN LONG-TERM CARE FACILITIES, Dep’t of Health and Human Servs., at 4 (December 1, 2005). 29. A State-funded report has similarly acknowledged an “institutional bias” in North Carolina: “People who enter an ACH or other type of facility can obtain certain financial assistance, services, and supports that are not equally available to people with similar levels of disability and financial need who choose to remain in their own homes.” SHORT- AND LONGTERM SOLUTIONS FOR CO-LOCATION, at 32. 30. As a result of the State’s planning, structuring, administration, and funding of its system of care, people with mental illness receive services unnecessarily in adult care homes or are at risk of unnecessary institutionalization. B. Adult Care Homes 31. Adult care homes are institutional settings that do not enable Residents to interact with nondisabled persons to the fullest extent possible. Many adult care homes house a large number of people, a significant percentage of whom have diagnoses of mental illness. Residents live in close quarters primarily with other persons with disabilities, and most aspects of their daily lives are regimented and limited by rules and practices of adult care homes. 32. Many Residents are seen on-site by doctors and mental health and health care providers. In some adult care homes, staff dispense medications by cart; in others, Residents are required to queue at a medication station.
7 Case 5:12-cv-00557-F Document 1 Filed 08/23/12 Page 7 of 15

33. Paging systems are used on a regular basis at many facilities, and administrative offices in some adult care homes display video screens on which the movements and activities of Residents can be monitored. 34. Adult care homes have highly regimented meal and medication times, and Residents of adult care homes are typically assigned to small, shared bedrooms with other people. 35. Several adult care homes house Residents behind locked, alarmed doors, restricting their ability to come and go freely. Many facilities have curfews, and require guests to sign in and out. See also 10A N.C. Admin. Code § 13F.0906(f)(2) (permitting restrictions on visitation by friends and family); 10A N.C. Admin. Code § 13F.0906(f)(3) (requiring facilities to maintain a sign out register). 36. Physically, many adult care homes are isolated from the general community—they are often located in remote areas outside of walking distance to stores and town centers. Although some facilities take Residents on organized trips to shopping centers or stores, Residents typically travel together as a group in a facility’s bus or van. 37. In a recent report regarding the co-location of different populations in adult care homes, a task force comprised of State officials and employees, as well as various stakeholders, recognized that adult care homes “are not optimal for community integration,” and that “[r]esidents of adult care homes may be cut off from active participation in the local community because of the lack of transportation and the structured format (i.e., the schedule of meals and personal care) of many residential care homes.” See SHORT- AND LONG-TERM SOLUTIONS FOR CO-LOCATION, at 34. 38. A 2005 report issued by DHHS similarly acknowledged that “many with mental illnesses continue to live in long term care settings because there are not yet more appropriate alternatives
8 Case 5:12-cv-00557-F Document 1 Filed 08/23/12 Page 8 of 15

available to them in their communities” and that adult care homes are not designed to allow persons with mental illnesses “to achieve a greater measure of independence.” See STUDY OF ISSUES RELATED TO PERSONS WITH MENTAL ILLNESS IN LONG-TERM CARE FACILITIES, Dep’t of Health and Human Servs., at 4 (December 1, 2005). C. Individuals with Mental Illness Residing in Adult Care Homes Are Qualified to Receive
Services in More Integrated Settings 39. Upon information and belief, the vast majority of persons with mental illness in adult care homes and those at risk of entry to adult care homes can be served in more integrated settings. 40. The placement of persons with mental illness in adult care homes is not based on a determination that such placement is clinically necessary. Instead, people with mental illness tend to end up in adult care homes simply because there are no available community-based alternatives. As the State has acknowledged, adult care homes are not the most appropriate settings for persons with mental illness, because, among other things, they are not designed to provide any recovery-oriented or rehabilitative services, or to afford people with mental illness opportunities for achieving greater independence and community integration. See, e.g., STUDY OF ISSUES RELATED TO PERSONS WITH MENTAL ILLNESS IN LONG-TERM CARE FACILITIES, Dep’t of Health and Human Servs., at 4 (December 1, 2005). 41. People with mental illness in adult care homes are not materially different from people with mental illness who receive services in the community. They have similar diagnoses and symptoms of people who live successfully in more independent settings, with the supports and services that exist in the State’s community mental health system. 42. Supported housing is a community-based program that is able to meet the needs of persons with mental illness.
9 Case 5:12-cv-00557-F Document 1 Filed 08/23/12 Page 9 of 15

43. The State has acknowledged that supportive housing is an effective service setting for persons with serious mental illness and achieves positive outcomes in terms of housing and health stability and improvement in quality of life for persons with mental illness. See, e.g., SUPPORTIVE HOUSING AS AN ALTERNATIVE TO PSYCHIATRIC HOSPITALIZATION, Dep’t of Health and Human Servs., at 1-2 (March 15, 2011). 44. With reasonable modifications, the types of services and supports that exist in North Carolina’s community mental health service system are able to meet the needs of people with mental illness confined to adult care homes. 45. People with mental illness in adult care homes would not oppose moving to integrated settings if they had a fully-informed choice and a realistic opportunity to do so. Numerous Residents have expressed their desire to leave their adult care homes and become members of their communities once again. D. Providing Services in Integrated Settings Can Be Reasonably Accommodated 46. Providing services to Residents and persons with mental illness at risk of entry to adult care homes in community settings can be reasonably accommodated. 47. The types of services needed to support people with mental illness in community-based settings already exist in North Carolina’s community mental health service system, including ACT Teams, Community Support Teams, case management services, peer support services, supported employment services, psychosocial rehabilitation services, and crisis services. They have been administered, however, in a manner inadequate to serve Residents in communitybased settings. 48. Supported housing also exists in the State’s mental health system, but on a scale that is inadequate to meet the needs of persons who are unnecessarily institutionalized in adult care
10 Case 5:12-cv-00557-F Document 1 Filed 08/23/12 Page 10 of 15

homes. See SERVING PERSONS WITH DISABILITIES IN APPROPRIATE SETTINGS: THE NORTH CAROLINA PLAN, Dep’t of Health and Human Servs., at 29, 32-33 (April 2003). See generally SUPPORTIVE HOUSING AS AN ALTERNATIVE TO PSYCHIATRIC HOSPITALIZATION, Dep’t of Health and Human Servs., at 1 (March 15, 2011). The State could redirect funds it currently spends on services for Residents of adult care homes and use them to support Residents in communitybased settings. E. The United States’ Investigation 49. On July 28, 2011, after an eight month investigation into the State’s mental health service system, the United States Department of Justice (the “Department”) sent a formal Letter of Findings (the “Letter”) to the Attorney General of North Carolina. The Letter reported in detail the findings of the Department’s investigation, provided the State notice of its failure to comply with the ADA, and outlined the steps necessary for the State to meet its obligations under the ADA. 50. The Letter reported the Department’s findings that “the State fails to provide services to individuals with mental illness in the most integrated setting appropriate to their needs in violation of the ADA” and that “[t]he State plans, structures, and administers its mental health service system to deliver services to thousands of persons with mental illness in large, segregated adult care homes, and to allocate funding to serve individuals in adult care homes rather than in integrated settings.” 51. The Letter identified numerous remedial measures the State could take to comply with the ADA, and further advised the State that, in the event that a resolution could not be reached voluntarily, the Attorney General may initiate a lawsuit. Over the past year, the Department met with State officials and exchanged written proposals in an attempt to reach a resolution to the deficiencies identified in the Letter. The parties ultimately reached a settlement agreement.
11 Case 5:12-cv-00557-F Document 1 Filed 08/23/12 Page 11 of 15

52. All conditions precedent to the filing of this Complaint have occurred or been performed. COUNT I
VIOLATION OF TITLE II OF THE AMERICANS WITH DISABILITIES ACT 53. The allegations of Paragraphs 1 through 52 of the Complaint are hereby realleged and incorporated by reference. 54. Defendant is a public entity subject to title II of the ADA. 42 U.S.C. § 12131(1). 55. Defendant violates the ADA by administering its mental health service system in a manner that denies Residents and persons with mental illness at risk of entry into adult care homes the opportunity to receive services in the most integrated setting appropriate to their needs. 56. The Residents and persons with mental illness at risk of entry into adult care homes are persons with disabilities covered by title II of the ADA, and they are qualified to receive services in a more integrated setting. 42 U.S.C. §§ 12102, 12131(2). 57. Providing services to Residents and persons with mental illness at risk of entry into adult care homes in more integrated settings can be accomplished with reasonable modifications to the Defendants’ programs and services. 58. Defendant’s actions constitute discrimination in violation of title II of the ADA, 42 U.S.C. § 12132, and its implementing regulations, 28 C.F.R. Part 35.
COUNT II VIOLATION OF SECTION 504 OF THE REHABILITATION ACT 59. The allegations of Paragraphs 1 through 58 of the Complaint are hereby re-alleged and incorporated by reference. 60. The State of North Carolina, which is a recipient of federal financial assistance, discriminates against “qualified individual[s] with a disability” within the meaning of Section
12 Case 5:12-cv-00557-F Document 1 Filed 08/23/12 Page 12 of 15

504 of the Rehabilitation Act by administering programs and services for individuals with mental illness in a manner that denies individuals the opportunity to receive services in the most integrated setting appropriate to their needs. 29 U.S.C. § 794; 45 C.F.R. § 84.4. 61. The Residents and persons with mental illness at risk of entry into adult care homes are persons with disabilities covered by Section 504 of the Rehabilitation Act, and they are qualified to receive services in a more integrated setting. 62. Providing services to Residents and persons with mental illness at risk of entry into adult care homes in more integrated settings can be accomplished with reasonable modifications to the Defendants’ programs and services. 63. Defendant’s actions constitute discrimination in violation of Section 504 of the Rehabilitation Act, 29 U.S.C. § 794, and its implementing regulations, 45 C.F.R. § 84.4.
PRAYER FOR RELIEF WHEREFORE, the United States of America prays that the Court:
A. Grant judgment in favor of the United States on its Complaint and declare that Defendant has violated title II of the ADA, 42 U.S.C. § 12131 et seq. and Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794;
B. Enjoin Defendant from: 1. failing to provide appropriate, integrated community services and supports
to Residents and individuals with mental illness at risk of unnecessary segregation in adult care homes;
2. discriminating against Residents and individuals with mental illness at risk of unnecessary segregation in adult care homes by failing to provide services and supports in the most integrated setting appropriate to their needs;
13 Case 5:12-cv-00557-F Document 1 Filed 08/23/12 Page 13 of 15

C. Issue a declaratory judgment declaring that Defendant has violated title II of the Americans with Disabilities Act and Section 504 of the Rehabilitation Act by failing to make reasonable modifications to services, programs, and supports for Residents and individuals with mental illness at risk of unnecessary segregation in adult care homes to enable them to receive services in the most integrated setting appropriate to their needs; and
D. Order such other appropriate relief as the interests of justice may require.

This 23rd day of August, 2012.

Respectfully submitted,

/s/ Thomas G. Walker
THOMAS G. WALKER United States Attorney Eastern District of North Carolina

/s/ Thomas E. Perez THOMAS E. PEREZ Assistant Attorney General Civil Rights Division
EVE HILL Senior Counselor to the Assistant Attorney General Civil Rights Division
ALISON N. BARKOFF Special Counsel for Olmstead Enforcement Civil Rights Division
GREGORY B. FRIEL Acting Section Chief SHEILA M. FORAN Special Legal Counsel ANNE S. RAISH Deputy Chief Disability Rights Section Civil Rights Division

/s/ G. Norman Acker III G. NORMAN ACKER III Assistant United States Attorney 310 New Bern Avenue Federal Building, Suite 800 Raleigh, NC 27601 Telephone: (919) 856-4530 Facsimile: (919) 856-4821

/s/ Joy Levin Welan JOY LEVIN WELAN, D.C. Bar No. 978973 REGAN RUSH TRAVIS W. ENGLAND REGINA KLINE Trial Attorneys Disability Rights Section Civil Rights Division

14

Case 5:12-cv-00557-F Document 1 Filed 08/23/12 Page 14 of 15

Norman.Acker@usdoj.gov N.C. Bar No. 12839

U.S. Department of Justice 950 Pennsylvania Avenue, N.W. - NYA Washington, D.C. 20530 Telephone: (202) 305-1894 Facsimile: (202) 307-1197 Joy.Welan@usdoj.gov
Counsel for Plaintiff United States of America

15 Case 5:12-cv-00557-F Document 1 Filed 08/23/12 Page 15 of 15

.1844 (Rev. 09/1 t)

CIVIL COVER SHEET

TheJS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service ofpleadings or other papers as required by law, except as provided
by local rules ofcourt. This form, approved by the Judicial Conference ofthe United States in September 1974, is requimd for the use ofthe Clerk ofCourt for the purpose ofmitiating
the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FO)ZAL)

I. (a) PLAINTIFFS
United States of America

DEFENDANTS State of North Carolina

(b) County of Residence of First Listed Plaintiff
(EXCEPT IN U.S. PLAINTIFF CASES)

County of Residence of First Listed Defendant Wake

(IN U.S. PLAINTIFF CASES ONLY)

NOTE:

IN LAND CONDEMNATION CASES, USE THE LOCATION OF
THE TRACT OF LAND INVOLVED.

AnS sAtkraleys,(Firru Name, Addyess, and 'elephoae Nutnber) S-11 U.8. Department ot Justice 950 Pennsylvania Avenue, NW, NYA, Washington, DC 20530
202-307-0663
IL BASIS OF JURISDICTION (Place an "X" in One Box Only)

N 1 U.S. Government Plaintiff

0 3 Federal Question (U.S. Government Not a Par0

I

Attorneys afKnown)
Lisa Granberry Corbett, North Carolina Department of Justice

I 9001 Mail Service Center, Raleigh, NC 27699

919-716-6860

III, CITIZENSHIP OF PRINCIPAL PARTIES (Place an "X" In One Boxfor PlaintijD

(Far Diversity Cases Only)

and One Box for Defendant)

PTIF DEF

PTE

DEP

Citizen of This State

0 1 0 1 Incorporated or Principal Place

0 4 04

of Business In This State

O 2 U.S. Government Defendant

0 4 Diversity

I

(Indicate Citizenship ofParties in Item III) I

Citizen of Another State

1 2 0 2 Incorporated and Principal Place
of Business hi Another State

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Citizen or Subject of a Foreign Country

0 3 0 3 Foreign Nation

0 6 I6

IV. NATURE OF SUIT (Place an "X" in One Box Only)

20.111TAT,DIT: OTTOTTAI4EW

iNE01102-

O 110 Insurance

PERSONAL INJURY

PERSONAL INJURY 0 625 Drug Related Seizure

0 422 Appeal 28 USC 158

0 375 False Claims Act

O 120 Marine

0 310 Airplane

0 365 Personal Injury

of Property 21 USC 881 0 423 Withdrawal

0 400 State Reapportionment

CI 130 Miller Act

0 315 Airplane Product

Product Liability

0 690 Other

28 USC 157

0 410 Antitrust

ini 140 Negotiable Instrument

Liability

0 367 Health Care/

0 430 Banks and Banking

0 150 Recovery of Overpayment 0 320 Assault, Libel &

Pharmaceutical

ier7----....TERWERTZWRIV-_-----Z1 0 450 Commerce

& Enforcement of Judgment

Slander

Personal Injury

0 820 Copyrights

0 460 Deportation

O 151 Medicare Act

0 330 Federal Employers'

Product Liability

0 830 Patent

0 470Racketeer Influenced and

O 152 Recovery of Defaulted

Liability

0 368 Asbestos Personal

171 840 Trademark

Corrupt Organizations

Student Loans
(Excl. Veterans)

0 340 Marine 0 345 Marine Product

Injury Product Liability

0 480 Consumer Credit
.E===lr'----- 171 490 CableiSai TV

O 153 Rccovciy of Overpayment

Liability

PERSONAL PROPERTY 0 710 Fair Labor Standards

0 861 HIA (1395ff)

0 850 Securities/Commodities/

of Veteran's Benefits

0 350 Motor Vehicle

0 370 Other Fraud

Act

D 862 Black Lung (923)

Exchange

O 160 Stockholders' Suits

0 355 Motor Vehicle

0 371 Truth in Lending:

0 720 Labor/Mgmt, Relations 0 863 DIWC/DIWW (405(g)) 0 890 Other Statutory Actions

O 190 Other Contract

Product Liability

0 380 Other Personal

0 740 Railway Labor Act

0 864 SSID Title XVI

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O 195 Contract Product Liability 0 360 Other Personal

Property Damage

0 751 Family and Medical

0 865 RSI (405(g))

0 893 Environmental Matters

tEl 196 Franchise

Injury

0 385 Property Damage

Leave Act

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0 362 Personal Injury

Product Liability

0 790 Other Labor Litigation

Act

Med. Mal.ractice

0 791 Einpl, Ret. Inc.

0 896 Arbitration

UELF,LTIEL-ila jiAjk....WiXIIPIErt: t: eklER t t l'kUiRK,,-.:4

Sectuity Act

'..'::-..:Alst: .1kil

0 899 Administrative Procedure

0 210 Land Condemnation

0 440 Other Civil Rights

0 510 Motions to Vacate

0 870 Taxes (U.S. Plaintiff

Act/Review or Appeal of

O 220 Foreclosure

0 441 Voting

Sentence

or Defendant)

Agency Decision

O 230 Rent Lease & Ejectment 0 442 Employment

Habeas Corpus:

0 871 IRS—Third Party

0 950 Constitutionality of

O 240 Torts to Land

0 443 Housing/

0 530 General

26 USC 7609

State Statutes

O 245 Tort Product Liability

Accommodations

0 535 Death Penalty

ril Alt tAt tIlL„--,

0 290 All Other Real Property

0 445 Amer. w/Disabilities 3 540 Mandamus & Other 0 462 Naturalization Application

Employment

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R 446 Amer. vilDisabilities in 555 PRson Condition

Alien Detainee

Other

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(Prisoner Petition)

0 448 Education

Conditions of

0 465 Other Immigration

Confinement

Actions.

V. ORIGIN 1 Original Proceeding

(Place an "X" in Oree Box Only)

0 2 Removed from

03

State Court

Remanded from
Appellate Court

0 4 Reinstated or

0

Transferred from 5 another district

0 6 Multidistrict

Reopened

anecift9

Litigation

VI. CAUSE OF ACTION

Cite the U.S. Civil Statute under which you am filing (Do not citejurisdictional statutes unless &perste 42 U.S.C. ii 12132
Brief description of cause:
Failure to provide services to people with disabilities in most integrated setting appropriate

VII. REQUESTED IN

Cli CHECK IF THIS IS A CLASS ACTION

DEMAND

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COMPLAINT:

UNDER F.R.C.P. 23

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JUDGE

DOCKET NUMBER

DATE,
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s,

TORE OF Ai 'FORNEY OF RECORD

141117

RECEIPT F

AMOUNT

APPLYING III'

JUDGE

MAG. JUDGE

Case 5:12-cv-00557-F Document 1-1 Filed 08/23/12 Page 1 of 1

 
 October 11, 2011

Civil Rights and Human Dignity
BOARD OF TRUSTEES
Nikki Heidepriem, Chair
Fabiani & Company, Washington DC
Anita L. Allen
University of Pennsylvania Law School
David B. Apatoff
Arnold & Porter, Washington DC
Dana Bazelon
The Defender Association of Philadelphia
Eileen A. Bazelon
Department of Psychiatry, Drexel University
Rhonda Robinson-Beale
OptumHealth Behavioral Solutions
Robert A. Burt
Yale Law School
Jacqueline Dryfoos
New York NY
Kenneth R. Feinberg
Feinberg Rozen, LLP, Washington DC
Howard H. Goldman, MD
Department of Psychiatry, University of Maryland School of Medicine
Terri Langston
Aligning Resources, LLC
Jacki McKinney
National Association of People of Color Consumer/Survivor Network
Martha L. Minow
Harvard Law School
Stephen J. Morse
University of Pennsylvania Law School
Margaret E. O’Kane
National Committee for Quality Assurance
Joseph G. Perpich
JG Perpich LLC, Bethesda MD
Harvey Rosenthal
New York Association of Psychiatric Rehabilitation Services
Elyn R. Saks
University of Southern California Gould School of Law
W. Allen Schaffer, MD
The Acadia Hospital, Bangor, ME
Cynthia M. Stinger URS Corporation Martin Tolchin
Journalist and author, Washington DC
Sally Zinman
Mental Health Consultant, Berkeley, CA
HONORARY TRUSTEE Miriam Bazelon Knox, 1914 - 2011
TRUSTEES EMERITI Mary Jane England
Regis College
H. Rutherford Turnbull
Beach Center for Families and Disability, University of Kansas
PRESIDENT & CEO Robert Bernstein, Ph.D.
Affiliations listed for informational purposes only

Governor Beverly Perdue 116 West Jones Street Raleigh, North Carolina 27603
Lanier M. Cansler Secretary, Division of Health and Human Services 2001 Mail Service Center Raleigh, NC 27699
Roy Cooper Attorney General for the State of North Carolina Department of Justice 9001 Mail Service Center Raleigh, NC 27699
Dear Governor Perdue, Secretary Cansler and Attorney General Cooper:
We, a broad array of stakeholders, write on behalf of individuals with mental illnesses living in adult care homes in North Carolina. These individuals are members, constituents or clients of our organizations. We know that these individuals are capable of living rich and meaningful lives, marked by growth and community engagement. We believe that their rights under the Americans with Disabilities Act and the Olmstead decision are being violated by North Carolina’s failure to provide services in the most integrated setting appropriate to their needs.
The U.S. Department of Justice confirmed this conclusion in its letter issued of July 28, 2011, finding that North Carolina is violating the ADA and Olmstead by needlessly segregating individuals with mental illness in adult care homes.1 The Department found that individuals with mental illness are placed in adult care homes because more integrated settings are unavailable, rather than because of clinical need; that adult care homes are segregated, institutional settings that afford little privacy, autonomy, or contact with people without disabilities; that adult care home residents with mental illness are not materially different from individuals with mental illness who thrive in integrated settings; that most adult care home residents can be
1 Letter of July 28, 2011 from Thomas E. Perez, Assistant Attorney General, to the Honorable Roy Cooper, Attorney General.

1101 Fifteenth Street NW, Suite 1212, Washington DC 20005-5002  202/467-5730, TDD 202/467-4232, fax 202/223-0409  info@bazelon.org  www.bazelon.org

served successfully in supportive housing;2 and that adult care home residents with mental illness would choose to move to integrated settings if they had the opportunity to do so.3 We note that individuals with other disabilities, including intellectual and other developmental disabilities, as well as individuals dually diagnosed with psychiatric and developmental disabilities, are also unnecessarily segregated in adult care homes.
As the Justice Department observed, North Carolina “plans, oversees, funds, and regulates programs and services for individuals with mental illness in a manner that leaves thousands of individuals with mental illness isolated in large, segregated adult care homes.”4 For example:
The state has failed to develop sufficient capacity in integrated service settings, such as supportive housing, to meet the needs of adult home care residents.5
The state has chosen to allocate resources to adult care homes (including approximately $550 per month of Special Assistance to subsidize the cost of individuals with mental illness living in adult care homes) rather than to integrated settings.6
The state’s Medicaid personal care program makes it more difficult to obtain personal care services in integrated settings than in adult care homes. Individuals living in their own homes must meet more stringent criteria to receive these services than individuals in adult care homes.7
The state discharges individuals from psychiatric hospitals to adult care homes.8
The state issues “certificates of need” for adult care home beds to “enable the development of adult care home beds to the detriment of integrated alternatives.”9
The Department found that North Carolina could readily serve adult care home residents with mental illness in more integrated settings – specifically, in scattered site supportive housing.10 The state’s mental health service system knows how to provide the services that these individuals need to live in integrated settings, such as assertive community treatment (ACT), case
2 Id. at 9. 3 Id. at 10. 4 Id. at 11. 5 Id. 6 Id. at 12. 7 Id. 8 Id. 9 Id. 10 Id. at 13, 14.
2

management, crisis services and supported employment. Special Assistance and Medicaid funds currently used to support individuals with mental illness in adult care homes should be redirected to support them in integrated settings.11
We would like to meet with you or your representatives to discuss the state’s remedying its violation of Olmstead, including:
Developing additional scattered site supportive housing so that individuals with mental illness now in, or being considered for admission to, adult care homes have the chance to live and receive services in the most integrated setting appropriate to their needs, which, in most cases, will be in their own home or in supportive housing.
Ensuring that such individuals are offered the necessary supports and services to live successfully in integrated settings.
Ensuring that individuals with mental illness in, or being considered for admission to adult care homes, have full and accurate information about their options, and the opportunity to make an informed choice about where they receive services.
Thank you for your prompt attention to this matter.
Sincerely,
Connie Cochran President and CEO Easter Seals UCP North Carolina & Virginia, Inc.
Deby Dihoff Executive Director NAMI North Carolina
Ron Honberg National Director for Policy and Legal Affairs National Alliance on Mental Illness (NAMI)
David Richard Executive Director The Arc of North Carolina
11 Id.
3

Laurie Coker Director North Carolina Consumer Advocacy, Networking, and Support Organization
Michael S. Pedneau Former North Carolina State Director of Mental Health, Developmental Disabilities and Substance Abuse
Pender R. McElroy Board Chair Mental Health America
Ellis C. Fields Executive Director Mental Health Association of Central Carolinas, Inc. North Carolina Mental Health Association Collaborative
Karen Kincaid Dunn Executive Director Club Nova Community, Inc. Member, North Carolina Clubhouse Coalition
Susie Deter Executive Director Threshold Member, North Carolina Clubhouse Coalition
William D. Rowe Director of Advocacy North Carolina Justice Center
Tracey Sheriff Chief Executive Officer Autism Society of North Carolina
Sue Estroff Mental Health Researcher
Martha Brock Mental Health Consumer and Freelance Writer
4

By their counsel
Ira Burnim Jennifer Mathis Bazelon Center for Mental Health Law cc: Vicki Smith
Mark Davis Britt Cobb John Dervin Kevin McLaughlin Mike Arnold Angella Dunston Anne Raish Regan Rush
5

 
 November 30, 2011

The Honorable Beverly Perdue

Civil Rights and Human Dignity
BOARD OF TRUSTEES

Governor Constituent Services Office

Nikki Heidepriem, Chair
Fabiani & Company, Washington, DC
Anita L. Allen
The University of Pennsylvania Law School

116 W. Jones Street Raleigh, NC 27603

David B. Apatoff
Arnold & Porter, Washington, DC
Samuel R. Bagenstos
The University of Michigan Law School
Dana Bazelon
The Defender Association of Philadelphia
Eileen A. Bazelon
Department of Psychiatry, Drexel University

The Honorable Roy Cooper Attorney General Department of Justice 9001 Mail Service Center Raleigh, NC 27699

Rhonda Robinson-Beale
OptumHealth Behavioral Solutions
Robert A. Burt
Yale Law School
Jacqueline Dryfoos
New York, NY

Re: United States Department of Justice Investigation of North Carolina’s Reliance on Adult Care Homes in Violation of the Americans with Disabilities Act and the Olmstead Decision

Kenneth R. Feinberg
Feinberg Rozen, LLP, Washington, DC
Howard H. Goldman, MD
University of Maryland School of Medicine

Dear Governor Perdue and Attorney General Cooper:

Jennifer A. Gundlach
Hofstra University School of Law
Terri Langston
Aligning Resources, LLC
Jacki McKinney
People of Color Consumer/Survivor Network
Martha L. Minow
Harvard Law School
Stephen J. Morse
The University of Pennsylvania Law School
Margaret E. O’Kane
National Committee for Quality Assurance
Joseph G. Perpich
JG Perpich LLC, Bethesda, MD

We urge you to take the necessary steps to resolve the United States Justice Department’s findings concerning North Carolina’s use of large, segregated adult care homes to serve thousands of individuals with mental illness. It is time for the state to bring itself into compliance with the Americans with Disabilities Act (ADA) and the Supreme Court’s Olmstead decision by ending such needless isolation and offering these individuals the chance to thrive in their own homes.
As you know, on July 28, 2011, the Justice Department issued a findings letter concluding that the state is violating the ADA and Olmstead by failing to provide services to adult care home residents with mental illness in the most integrated

Harvey Rosenthal

setting appropriate to their needs. Among other things, the Department called upon

NY Association of Psychiatric Rehabilitation Services
Elyn R. Saks

North Carolina to develop sufficient supported housing to ensure that individuals

University of Southern California Gould School of Law with mental illness who are needlessly confined to adult care homes are given the

W. Allen Schaffer, MD
The Acadia Hospital, Bangor, ME
Cynthia M. Stinger
URS Corporation
Martin Tolchin
Journalist and author, Washington, DC

opportunity to move to supported housing with the services they need to succeed there. As the Department pointed out, the state could readily accomplish this by redirecting funds that are currently used to support these individuals in adult care homes.

Sally Zinman
Mental Health Consultant, Berkeley, CA
HONORARY TRUSTEE Miriam Bazelon Knox, 1914 - 2011
TRUSTEES EMERITI Mary Jane England
Regis College
H. Rutherford Turnbull
Beach Center for Families and Disability
PRESIDENT & CEO Robert Bernstein, Ph.D.

North Carolina is clearly capable of taking the key steps identified by the Justice Department to afford these individuals the opportunity to live in the most integrated setting appropriate to their needs. The undersigned organizations, which include large statewide providers of community-based services for individuals with disabilities, national and state mental health consumer and family organizations, and a former North Carolina mental health director, have many years of experience and

Affiliations listed for informational purposes only

1101 Fifteenth Street NW, Suite 1212, Washington DC 20005-5002 202/467-5730, TDD 202/467-4232, fax 202/223-0409 info@bazelon.org www.bazelon.org

expertise with North Carolina’s service system, as well as familiarity with the needs of individuals in adult care homes. We know that there is ample capacity among providers to meet the needs of adult care home residents with mental illness in more integrated settings. We also know that resources can be readily redirected to support these individuals in integrated settings.1
If the state declines to resolve this matter and invites litigation by the Justice Department, the strong likelihood is that the state will ultimately lose. In the meantime, state and federal dollars will continue to be misdirected to services provided in settings that afford residents a poor quality of life and poor outcomes. Rather than wasting lives and wasting dollars, we urge you to do the right thing and negotiate a prompt resolution with the Justice Department. We stand ready to assist the state in implementing such a resolution.
Your leadership on this issue is critical to resolve the violation of the rights of North Carolina’s adult care home residents with mental illness and to move toward a mental health system of which we can all be proud. We hope you will make a commitment to bring real and positive change for residents of adult care homes.
Sincerely,
Connie Cochran President and CEO Easter Seals UCP North Carolina & Virginia, Inc.
Deby Dihoff Executive Director National Alliance on Mental Illness (NAMI) North Carolina
Ron Honberg National Director for Policy and Legal Affairs National Alliance on Mental Illness (NAMI)
David Richard Executive Director The Arc of North Carolina
1 The same is true of individuals with intellectual and other developmental disabilities living in adult care homes. While the Justice Department’s investigation concerns adult care home residents with mental illness, we believe that the state must take similar steps to comply with Olmstead as it applies to individuals with intellectual and other developmental disabilities, and that it can readily do so.
2

Laurie Coker Director North Carolina Consumer Advocacy, Networking, and Support Organization
Michael S. Pedneau Former North Carolina State Director of Mental Health, Developmental Disabilities and Substance Abuse
Pender R. McElroy Board Chair Mental Health America
Ellis C. Fields Executive Director Mental Health Association of Central Carolinas, Inc. North Carolina Mental Health Association Collaborative
Karen Kincaid Dunn Executive Director Club Nova Community, Inc. Member, North Carolina Clubhouse Coalition
Susie Deter Executive Director Threshold Member, North Carolina Clubhouse Coalition
William D. Rowe Director of Advocacy North Carolina Justice Center
Tracey Sheriff Chief Executive Officer Autism Society of North Carolina
Sue Estroff Mental Health Researcher
Martha Brock Mental Health Consumer and Freelance Writer
3

By their counsel Ira Burnim Jennifer Mathis Bazelon Center for Mental Health Law
4

 
 April 27, 2012

Cynthia Mann

Civil Rights and Human Dignity
BOARD OF TRUSTEES

Deputy Administrator and Director Center for Medicaid, CHIP, and Survey & Certification

Nikki Heidepriem, Chair
Fabiani & Company, Washington, DC
Anita L. Allen
The University of Pennsylvania Law School
David B. Apatoff
Arnold & Porter, Washington, DC
Samuel R. Bagenstos
The University of Michigan Law School

Centers for Medicare & Medicaid Services (CMS) 7500 Security Boulevard, Mail Stop S2-26-12 Baltimore, Maryland 21244-1850
Re: Proposed 1915(i) Option in North Carolina

Dana Bazelon
The Defender Association of Philadelphia

Dear Ms. Mann:

Eileen A. Bazelon
Department of Psychiatry, Drexel University
Rhonda Robinson-Beale
OptumHealth Behavioral Solutions
Robert A. Burt
Yale Law School
Jacqueline Dryfoos
New York, NY

We, a broad array of stakeholders, write to express grave concerns about certain aspects of North Carolina's application for a Section 1915(i) option. Our stakeholder group includes state and national mental health consumer and family groups, service providers, and a former state mental health director.

Kenneth R. Feinberg
Feinberg Rozen, LLP, Washington, DC
Howard H. Goldman, MD
University of Maryland School of Medicine
Jennifer A. Gundlach
Hofstra University School of Law
Terri Langston
Aligning Resources, LLC
Jacki McKinney
People of Color Consumer/Survivor Network
Martha L. Minow
Harvard Law School

North Carolina has a history of adopting policies that reflect an institutional bias. We urge you to scrutinize the state's 1915(i) proposal carefully and ensure that whatever CMS ultimately approves does not perpetuate this bias. Most people with disabilities prefer to live in their own homes rather than large congregate settings. North Carolina's 1915(i) proposal, as currently written, would ignore that preference and continue the needless institutionalization of the thousands of individuals with mental illness and intellectual and other developmental disabilities in adult care homes in North Carolina.

Stephen J. Morse
The University of Pennsylvania Law School
Margaret E. O’Kane
National Committee for Quality Assurance

Adult Care Homes are Institutions and Should Not be Considered Home and Community-Based Settings

Joseph G. Perpich
JG Perpich LLC, Bethesda, MD

The 1915(i) option could be a useful tool to enable North Carolina to offer

Harvey Rosenthal

residents of large, substandard adult care homes the opportunity to be served instead

NY Association of Psychiatric Rehabilitation Services
Elyn R. Saks

in their own homes. Indeed, other states have used this option to promote innovative

University of Southern California Gould School of Law and flexible services in integrated settings, in contrast to North Carolina's proposal to

W. Allen Schaffer, MD
The Acadia Hospital, Bangor, ME
Cynthia M. Stinger
URS Corporation
Martin Tolchin
Journalist and author, Washington, DC
Sally Zinman
Mental Health Consultant, Berkeley, CA

use the option in a way that relies on old service delivery models and does little to promote integration. As you indicated in your May 20, 2010 letter to state Medicaid directors, the 1915(i) option "offers great promise as a tool to prevent institutionalization" and provides "State plan opportunities to serve individuals in the most integrated setting."

HONORARY TRUSTEE Miriam Bazelon Knox, 1914 - 2011
TRUSTEES EMERITI Mary Jane England
Regis College
H. Rutherford Turnbull
Beach Center for Families and Disability
PRESIDENT & CEO Robert Bernstein, Ph.D.

North Carolina's proposed 1915(i) option, however, turns this purpose on its head by including large adult care homes among the "home and community-based" settings covered under the option. Adult care homes are neither home- nor community-based, nor are they the most integrated setting appropriate for individuals with mental illness or intellectual or other developmental disabilities.

Affiliations listed for informational purposes only

1101 Fifteenth Street NW, Suite 1212, Washington DC 20005-5002 202/467-5730, TDD 202/467-4232, fax 202/223-0409 info@bazelon.org www.bazelon.org

Last year, the U.S. Justice Department conducted an investigation of North Carolina's adult care homes and concluded that the state was violating the Americans with Disabilities Act (ADA) and the Olmstead decision by failing to ensure that the thousands of individuals with mental illness living in adult care homes are afforded the opportunity to live in more integrated settings such as supportive housing. The Department concluded that "[a]dult care homes are institutional settings that segregate residents from the community and impede residents' interactions with people who do not have disabilities."1
The Justice Department's findings noted that these homes "appear and function as institutions, not homes where people without disabilities live. People with mental illness who reside in adult care homes live in close quarters primarily with other persons with disabilities, and most aspects of their daily lives are highly regimented and limited by rigid rules and practices."2 Residents of many homes are monitored on video screens, many facilities have curfews as well as highly regimented meal and medication times, and some facilities forbid residents from leaving the grounds unaccompanied or restrict where they may go. Community outings are limited and rigidly scheduled, with residents typically travelling together as a group.3
The "community living standards" proposed in North Carolina's 1915(i) application would not convert North Carolina's large, institutional adult care homes into home and community-based settings. Affording residents telephone access, visitor access, kitchen access, the "ability to work with the facility to achieve the closest optimal roommate situations," the ability to participate in community activities, the assurance of "maximum possible privacy" in the delivery of personal care services, and other similar measures would not change the fact that these are segregated institutional settings where residents live highly regimented lives.
Approving the current version of the 1915(i) option would not only be inconsistent with the Justice Department's findings and incentivize continued institutionalization; it would also set a troubling precedent for other states around the country.
The 1915(i) Option Should Not Be Limited to Individuals Who Require On-site Services
A second concern we have with North Carolina's proposed 1915(i) option is that it appears to be limited to individuals who require "24 caregiver availability."4 It is unclear what this requirement means,
1 Letter of July 28, 2011 from Thomas E. Perez, Assistant Attorney General, U.S. Department of Justice, Civil Rights Division, to Hon. Roy Cooper, Attorney General of North Carolina, at 1, http://www.ada.gov/olmstead/documents/nc_findings_letter.pdf.
2 Id.
3 Id.
4 North Carolina §1915(i) HCBS State plan Services Application, at 12.
2

and we presume that CMS will require clarity before approving any 1915(i) option. If the 24-hour caregiver availability requirement means that the 1915(i) option will be available
only to individuals who have services located on-site in the same building where they live, the option will exclude most individuals living in supportive housing, including individuals who move from adult care homes to supportive housing. If the 1915(i) option were permitted to cover individuals in adult care homes based on the availability of services on-site, but would not cover these same individuals if they moved to scattered-site supportive housing, it would perpetuate their needless institutionalization. This would create a new Olmstead problem and would undermine the Justice Department's efforts to resolve the current Olmstead violations concerning adult care home residents. It would also subvert the recent ruling by a federal judge that North Carolina is violating Olmstead as well as the Medicaid Act's comparability requirement by imposing higher standards for receiving personal care services in community settings than in adult care homes. See Pashby v. Cansler, 2011 WL 6130819 (E.D. N.C. Dec. 8, 2011) (issuing preliminary injunction).
We hope that CMS will take these concerns seriously and will approve a 1915(i) option only if it excludes adult care homes and does not require that participants need 24-hour on-site service availability. A 1915(i) option that is structured to perpetuate institutionalization in adult care homes rather than to promote a much-needed expansion of the integrated settings in North Carolina’s existing community system would be inconsistent with Olmstead as well as the Medicaid Act.
Thank you for your consideration.
Sincerely,
Ira Burnim Jennifer Mathis Bazelon Center for Mental Health Law Counsel for North Carolina Stakeholders Listed Below
3

Connie Cochran President and CEO Easter Seals UCP North Carolina & Virginia, Inc.
Deby Dihoff Executive Director National Alliance on Mental Illness (NAMI) North Carolina
Ron Honberg National Director for Policy and Legal Affairs National Alliance on Mental Illness (NAMI)
Laurie Coker Director North Carolina Consumer Advocacy, Networking, and Support Organization
Michael S. Pedneau Former North Carolina State Director of Mental Health, Developmental Disabilities and Substance Abuse
Pender R. McElroy Board Chair Mental Health America
Ellis C. Fields Executive Director Mental Health Association of Central Carolinas, Inc. North Carolina Mental Health Association Collaborative
Karen Kincaid Dunn Executive Director Club Nova Community, Inc. Member, North Carolina Clubhouse Coalition
Susie Deter Executive Director Threshold Member, North Carolina Clubhouse Coalition
William D. Rowe Director of Advocacy North Carolina Justice Center
4

Sue Estroff Mental Health Researcher Martha Brock Mental Health Consumer and Freelance Writer cc: Barbara Edwards
5

 
 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION Civil Case No. 5:12-cv-557

THE UNITED STATES OF AMERICA, )

)

Plaintiff,

)

)

v.

)

)

STATE OF NORTH CAROLINA,

)

)

Defendant.

)

________________________________ )

NOTICE OF WITHDRAWAL

NOW COMES the Defendant, the State of North Carolina, Lisa Granberry Corbett,

former Special Deputy Attorney General and Josephine N. Tetteh, Assistant Attorney General,

pursuant to Local Rule 5.2(d), and gives notice that Lisa Granberry Corbett is withdrawing as

counsel for the foregoing Defendant. Undersigned counsel, admitted to practice by this Court,

has appeared as counsel in this action on behalf of the Defendant, the State of North Carolina in

addition to Michael T. Wood, Special Deputy Attorney General and Brian D. Rabinovitz,

Assistant Attorney General.

The undersigned hereby requests that Lisa Granberry Corbett be removed from the

docket and that all future pleadings, motions, notices, correspondence and other papers relating

to the above-captioned action be sent to the undersigned.

Respectfully submitted, this 13th day of January, 2017.

JOSH STEIN Attorney General

/s/ Josephine N. Tetteh Josephine N. Tetteh Assistant Attorney General P.O. Box 629 Raleigh, North Carolina 27602-0629

Case 5:12-cv-00557-D Document 21 Filed 01/13/17 Page 1 of 3

NC State Bar No. 38552 Telephone: (919) 716-6875 Facsimile: (919) 716-6756 Email: jtetteh@ncdoj.gov
Case 5:12-cv-00557-D Document 21 Filed 01/13/17 Page 2 of 3

CERTIFICATE OF SERVICE The undersigned hereby certifies that she electronically filed a copy of the foregoing NOTICE OF WITHDRAWAL with the Court through the Court’s CM/ECF system and thereby served this document upon the counsel of record who are registered with that system. I further certify that I have mailed the document to the following non CM/ECF participants: none. Dated this the 13th day of January, 2017.
/s/ Josephine N. Tetteh Josephine N. Tetteh Assistant Attorney General
Case 5:12-cv-00557-D Document 21 Filed 01/13/17 Page 3 of 3

 
 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION

THE UNITED STATES OF AMERICA,
Plaintiff, v.
STATE OF NORTH CAROLINA,
Defendant.

Case No. 5:12-cv-5-57-D

CONSENT ORDER ENTERING MODIFICATION OF SETTLEMENT AGREEMENT
AND EXTENDING JURISDICTION Having considered the Joint Motion to Enter Modification of Settlement Agreement and Extend Jurisdiction ("Joint Motion") submitted in response to the Order directing the parties to file agreed-upon modifications to the Settlement Agreement's original timeline, D.E. 29, the Court hereby GRANTS the Joint Motion and specifically retains jurisdiction to enforce the Settlement.Agreement as modified by the Modification of the Settlement Agreement, filed as Attachment A to the Joint Motion, incorporated here by reference.
SO ORDERED. This \ day ofNovember 2017.
JA SC. DEVER ill
Chief United States District Judge

Case 5:12-cv-00557-D Document 32 Filed 11/01/17 Page 1 of 1

 
 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION 5:12-CV-557-D

UNITED STATES OF AMERICA,

)

)

)

Plaintiff,

)

)

v.

)

)

STATE OF NORTH CAROLINA,

)

)

Defendant.

)

ORDER

On August 23, 2012, the United States ofAmerica sued the State ofNorth Carolina (''the State") over alleged violations ofTitle II ofthe Americans with Disabilities Act, 42 U.S.C.§ 12132, Title IT's implementing regulations, Section 504 of the Rehabilitation Act, 29 U.S.C. § 794, and Section 504's implementing regulations [D.E. 1]. That same day, the parties jointly moved to dismiss the case and for the court to retain jurisdiction to enforce a settlement agreement the parties had executed [D.E. 2]. On October 5, 2012, the court granted the motion to dismiss and retained jurisdiction to enforce the settlement agreement [D.E. 13].
On January 9, 2017, the United States moved to enforce the settlement agreement [D.E. 15]. On March 1, 2017, the State responded in opposition [D.E. 23]. On March 22, 2017, the United States replied [D.E. 25]. As explained below, the court grants the United States' motion in part and denies it in part.
I. The Americans with Disabilities Act ("ADA") prohibits public entities-such as North Carolina-from discriminating against individuals with disabilities. "[N]o qualified individual with

a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits ofthe services, programs, or activities ofa public entity, or be subjected to discrimination by any such entity." 42 U.S.C. § 12132.1 Congress directed the Attorney General to issue regulations implementing this discrimination proscription. See id. § 12134(a). One ofthe ADA's implementing regulations, calledthe "integration regulation," requires public entities ''to administer services, programs, and activities in the most integrated setting appropriate to the needs ofqualified individuals with disabilities." 28 C.F.R. § 35.130(d). "[T]he most integrated setting appropriate to the needs of qualified individuals with disabilities" means "a setting that enables individuals with disabilities to interact with non-disabled persons to the fullest extent possible." 28 CFR pt. 35, app. B. The integration regulation recognizes ''that unjustified placement or retention of persons in institutions, severely limiting their exposure to the outside community, constitutes a form of discrimination based on disability prohibited by Title II." Olmstead v. L.C. ex rei. Zimring, 527 U.S. 581, 596 (1999).
On November 17, 2010, the United States began investigating North Carolina's mentalhealth-service system for compliance with Title II. See [D.E. 15-3] 4. Before the investigation, the State relied heavily on adult-care homes in administering its mental-health-service system. See Compl. [D.E. 1] ,, 23, 26. Adult-care homes "provide room and board, housekeeping, and personal care services for two or more unrelated adults." ld. , 22. The facilities are not, however, designed to serve their residents' mental-health needs. See id. North Carolina's adult-care homes isolated residents-"a significant percentage ofwhom have diagnoses ofmental illness"-from nondisabled
1 The United States also brought a claim under Section 504 of the Rehabilitation Act, 29 U.S.C. § 794(a). Title II and Section 504 share the same integration requirements, and courts analyze them together. See Pashby v. Deli!!, 709 F.3d 307, 321 (4th Cir. 2013).
2

persons. Id. W31, 36. Several reports from North Carolina agencies acknowledged that adult-care
homes fell short of integrating disabled persons into the community. See id. ~~ 37-38. On July 28, 2011, the United States sent North Carolina's Attorney General Roy Cooper a
letter detailing the investigation's findings. See [D.E. 15-3]. The United States concluded that North Carolina "fails to provide services to individuals with mental illness in the most integrated setting appropriate to their needs in violation ofthe ADA." ld. at 2. Specifically, North Carolina "plans, administers, and funds its mental health service system in a manner that unnecessarily segregates persons with mental illness in institutional adult care homes, rather than providing services to them in community-based settings." Id. at 6. As the Supreme Court has held, the "unjustified institutional isolation ofpersons with disabilities is a form ofdiscrimination" prohibited under Title IT. Olmstead, 527 U.S. at 600. Title IT and its integration regulation requires states
to provide community-based treatment for persons with mental disabilities when the State's treatment professionals determine that such placement is appropriate, the affected persons do not oppose such treatment, and the placement can be reasonably accommodated, taking into account the resources available to the State and the needs of others with mental disabilities. Id. at 607. According to the United States, North Carolina's use of adult-care homes violated the ADA and Olmstead. See [D.E. 15-3] 7. After the State received the letter detailing the investigation's findings, the parties exchanged proposals for resolving the identified deficiencies. See Compl. ~ 51. illtimately, the parties executed a settlement agreement that includes certain remedial measures. See id.; [D.E. 2-2]. The measures aim ''to provide adequate and appropriate public services and supports ... in the most integrated setting appropriate to meet the needs" ofindividuals with serious mental illness ''who are in or at risk ofentry to an adult care home." [D.E. 2-2] § ill(A). Two provisions concerning housing and employment are relevant here.
3

The settlement agreement requires the State to "develop and implement measures to provide individuals ... access to community-based supported housing." Id. § III(B)(1 ). Community-based supported housing enables residents to attain and maintain affordable housing that integrates them with the community to permit "individuals with disabilities to interact with individuals without disabilities to the fullest extent possible." Id. § III(B)(7)(c). Under the settlement agreement, by July 1, 2020, the State must increase its capacity for supported housing by "provid[ing] access to 3,000 Housing Slots." Id. § III(B)(3). "Housing Slots" are "State or federal housing vouchers and/or rental subsidies for community-based supported housing" that include "a package of tenancy support, transition support[,] and rental support." ld. § II(A). In short, supported housing slots combine permanent housing that includes tenancy rights with tenancy support services ''that enable residents to attain and maintain integrated, affordable housing." ld. § III(B)(7)(b). The settlement agreement establishes annual, incremental obligations for the number of such housing slots the State must provide. See id. § III(B)(3). By July 1, 2016, the State was required to provide such housing slots "to at least 1,166 individuals." Id. § III(B)(3)(d).
The settlement agreement also requires the State to provide "Supported Employment Services" to individuals with serious mental illness ''who are in or at risk of entry to an adult care home." ld. § III(D)(1). "Supported employment services" are "services that will assist individuals inpreparing for, identifying, and maintaining integrated, paid, competitive employment." Id. Again, the settlement agreement establishes annual, incremental obligations dictating the pace at which the State must increase its capacity to provide supported employment services. See id. § III(D)(3). By July 1, 2016, the State was required to provide supported employment services ''to a total of 1,166 individuals." Id.
4

II. According to the United States, as of July 1, 2016, the State failed to meet its obligations under the settlement agreement. The State had provided only 650 ofthe required 1,166 housing slots and provided supported employment services to only 708 of the required 1,166 individuals. See [D.E. 15-19] 3, 8. As for the events leading to the States' alleged failure, in April 2014, the State began providing monthly reports on its progress toward compliance with the settlement agreement's
housing and employment-services requirements. See [D.E. 15-1] 11 n.5. In the monthly reports for
April, May, June, and July of2014, the State reported its compliance with its obligations to provide certain numbers ofhousing slots by counting the number ofindividuals "in housing with confirmed lease," i.e., by counting only occupied housing slots. See [D.E. 15-7] 2, 6 (April2014 monthly report); [D.E. 15-6] 2, 5 (May 2014 monthly report); [D.E. 15-5] 2, 9 (June 2014 monthly report); [D.E. 15-4] 3, 6 (July 2014 monthly report). Beginning with the August 2014 monthly report, in addition to the occupied housing slots the State displayed a column labeled ''total." See [D.E. 15-8] 4. According to the United States, the ''total" column represented the total number ofoccupied and vacant housing slots, the latter being housing slots yet to be reassigned after the former tenant left. See [D.E. 15-1] 12 & n.6. Starting with the January 2015 report, the State measured compliance by referencing the combined number of occupied and vacated housing slots. See [D.E. 15-9] 3.
On March 17, 2015, the United States advised the State thatthe federal government disagreed withthe State's interpretation ofhowto measure compliance withthe supported-housing provisions. See [D.E. 15-10] 3-4. The United States noted the State's position as being that "[c]ompliance with the supported housing obligations should be measured against the gross number ofpeople who have ever transitioned into supported housing under the SettlementAgreement, regardless ofwhetherthey
5

left supported housing, when they left, what services and supports they received while in supported housing, or why they left." Id. at 3. According to the United States, "[c]ompliance with the supported housing provisions ofthe SettlementAgreement is measured by examining the netnumber of people in supported housing on the given compliance dates." Id.
On June 29, 2015, the State responded. See [D.E. 15-11]. The State "disagree[d) with counting only the 'net' number of individuals in housing slots on a certain date." Id. at 3. Instead, the State contended that "[i]f the individual enters into a qualifying residence, and has tenancy support, transition support and rental support, that individual has been provided a Housing Slot, and counts towards the numeric goal," even ifthe individual later vacates the slot. Id. On May 27, 2016, the State reiterated this position in a letter: "[T]he State will continue to report (currently monthly) the number ofindividuals in the priority populations who have been provided housing slots over the course ofthe settlement as well as the number ofindividuals currently housed at the end ofthe time period." [D.E. 15-12] 3.
The State's interpretationofcompliance withthe settlement agreement's employment-service requirements also shifted over time. During the settlement agreement's first three years, the State reported compliance as the number ofindividuals in the target population-individuals with mental illness who are in or at risk of entry to an adult care home-receiving supported employment services on the reporting dates. See,~' [D.E. 15-24] 2 (2014 annual report). Although the State acknowledged that it provides employment services to individuals outside the target population, it did not count those individuals. See, ~' [D.E. 15-25] 3 (Dec. 2014 monthly report); [D.E. 15-26] 3 (2014 Annual Report). Indeed, in June and July 2015 the State did not report compliance because the State was "assess[ing] if all individuals reported [met] the in or at risk definition for supported employment." [D.E. 15-27] 3 (July2015 monthly report); [D.E. 15-13] 3. The October2014report
6

stated that ''the State is conducting onsite Supported Employment reviews to make sure the people met the definition of 'in or at risk ofentry to an adult care home' as laid out in the settlement." [D.E. 15-28] 3 (Oct. 2014 monthly report). The State later changed course and began measuring compliance by counting anyone receiving supported employment services, regardless ofwhether the person was in the target population. See [D.E. 15-12] 3-4.
m.
The United States moves to enforce the settlement agreement. According to the United States, the State misconstrues its housing and employment-services obligations by misinterpreting how to measure compliance with these obligations. The United States contends that the housing obligation requires the State to count only individuals residing in permanent supported housing as of the reporting date, and that the employment-services obligation requires the State to count only those individuals within the target population who received supported employment services.
The court has jurisdiction to enforce the settlement agreement. See Kokkonen v. Guardian Life Ins. Co. ofAm., 511 U.S. 375,381 (1994); Columbus-Am.DiscoveryGr;p. v.AtlanticMut.Ins. Co., 203 F.3d 291,299 (4th Cir. 2000). Nonetheless, the State initially argues that the court cannot resolve the United States' motion to enforce because the United States ignored the settlement agreement's dispute-resolution provisions before filing its motion.
The settlement agreement includes procedures for resolving disputes about the State's compliance. Before involving the court, if the United States thinks the State is noncompliant, the United States must notify the State in writing ofthe alleged noncompliance and ask the State to take corrective action. See [D.E. 2-2] § V(F). The State has 45 days to respond by denying the noncompliance or accepting the allegation and proposing corrective action. See id. If the State proposes corrective action, the United States "may accept the State's proposal or offer a
7

counterproposal for a different curative action or deadline." Id. § V(G). Ifthe parties fail to reach an agreement, the United States "may seek an appropriate judicial remedy." ld.
The United States followed this procedure. After the parties failed to resolve the issues, on November 6, 2015, the United States formally requested a corrective-action plan under section V(F). See [D.E. 15-15]. On December 22,2015, the State responded with a proposed corrective-action plan. See [D.E. 15-16]; [D.E. 23-5]. OnMarch24, 2016, the United States identified shortcomings in the State's plan and made recommendations to the State concerning effective corrective action. See [D.E. 15-17]. These steps exhausted the United States' obligations under the settlement agreement and permitted the United States to "seek an appropriate judicial remedy." Thus, the court addresses the United States' motion to enforce the settlement agreement.
IV. "[A] motion to enforce a settlement agreement draws on standard contract principles." Hensley v. Alcon Labs.• Inc., 277 F.3d 535, 540 (4th Cir. 2002). Here, federal common law supplies these principles. See Gamewell Mfg.. Inc. v. HVAC Suwly. Inc., 715 F.2d 112, 115-16 (4th Cir. 1983); Washington v. Hartford Life &Accident Ins. Co., No. 5:16-CV-173-BO, 2017 WL2930579, at *1 (E.D.N.C. July 6, 2017) (unpublished). The court seeks to discern the parties' intent at the time they made the agreement. Intent is derived not from a particular contractual term but from the contract as a whole. See, e.g., Johnson v. Am. United Life Ins. Co., 716 F.3d 813, 820 (4th Cir. 2013). The subject matter and purpose of the contract help discern the parties' intent. See id. Courts also must consider evidence of the parties' own interpretation of the contract before the controversy arose. The parties' own interpretation of the settlement agreement's terms, as demonstrated by how the parties carried out its terms after its execution, offers compelling evidence of the parties' intent. See,~' Mgmt. Sys. Assocs., Inc. v. McDonnell Douglas Cor;p., 762 F.2d
8

(
1161, 1171-72 (4th Cir. 1985). This dispute concerns how the parties intended to measure the State's compliance with the
settlement agreement's housing and employment-services provisions. As for housing, the United States contends that compliance requires counting only occupied housing slots as ofthe reporting date, while the State relies on the number ofhousing slots that are both currently occupied and were occupied at one point during the reporting period. As for employment services, the United States argues that the number of individuals in the target population receiving supported employment services governs, while the State claims it can count all individuals receiving those services, regardless ofwhether the individual was within the settlement agreement's target population.
A. Section ill(B)(3) governs the State's housing obligations. In light ofthe text, the purpose of the settlement agreement, and the parties' initial interpretation ofthe settlement agreement, the court concludes that the parties intended to measure compliance by counting only occupied housing slots as ofthe reporting date. Through the settlement agreement, the parties "intend[ed] that the goals of community integration and selfdetermination will be achieved." [D.E. 2-2] § I(C). The agreement's "intended outcomes" were "increased integration, stable integrated housing, and decreased hospitalization and institutionalization." Id. § ill(G)(7). To achieve these intended outcomes, section ill(B)(3) obligates the State to meet provide an additional458 or 459 housing slots eachyear from the second year ofthe agreement until its conclusion: 3. The State will provide access to 3,000 Housing Slots in accordance with the
following schedule: a. By July 1, 2013 the State will provide Housing Slots to at least 100 and up to 300 individuals.
9

b. By July 1, 2014 the State will provide Housing Slots to at least 150 additional individuals. c. By July 1, 2015 the State will provide Housing Slots to at least 708 individuals. d. By July 1, 2016 the State will provide Housing Slots to at least 1,166 individuals. e. By July 1, 2017 the State will provide Housing Slots to at least 1,624 individuals. f. By July 1, 2018 the State will provide Housing Slots to at least 2,082 individuals. g. By July 1, 2019 the State will provide Housing Slots to at least 2,541 individuals. h. By July 1, 2020 the State will provide Housing Slots to at least 3,000 individuals. To achieve the settlement agreement's stated purpose of increasing community integration, this provision imposes an obligation concerning occupied housing slots as ofthe compliance date. Only by building its community-based housing capacity year over year can the State hope to create a system of community integration that remedies the deficiencies that the initial investigation identified. This reading ofsection III(B)(3) comports most closely with the parties' intent. Consider the implications ofthe State's proposed interpretation. The State reads section III(B)(3) as measuring compliance "by reference to the running, cumulative total number of individuals the State has transitioned to Housing Slots overtime." [D.E. 23] 16-17. As the United States notes, "[t]aken to its logical extreme, North Carolina's position could result in a 'compliant' system in which no one resides in supported housing by the Agreement's end." [D.E. 25] 4. Indeed, under the State's reading it would not matter if every individual who received a housing slot immediately abandoned it and
10

moved back into an adult home care-the exact problem the parties sought to remedy. On July 1, 2020, the status quo could match that which precipitated the settlement agreement in the first place, yet the State could claim that it achieved the settlement agreement's intent. The State's position, if accepted, could eviscerate the settlement agreement. Only by measu.rj.ng compliance by counting the housing slots actually occupied on the reporting date could the parties expect to achieve the systemic change needed to accomplish the settlement agreement's purpose-providing meaningful community-based alternatives to segregated adult-care homes.
The parties' course of conduct after they executed the settlement agreement confirms this interpretationoftheparties' intent. lnApril2014, the State beganprovidingmonthlyreports. In the April, May, June, and July 2014 monthly reports, the State reported compliance by referencing the number of individuals actually in housing as of the reporting date. Even before it began filing monthly reports, the State reported compliance the same way. See [D.E. 15-22] 6 (first year' summary); [D.E. 15-23] 2 (update as ofJan. 6, 2014). The Independent Reviewer also reported the State's compliance in terms of how many individuals actually occupied housing slots on the reporting date. See [D.E. 23-9] 29 (Oct. 1, 2016 report) (stating that the State's current pace would "not result in 3,000 slots in use at the time the Agreement is setto expire"); [D.E. 23-4]10 (Oct. 14, 2015 report) ("Filling the exact number of slots as required in this Agreement or in any housing program requires refilling a substantial number ofHousing Slots that are vacated over the course of eight years."). This post-agreement course of conduct confirms the parties' intent to measure compliance by counting the number of occupied housing slots, regardless ofturnover.
The settlement agreement's purposes and the parties' interpretation of the settlement agreement's requirements reveal the parties' intent to measure compliance by reference to the number of housing slots actually occupied on the reporting date. As of the July 1, 2016 reporting
11

date, the State was providing housing slots to only 650 of the required 1,166 individuals-56% of the expected capacity. Thus, the State was not in substantial compliance with its July 1, 2016 obligations. See [D.E. 2-2] § V(B) ("Substantial compliance is achieved if any violations of the Agreement are minor and occasional and are not systemic.").
B.
Section ITI(D) governs the State's employment-services obligation. Again, in light of the text, the purpose ofthe settlement agreement, and the parties' initial interpretation ofthe settlement agreement, the court concludes that the parties intended to measure compliance with section ITI(D) by counting only individuals in the target population who received supported employment services. Section ITI(D) contains three paragraphs. The first paragraph identifies the subsection's objective: "The State will develop and implement measures to provide Supported Employment Services to individuals with SMI, who are in or at risk of entry to an adult care home, that meet their individualized needs." [D.E. 2-2] § ITI(D)(1). The second paragraph ensures the quality of those services: "Supported Employment Services will be provided with fidelity to an evidence-based supported employment model for supporting people in their pursuit and maintenance of integrated, paid, competitive work opportunities." Id. § ITI(D)(2). The third paragraph dictates the timeline for the State to provide those services: "[B]y July 1, 2016, the State will provide Supported Employment Services to a total of 1,166 individuals." ld. § ITI(D)(3). When read in conjunction with section ITI(D)(1), section ITI(D)(3)'s reference to "individuals" refers to "individuals with SMI, who are in or at risk of entry to an adult care home." Thus, the parties intended to measure compliance with section ITI(D)(3) by counting only individuals in this target population.
This reading comports with the settlement agreement's stated purpose ofserving ''the needs of individuals with SMI, who are in or at risk of entry to an adult care home." Id. § ITI(A).
12

Conversely, the State's interpretation ignores the settlement agreement's text and purpose. Under the State's reading, it could claim compliance with the employment-services provision even ifit did not provide those services to a single individual in the population the settlement agreement aims to help.
As with the housing provision, the parties' post-agreement course ofconduct concerning the State's employment-services obligation confirms the United States' reading. During the settlement agreement's first three years, the State reported compliance as the number ofindividuals with mental illness who are in or at risk ofentry to an adult care home who were receiving supported employment services on the reporting dates. Several times the State chose not to report compliance because the State was "assess[ing] if all individuals reported [met] the in or at risk definition for supported employment." [D.E. 15-27] 3 (July2015 monthly report); [D.E. 15-13] 3. In fact, the October2014 report embraced the reading the State now disavows: "[T]he State is conducting onsite Supported Employment reviews to make sure the people met the definition of 'in or at risk ofentry to an adult care home' as laid out in the settlement." [D.E. 15-28] 3 (Oct. 2014 monthly report). The Independent Reviewer also evaluated the State's compliance in terms ofthe target population. See [D.E. 23-9] 57 (Oct. 1, 2016 report). This post-agreement course ofconduct confirms that the parties intended to measure compliance by counting only those individuals within the target population to whom the State provided supported employment services.
The settlement agreement's text and the parties' course of conduct immediately following its execution reveal the parties' intent to measure compliance with section III(D)(3) by reference to individuals within the target population. As of July 1, 2016, only 708 individuals from the target population of the required 1,166 received supported employment services-61% of the expected number. Thus, the State was not in substantial compliance with its July 1, 2016 obligations.
13

v.
As a remedy for the State's noncompliance with its July 1, 2016 obligations under sections ll(B)(3) and ill(D)(3) ofthe settlement agreement, the United States requests specific enforcement pursuant to schedule ofrevised monthly obligations. See [D.E. 15-1] 29-30, 32-33. In opposition, the State contends that the settlement agreement prevents the court from modifying the timeline for the State to comply with its obligations. In support, the State cites section V(H):
Any modification ofthis Settlement Agreement must be consented to by the Parties, shall be executed in writing by the Parties, shall be filed with the Court, and shall not be effective until the Court enters the modified agreement and retains jurisdiction to enforce it. [D.E. 2-2] § V(H). The court need not conclusively determine the meaning of section V(H). Instead, the court will give the parties an opportunity to negotiate in good faith and reach an agreement concerning any modified timeline in light ofthe court's conclusions concerning sections ill(B)(3) and ill(D). The parties shall file any agreed-to modifications with the court by October 27,2017.
VI. In sum, the court GRANTS IN PART and DENIES IN PART the United States' motion to enforce the settlement agreement [D.E. 15]. Compliance with section ill(B)(3) of the settlement agreement is measured by counting the number of occupied housing slots on the relevant compliance dates. Compliance with section ill(D) of the settlement agreement is measured by counting the number ofindividuals with serious mental illness in or at risk ofentry to an adult care home who received supported employment services. Thus, North Carolina failed to substantially comply with its July 1, 2016 obligations under sections ill(B)(3) and ill(D). The parties shall negotiate in good faith and file any agreed-to modifications by October 27,2017.
14

SO ORDERED. This..&_ day of September 2017. J S C. DEVER III ChiefUnited States District Judge
15

 
 Case: 5:12-cv-557 As of: 11/01/2017 08:02 PM EDT 1 of 5
CLOSED,USMJ Gates
U.S. District Court EASTERN DISTRICT OF NORTH CAROLINA (Western Division)
CIVIL DOCKET FOR CASE #: 5:12−cv−00557−D

United States of America v. State of North Carolina Assigned to: Chief Judge James C. Dever, III Cause: 42:12101 The Americans with Disabilities Act of 1990
Plaintiff

Date Filed: 08/23/2012 Date Terminated: 10/05/2012 Jury Demand: None Nature of Suit: 446 Civil Rights: Americans with Disabilities − Other Jurisdiction: U.S. Government Plaintiff

United States of America

represented by Anne S. Raish U. S. Department of Justice 1425 New York Avenue, N.W. Washington, DC 20005 202−305−1321 Fax: 202−307−1197 Email: anne.raish@usdoj.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED

G. Norman Acker , III United States Attorney's Office 310 New Bern Avenue, Suite 800 Raleigh, NC 27601 919−856−4315 Fax: 919−856−4821 Email: norman.acker@usdoj.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED

Joy L. Welan United States Department of Justice Disability Rights Section, Civil Rights Division 1425 New York Avenue, N.W. Washington, DC 20005 202−305−1894 Fax: 202−305−9775 Email: joy.welan@usdoj.gov TERMINATED: 10/27/2017

Julia M. Graff United States Department of Justice − Civil Rights Division 950 Pennsylvania Avenue NW Washington, DC 20530 202−616−5319 Fax: 202−514−7821 Email: julia.graff@usdoj.gov ATTORNEY TO BE NOTICED

Teresa Yeh United States Department of Justice − Civil Rights Division 950 Pennsylvania Avenue NW Washington, DC 20530 202−616−4784 Fax: 202−514−7821 Email: Teresa.Yeh@usdoj.gov TERMINATED: 09/21/2017

Case: 5:12-cv-557 As of: 11/01/2017 08:02 PM EDT 2 of 5

Travis W. England U. S. Department of Justice 1425 New York Avenue, N.W. Washington, DC 20005 202−616−2042 Fax: 202−307−1197 Email: travis.england@usdoj.gov TERMINATED: 09/21/2017

V. Defendant State of North Carolina

represented by Brian D. Rabinovitz North Carolina Deptartment of Justice 114 West Edenton Street, 9001 Mail Service Center Post Office Box 629 Raleigh, NC 27602−0629 919−716−6863 Fax: 919−716−6759 Email: brabinovitz@ncdoj.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
Josephine N. Tetteh N.C. Dept. of Justice P.O. Box 629 114 W. Edenton St. Raleigh, NC 27602−0629 919−716−6875 Fax: 919−716−6756 Email: jtetteh@ncdoj.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lisa G. Corbett N.C. Department of Health and Human Services 2001 Mail Service Center Raleigh, NC 27699−2001 919−855−4800 Fax: 919−733−3854 Email: lisa.corbett@dhhs.nc.gov TERMINATED: 01/13/2017 LEAD ATTORNEY
Michael T. Wood North Carolina Department of Justice Post Office Box 629 114 West Edenton Street Raleigh, NC 27602−0629 919−716−0186 Fax: 919−716−6758 Email: MWood@ncdoj.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED

Date Filed 08/23/2012

# Docket Text
1 COMPLAINT for Declaratory and Injunctive Relief against State of North Carolina, filed by United States of America. (Attachments: # 1 Civil Cover Sheet, # 2 Proposed Summons for State of North Carolina) (Welan, Joy) (Entered: 08/23/2012)

Case: 5:12-cv-557 As of: 11/01/2017 08:02 PM EDT 3 of 5

08/23/2012
08/23/2012
08/23/2012 08/23/2012 08/23/2012 08/24/2012 08/24/2012 08/29/2012 09/05/2012 09/07/2012 09/11/2012
09/11/2012
09/14/2012
09/15/2012 09/17/2012 10/05/2012
01/09/2017 01/09/2017

2 Joint MOTION to Dismiss Without Prejudice and Retain Jurisdiction by United States of America. (Attachments: # 1 Text of Proposed Order, # 2 Exhibit Settlement Agreement) (Welan, Joy) (Entered: 08/23/2012)
3 Memorandum in Support regarding 2 Joint MOTION to Dismiss Without Prejudice and Retain Jurisdiction filed by United States of America. (Welan, Joy) (Entered: 08/23/2012)
NOTICE TO COUNSEL − Counsel should file a Notice of Appearance pursuant to Local Civil Rule 5.2(a). (Heath, D.) (Entered: 08/23/2012)
4 NOTICE of Appearance by Joy L. Welan on behalf of United States of America (Welan, Joy) (Entered: 08/23/2012)
5 Summons Issued as to State of North Carolina. (Grady, B.) (Entered: 08/23/2012)
6 NOTICE of Appearance by Travis W. England on behalf of United States of America (England, Travis) (Entered: 08/24/2012)
7 NOTICE of Appearance by Anne S. Raish on behalf of United States of America (Raish, Anne) (Entered: 08/24/2012)
8 NOTICE of Appearance by Lisa G. Corbett on behalf of State of North Carolina (Corbett, Lisa) (Entered: 08/29/2012)
Motion Submitted to Senior Judge James C. Fox: 2 Joint MOTION to Dismiss Without Prejudice and Retain Jurisdiction. (Edwards, S.) (Entered: 09/05/2012)
9 NOTICE by United States of America of Service (Attachments: # 1 Exhibit A) (Welan, Joy) (Entered: 09/07/2012)
NOTICE OF DEFICIENCY regarding: 9 Notice−(other). Failure to identify exhibit pursuant to Section L(2)(b) of the Court's Electronic Policy and Procedure Manual. Counsel is directed to refile the Notice and identify the exhibit. (Heath, D.) (Entered: 09/11/2012)
10 NOTICE by United States of America of Service (Attachments: # 1 Exhibit A −− Postal Service Form 3811: Return Receipt Proof of Service) (England, Travis) (Entered: 09/11/2012)
11 MOTION for Extension of Time to File Answer regarding 1 Complaint by State of North Carolina. (Attachments: # 1 Text of Proposed Order) (Corbett, Lisa) (Entered: 09/14/2012)
MOTION REFERRED Julie A. Richards, Clerk of Court: 11 MOTION for Extension of Time to File Answer regarding 1 Complaint. (Edwards, S.) (Entered: 09/15/2012)
12 ORDER granting 11 Motion for Extension of Time to Answer. Signed by Julie A. Richards, Clerk of Court on 9/17/2012. (Marsh, K) (Entered: 09/17/2012)
13 ORDER granting 2 Motion to Dismiss. Counsel is reminded to read the order in its entirety for further information. Signed by Senior Judge James C. Fox on 10/5/2012. (Edwards, S.) (Entered: 10/05/2012)
14 Notice of Appearance filed by Julia M. Graff on behalf of United States of America. (Graff, Julia) (Entered: 01/09/2017)
15 MOTION to Enforce Settlement Agreement (D.E. 2−2) filed by United States of America. (Attachments: # 1 Memorandum in Support of Motion to Enforce Settlement Agreement, with Proposed Order, # 2 Exhibit List, # 3 Exhibit A − Letter of Findings (July 28, 2011), # 4 Exhibit B − July 2014 Monthly Report (Aug. 25, 2014), # 5 Exhibit C − June 2014 Monthly Report (undated), # 6 Exhibit D − May 2014 Monthly Report (undated), # 7 Exhibit E, − April 2014 Monthly Report (undated) # 8 Exhibit F − August 2014 Monthly Report (Sept. 25, 2014), # 9 Exhibit G − January 2015 Monthly Report (Feb. 25, 2015), # 10 Exhibit H − Letter from Nicholas Lee to Lisa Corbett (Mar. 17, 2015), # 11 Exhibit I − Letter from Lisa Corbett to Nicholas Lee (June 29, 2015), # 12 Exhibit J − May 2016 Letter from North Carolina (May 27, 2016), # 13 Exhibit K − June 2015 Monthly Report (July 27, 2015), # 14 Exhibit L − August 2015 Monthly Report (Sept. 30, 2015), # 15 Exhibit M − Letter from Nicholas Lee to Roy Cooper and Richard Brajer (11/6/15), # 16 Exhibit N − Letter from

Case: 5:12-cv-557 As of: 11/01/2017 08:02 PM EDT 4 of 5

01/09/2017
01/09/2017
01/09/2017 01/09/2017 01/11/2017 01/11/2017 01/13/2017 01/13/2017 01/25/2017
01/25/2017 01/25/2017
03/01/2017

Richard Brajer to Nicholas Lee (Dec. 22, 2015), # 17 Exhibit O − Letter from Nicholas Lee to Roy Cooper and Richard Brajer (3/24/16), # 18 Exhibit P − Letter from Teresa Yeh to Roy Cooper and Richard Brajer (10/21/16), # 19 Exhibit Q, − June 2016 Monthly Report (July 28, 2016) # 20 Exhibit R − N.C. Supportive Housing Corrective Action Plan (June 3, 2016), # 21 Exhibit S − November 2016 Monthly Report (Dec. 29, 2016), # 22 Exhibit T − Year One Summary (Aug. 7, 2013), # 23 Exhibit U − Transitions to Community Living Update as of January 6, 2014, # 24 Exhibit V − Supported Employment Strategic Plan (Sept. 2014), # 25 Exhibit W, − December 2014 Monthly Report (Jan. 27, 2015) # 26 Exhibit X − 2014 Annual Report (May 15, 2015), # 27 Exhibit Y − July 2015 Monthly Report (Aug. 25, 2015), # 28 Exhibit Z) (Graff, Julia) Modified on 3/22/2017 to identify exhibits. (Grady, B.) (Entered: 01/09/2017)
NOTICE OF DEFICIENCY regarding 14 Notice of Appearance. Counsel is directed to flatten the notice of appearance and refile in accordance with Section B(3) of the CM/ECF Policies and Procedures Manual. Additionally, counsel should include a certificate of service. (Grady, B.) (Entered: 01/09/2017)
REMINDER TO COUNSEL. Pursuant to Judge Fox's Practice Preferences located on the court's website, counsel shall provide a courtesy copy of lengthy briefs, by mailing or delivering to the clerk's office in Wilmington. Also, in the future, counsel should properly identify exhibits in the docket text pursuant to Section L of the CM/ECF Policies and Procedures Manual. (Grady, B.) (Entered: 01/09/2017)
16 Notice of Appearance filed by Julia M. Graff on behalf of United States of America. (Graff, Julia) (Entered: 01/09/2017)
17 Notice of Appearance filed by Teresa Yeh on behalf of United States of America. (Yeh, Teresa) (Entered: 01/09/2017)
18 Notice of Appearance filed by Michael T. Wood on behalf of State of North Carolina. (Wood, Michael) (Entered: 01/11/2017)
19 Notice of Appearance filed by Brian D. Rabinovitz on behalf of State of North Carolina. (Rabinovitz, Brian) (Entered: 01/11/2017)
20 Notice of Appearance filed by Josephine N. Tetteh on behalf of State of North Carolina. (Tetteh, Josephine) (Entered: 01/13/2017)
21 Notice filed by State of North Carolina Withdrawal. (Tetteh, Josephine) (Entered: 01/13/2017)
22 Consent MOTION for Extension of Time to File Response/Reply as to 15 MOTION to Enforce Settlement Agreement (D.E. 2−2) filed by State of North Carolina. (Attachments: # 1 Text of Proposed Order Proposed order) (Wood, Michael) (Entered: 01/25/2017)
Motion Referred to Julie Richards Johnston, Clerk of Court: 22 Consent MOTION for Extension of Time to File Response as to 15 MOTION to Enforce Settlement Agreement. (Grady, B.) (Entered: 01/25/2017)
TEXT ORDER granting the consent motion for extension of time 22 . Defendant shall have up to and including March 1, 2017 to respond to the plaintiff's motion to enforce settlement agreement 15 . Plaintiff's reply in support of the motion, if any, shall be due within 21 days after defendant's response is filed. Signed by Julie Richards Johnston, Clerk of Court on 1/25/2017. (Hockaday, A.) (Entered: 01/25/2017)
23 Memorandum in Opposition regarding 15 MOTION to Enforce Settlement Agreement (D.E. 2−2) filed by State of North Carolina. (Attachments: # 1 Index Exhibit Index, # 2 Exhibit 1−Ltr from Brajer to Gupta 10−15−15, # 3 Exhibit 2−January 2017 Monthly Report, # 4 Exhibit 3−2015 Annual Report 10−14−15, # 5 Exhibit 4−Corrective Action Plan 12−22−15, # 6 Exhibit 5−Supportive Housing Corrective Action Plan 6−3−16, # 7 Exhibit 6−Supported Employment Corrective Action Plan 6−3−16, # 8 Exhibit 7−Services and Support Corrective Action Plan 6−3−16, # 9 Exhibit 8−2016 Annual Report 10−1−16, # 10 Exhibit 9−Declaration of Jessica Keith 3−1−17, # 11 Exhibit 10−Affidavit of Al Delia 2−28−17, # 12 Exhibit 11−Affidavit of Tara Larson 2−28−17, # 13 Exhibit 12−Affidavit of Beth Melcher 2−28−17, # 14 Exhibit 13−December 2016 Monthly Report) (Wood, Michael) (Entered: 03/01/2017)

Case: 5:12-cv-557 As of: 11/01/2017 08:02 PM EDT 5 of 5

03/06/2017 03/22/2017 03/22/2017 06/21/2017 06/22/2017
06/27/2017 06/27/2017 09/20/2017 09/21/2017
10/27/2017
10/27/2017 10/27/2017 11/01/2017

24 Notice of Appearance filed by G. Norman Acker, III on behalf of United States of America. (Acker, G.) (Entered: 03/06/2017)
25 REPLY to Response to Motion regarding 15 MOTION to Enforce Settlement Agreement (D.E. 2−2) filed by United States of America. (Yeh, Teresa) (Entered: 03/22/2017)
Motion Submitted to Senior Judge James C. Fox: 15 MOTION to Enforce Settlement Agreement (D.E. 2−2). (Grady, B.) (Entered: 03/22/2017)
26 Notice filed by United States of America regarding 25 Reply to Response to Motion to Enforce the Settlement Agreement. (Attachments: # 1 Exhibit Letter from Martha Knisley) (Yeh, Teresa) (Entered: 06/21/2017)
27 TEXT ORDER REASSIGNING CASE. At the direction of the Court, this case is reassigned to Chief Judge James C. Dever, III for all further proceedings. Senior Judge James C. Fox is no longer assigned to case. All future filings shall reflect the revised case number of 5:12−CV−557−D. Any previously scheduled hearings will be rescheduled. Entered by Peter A. Moore, Jr., Clerk of Court on 6/22/2017. (Powers, S.) (Entered: 06/22/2017)
Motion No Longer Submitted to Senior Judge James C. Fox: regarding 15 MOTION to Enforce Settlement Agreement (D.E. 2−2). (Briggeman, N.) (Entered: 06/27/2017)
Motion Submitted to Chief Judge James C. Dever III: regarding 15 MOTION to Enforce Settlement Agreement (D.E. 2−2). (Briggeman, N.) (Entered: 06/27/2017)
28 Notice of Withdrawal as Attorney filed by United States of America. (Graff, Julia) Modified on 9/21/2017 − changed text to correspond with document filed. (Briggeman, N.) (Entered: 09/20/2017)
29 ORDER granting in part and denying in part 15 Motion to Enforce Settlement Agreement (D.E. 2−2). The parties shall negotiate in good faith and file any agreed−to modifications by October 27,2017. Signed by Chief Judge James C. Dever III on 9/21/2017. (Briggeman, N.) (Entered: 09/22/2017)
30 Joint MOTION to Enter Modification of Settlement Agreement and Extend Jurisdiction regarding 29 Order on Motion for Miscellaneous Relief, filed by United States of America. (Attachments: # 1 Exhibit Modification of Settlement Agreement, # 2 Text of Proposed Order Proposed Consent Order Entering Modification of Settlement Agreement and Extending Jurisdiction) (Graff, Julia) (Entered: 10/27/2017)
Motion Submitted to Chief Judge James C. Dever III: regarding 30 Joint MOTION to Enter Modification of Settlement Agreement and Extend Jurisdiction regarding 29 Order on Motion for Miscellaneous Relief. (Briggeman, N.) (Entered: 10/27/2017)
31 NOTICE of Withdrawal of Governmental Counsel filed by United States of America. (Graff, Julia) Modified on 10/27/2017 − changed docket text to correctly reflect document filed. (Briggeman, N.) (Entered: 10/27/2017)
32 ORDER granting 30 Motion to Enter Modification of Settlement Agreement and Extend Jurisdiction regarding 29 Order on Motion for Miscellaneous Relief. Signed by Chief Judge James C. Dever III on 11/1/2017. (Briggeman, N.) (Entered: 11/01/2017)

 
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Department of Justice

FOR IMMEDIATE RELEASE

Office of Public Affairs

Thursday, August 23, 2012

Justice Department Obtains Comprehensive Agreement Regarding North Carolina Mental Health System
Settlement Will Expand Opportunities for Individuals with Mental Illness, Including Community-based Supported Housing, Ensuring That Necessary
Services Are Provided in the Community
The Justice Department announced today that it has entered into an agreement with the state of North Carolina to ensure the state is in compliance with the Americans with Disabilities Act (ADA) and the Rehabilitation Act. The agreement will transform the state’s system for serving people with mental illness. Under the settlement agreement, over the next eight years, North Carolina’s system will expand community-based services and supported housing that promote inclusion and independence and enable people with mental illness to participate fully in community life.

Under the ADA, as interpreted by the Supreme Court’s landmark decision in Olmstead v. L.C., people with disabilities have the right to receive services in the most integrated settings appropriate to their needs. The settlement follows an investigation by the Department of North Carolina’s mental health service system that began in 2010. Since the department’s letter of findings was issued one year ago, in July 2011, the state has worked cooperatively with the department to negotiate an agreement..

“As the Supreme Court noted over a decade ago, the unnecessary segregation of people with disabilities is based on the unsupported assumption that they are unworthy of participating in community life,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This agreement will enable North Carolinians with mental illness to live in community-based settings, enriching their lives and the lives of their neighbors, and recognizing their worth and dignity. I commend Governor Bev Perdue and North Carolina’s Department of Health and Human Services Secretary Al Delia for their leadership, which played a crucial role in making this comprehensive agreement a reality.”

Over the next eight years, North Carolina will provide integrated supported housing to 3,000 people, expand Assertive Community Treatment teams to serve 5,000 individuals, and provide a range of crisis services. The agreement will also expand integrated employment opportunities for people with mental illness by providing supported employment services to 2,500 individuals. These services will allow the state to serve people with mental illness effectively in their communities while avoiding costly institutional settings.

“North Carolina has taken an important step towards offering a choice to individuals with mental illness who prefer to live in the community,” said Thomas G. Walker, U.S. Attorney for the Eastern District of North Carolina. “The agreement, made possible by the coordinated and cooperative efforts of the state’s executive and legislative branches of government, will ensure that more North Carolinians with mental illness will be able to enjoy integrated lives in their communities.”

The agreement calls for a person-centered discharge planning process to help people move smoothly and

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successfully to community-based settings, while a pre-admission screening process will prevent people from unnecessarily entering institutional settings. Provisions of the agreement will ensure that people discharged from adult care homes designated as Institutions for mental disease are discharged in a safe, coordinated manner.

North Carolina will implement a comprehensive and robust quality assurance and performance improvement monitoring system to ensure that people are safe and are receiving integrated housing, services and supports that meet their needs. Compliance with the agreement will be monitored by an independent reviewer with extensive experience in mental health systems.

The Civil Rights Division enforces the ADA, which authorizes the attorney general to investigate whether a state is serving individuals in the most integrated settings appropriate to their needs. Visit www.justice.gov/crtto learn more about the Olmsteaddecision, the ADA and other laws enforced by the Justice Department’s Civil Rights Division.

This agreement is due to the efforts of the following Civil Rights Division staff: Alison Barkoff, Special Counsel for Olmstead Enforcement; Gregory Friel, Acting Chief; Anne Raish, Deputy Chief; Regan Rush, Joy Levin Welan, Travis England, and Regina Kline, Trial Attorneys; with support and assistance from Lance Simon.
Related Material:

Settlement Agreement

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 u.s. Department of Justice
Civil Rights Division

Office of the Assistant Attorney General

Washington, D.C. 20530

The Honorable Roy Cooper Attorney General for the State ofNorth Carolina Department of Justice 9001 Mail Service Center Raleigh, NC 27699

JUL28 2011

Re: United States' Investigation of the North Carolina Mental Health System Pursuant to the Americans with Disabilities Act

Dear Attorney General Cooper:

We write to report the findings of the Civil Rights Division's investigation of the State of North Carolina's (the "State") mental health system, which delivers services to persons with mental illness in adult care homes and other settings across the State. During our investigation, we assessed the State's compliance with Title II of the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12132, as interpreted by Olmstead v. L.C., 527 U.S. 581 (1999), requiring that individuals with disabilities receive services in the most integrated setting appropriate to their needs. The Department of Justice is authorized to seek a remedy for violations of Title II of the ADA. 42 U.S.C. § 12133.

Consistent with legal requirements set forth in the ADA and in Title VI of the Civil Rights Act of 1964,42 U.S.C. § 2000d-:-1, we write to provide you notice ofthe State's failure to comply with the ADA and of the minimum steps North Carolina needs to take to meet its obligations under the law.

I. SUMMARY OF FINDINGS
We conclude that the State fails to provide services to individuals with mental illness in the most integrated setting appropriate to their needs in violation oftne ADA. The State plans, structures, and administers its mental health service system to deliver services to thousands of persons with mental illness in large, segregated adult care homes, and to allocate funding to serve individuals in adult care homes rather than in integrated settings. Adult care homes are institutional settings that segregate residents from the community and impede residents' interactions with people who do not have disabilities. Most people with mental illness receiving services in adult care homes could be served in more integrated settings, but are relegated

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indefinitely and unnecessarily to adult care homes because of systemic State actions and policies, which include:

• The State's failure to develop a sufficient quantity of community-based alternatives for individuals with mental illness unnecessarily and indefinitely confined to adult care homes;

• The State's failure to redirect resources already available to expand communitybased alternatives;

• The State's prioritization of investment in institutional settings at the expense of community-based settings; and

• The use of policies and practices that cause individuals with mental illness to

enter adult care homes to obtain support services.

.

Our findings are consistent with the following conclusions made in several State-issued and State-funded reports:

• Adult care homes "are not optimal for community integration" and "[r]esidents of ACHs may be cut off from active participation in the local community ...";1
• Adult care homes are "highly likely to qualify as restricted settings,,;2
• There is an "institutional bias" in North Carolina: "People who enter an ACH or other type of facility can obtain certain financial assistance, services, and supports that are not equally available to people with similar levels of disability and financial need who choose to remain in their own homes,,;3
• "[M]any with mental illnesses continue to live in long term care settings because there are not yet more appropriate alternatives available to them in their
communities".,4

1SHORT- AND LONG-TERM SOLUTIONS FOR CO-LOCATION IN ADULT AND FAMILY CARE HOMES: A REpORT OF THE NCIOM TASK FORCE ON THE CO-LOCATION OF DIFFERENT POPULATIONS IN ADULT CARE HOMES, North Carolina Institute of Medicine, at 34 (January 2011).
2 STUDY OF ADULT CARE HOMES, FAMILY CARE HOMES, GROUP HOMES AND PERMANENT SUPPORTIVE HOUSING FOR PEOPLE WITH DISABILITIES IN NORTH CAROLINA, DRAFT 3, Technical Assistance Collaborative, at 51 (January 11,2009).
3 SHORT- AND LONG-TERM SOLUTIONS FOR CO-LOCATION, at 32.
4 STUDY OF ISSUES RELATED TO PERSONS WITH MENTAL ILLNESS IN LONG-TERM CARE FACILITIES, Dep't of Health and Human Servs., at 4 (December 1,2005).

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• Adult care homes are not the most appropriate setting for people with mental illness because they are not designed to provide services to allow people with mental illness to achieve greater independence;5 and
• Supportive housing promotes community integration and achieves "positive impacts in terms of cost-effectiveness and improvement in quality of life, housing stability and health and behavioral outcomes for people with mental illnesses, developmental disabilities and substance abuse disorders.,,6
We agree with these conclusions and observations. Reliance on unnecessary institutional settings violates the civil rights of people with disabilities. Community integration will permit the State to support people with disabilities in settings appropriate to their needs in a cost effective manner.
II. INVESTIGATION
On November 17,2010, we notified the State that we were opening an investigation of North Carolina's mental health system pursuant to Title II of the ADA. The State began producing requested documents and information in January 2011. We have reviewed the State's documents and information, gathered additional evidence, and considered the informed opinions of individuals knowledgeable about the State's mental health system. In March 2011, we toured numerous adult care homes in Durham, Wake Forest, Cary, Wilson, Fremont, Greensboro, and Rocky Mount. During our site visits, we and our expert interviewed residents about their personal experiences, and during several visits, we also spoke with adult care home staff. We also spoke with numerous community-service providers and stakeholders who were extremely knowledgeable about the State's mental health system, as well as individuals with mental illness receiving services in their own apartments and members of psychosocial rehabilitation clubhouses and centers. In late April, we again visited numerous adult care homes, this time in Louisburg, Kannapolis, Morganton, Wilkesboro, Nebo, Conover, and other surrounding communities. We also met with members of the long-term care and adult care home industries.
Before proceeding to the detailed substance of the letter, we would first like to thank the State for the assistance and cooperation extended to us thus far, and to acknowledge the courtesy and professionalism of all of the State officials and counsel involved in this matter to date. We appreciate that the State provided us with helpful, responsive documents and information in response to our written requests. We hope that going forward there is a desire to work toward an amicable resolution to this matter.
5 rd.
6 SUPPORTIVE HOUSING AS AN ALTERNATIVE TO PSYCHIATRIC HOSPITALIZATION, Dep't of Health and Human Servs., at 47 (March 15,2011).

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III. BACKGROUND
North Carolina has a mental health service system through which it delivers services to persons with mental illness. State law requires North Carolina "to provide mental health ... services through a delivery system designed to meet the needs of clients in the least restrictive, therapeutically most appropriate setting available" and "to provide community-based services when such services are appropriate, unopposed by the affected individuals, and can be reasonably accommodated within available resources and taking into account the needs of other persons for mental health, developmental disabilities, and substance abuse services.,,7
The North Carolina Department of Health & Human Services (DHHS) is responsible for developing and implementing the State plan for the delivery of mental health services. In doing so, among other activities, it sets strategic goals and determines how State, local, and federal resources will be deployed. The DHHS Secretary has overall responsibility for the administration ofDHHS, including overseeing the development of the State plan for mental health services and ensuring coordination with the North Carolina Medicaid State Plan.
Among the Department's programs and services are community support and residential care programs. The range of services existing in North Carolina's mental health service system include Assertive Community Treatment (ACT) Teams, Community Support Teams, case management services, peer support services, supported employment, and a range of crisis services.
Several divisions within DHHS are also responsible for North Carolina's mental health care delivery program and services. The Division of Mental Health, Developmental Disabilities and Substance Abuse Services (DMH) is responsible for managing the mental health service system, including promulgating and enforcing policies and regulations, allocating public funds, and managing the community mental health system. The Division of Medical Assistance (DMA) manages the State's Medicaid program, which includes coverage of mental health, developmental disabilities, substance abuse, and other services to Medicaid-eligible individuals in adult care homes and other settings.
The Division of Health Service Regulation (DHSR) licenses, regulates, and supervises adult care homes. It is also responsible for implementing the State's certificate of need law, which provides that "[n]o person shall offer or develop a new institutional health service without first obtaining a certificate of need[.],,8 In doing so, DHSR reviews and determines whether to approve or reject applications for certificates of need submitted by adult care homes. The Division of Aging and Adult Services (DAAS) is responsible for overseeing social services and certain benefits programs for persons with disabilities, including the State-County Special Assistance for Adults program, which provides a cash supplement to individuals with low incomes residing in adult care homes to pay for their care.
7 N.C. Gen. Stat. § 122C-2 (2010).
8 N.C. Gen. Stat. § 131E-178. See http://www.ncdhhs.gov/dhsr/coneed/index.html (last visited July 11,2011).

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Adult care homes are a type of assisted living residence licensed by DHHS to provide room and board, housekeeping, and personal care services for two or more unrelated adults. Thousands of people with mental illness are congregated in adult care homes across the State of· North Carolina. Approximately 5,800 individuals with mental illness are congregated at 288 adult care homes with at least twenty beds and at least ten percent of the population comprised of individuals with mental illness. Roughly 4,800 of these individuals are congregated at 196 facilities with fifty or more licensed beds, and approximately 1,100 of these individuals are receiving services in one of35 facilities with 100 or more licensed beds.
Even though adult care homes are not appropriate settings for persons with mental illness and State law prohibits the admission of persons to adult care homes for the treatment of mental illness, the facilities have become a major part of the State's mental health service system. Thousands of people with mental illness receive services in adult care homes-although they could be served in more integrated settings-because there are few community-based options available to them.
IV. FINDINGS
We conclude that the State fails to provide services to individuals with mental illness in the most integrated setting appropriate to their needs as required by the ADA. 42 U.S.C. § 12132; 28 C.F.R. § 35.130(d). The State plans, administers, and funds its mental health service system in a manner that unnecessarily segregates persons with mental illness in institutional adult care homes, rather than providing services to them in community-based settings. See 28 C.F.R. § 35.130(b) and (d). As a result, thousands of individuals with mental illness, who could be served in the community with the types of services and supports that exist in North Carolina's mental health service system, are needlessly institutionalized.
Congress enacted the ADA in 1990 "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." 42 U.S.C. § 12101(b)(1). Congress found that "historically, society has tended to isolate and segregate individuals with disabilities, and despite some improvements, such forms of discrimination against individuals with disabilities continue to be a serious and pervasive social problem." ld. § 12101(a)(2). For these reasons, Congress prohibited discrimination against individuals with disabilities by public entities:
[N]o qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, progranls, or activities of a public entity, or be subjected to discrimination by any such entity.

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Id. § 12132. 9 "The ADA is intended to insure that qualified individuals receive services in a manner consistent with basic human dignity rather than a manner which shunts them aside, hides, and ignores them." Helen L. v. DiDario, 46 F.3d 325,335 (3d Cir. 1995).
One form of discrimination prohibited by Title II of the ADA is violation of the "integration mandate." The integration mandate arises out of Congress's explicit findings in the ADA, the Attorney General's regulations implementing Title II, 10 and the Supreme Court's decision in Olmstead, 527 U.S. at 587. In Olmstead, the Supreme Court held that public entities are required to provide community-based services to persons with disabilities when (a) such services are appropriate, (b) the affected persons do not oppose community-based treatment, and (c) community-based services can be reasonably accommodated, taking into account the resources available to the entity and the needs of other persons with disabilities. Id. at 607.
In so holding, the Court explained that "institutional placement of persons who can handle and benefit from community settings perpetuates unwarranted assumptions that persons so isolated are incapable or unworthy of participating in community life." Id. at 600. It also recognized the harm caused by urmecessary institutionalization: "confinement in an institution severely diminishes the everyday life activities of individuals, including family relations, social contacts, work options, economic independence, educational advancement, and cultural emichment." Id. at 601. 11
The State fails to provide services to individuals with mental illness in the most integrated setting appropriate to their needs, in violation of its obligations under the ADA and Olmstead. As a result of the way the State administers its mental health service system, individuals with mental illness are urmecessarily institutionalized in adult care homes throughout the State.
9 Section S04 of the Rehabilitation Act of 1973 similarly prohibits disability-based discrimination. 29 U.S.C. § 794(a). The ADA and Section S04 are generally construed to impose similar requirements. See Sanchez v. Johnson. 416 F.3d 10Sl, 1062 (9th Cir. 200S). This principle follows from the similar language employed in the two acts. It also derives from the Congressional directive that implementation and interpretation of the two acts "be coordinated to prevent imposition of inconsistent or conflicting standards for the same requirements under the two statutes." Baird ex reI. Baird v. Rose, 192 F.3d 462,468-69 (4th Cir. 1999) (citing 42 U.S.C. § 12117(b)) (alteration omitted).
10 The regulations provide that "a public entity shall administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities." 28 C.F.R. § 3S.13 O(d). See also 28 C.F.R. § 41.S1(d). The preamble discussion of the "integration regulation" explains that "the most integrated setting" is one that "enables individuals with disabilities to h'1teract with nondisabled persons to the fullest extent possible[.]" 28 C.F.R. § 3S.130(d), App. A. at S72 (2010).
11 Olmstead therefore makes clear that the aim of the integration mandate is to eliminate unnecessary institutionalization and enable individuals with disabilities to participate in all aspects of community life. Accord Press Release, The White House, "President Obama Commemorates Anniversary of Olmstead and Announces New Initiatives to Assist Americans with Disabilities" (June 22, 2009) (In announcing the Year of Community Living Initiative, President Obama affirmed "one of the most fundamental rights of Americans with disabilities: Having the choice to live independently.").

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A. Adult Care Homes Are Segregated, Institutional Settings
A public entity must "administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities." 28 C.F.R. § 35.130(d). To determine whether a setting is the most integrated the appropriate inquiry is whether the setting "enables individuals with disabilities to interact with non-disabled persons to the fullest extent possible." Frederick L. v. Dep't of Pub. Welfare, 364 F.3d 487,491 (3d Cir. 2004) (citing 28 C.F.R. § 35.130(d) and 28 C.F.R. pt. 35 app. A); Disability Advocates, Inc. v. Paterson, 598 F. Supp. 2d 289,321-22 (E.D.N.Y. 2009).
Adult care homes do not enable interactions with nondisabled persons to the fullest extent possible. To the contrary, they impede community integration and interactions with persons who do not have disabilities. Adult care homes appear and function as institutions, not homes where people without disabilities live. People with mental illness who reside in adult care homes live in close quarters primarily with other persons with disabilities, and most aspects of their daily lives are highly regimented and limited by rigid rules and practices. Cf. Disability Advocates, Inc. v. Paterson, 653 F. Supp. 2d 184, 224 (E.D.N.Y. 2009) (finding that "many people with mental illness living together in one setting with few or no nondisabled persons contributes to the segregation of [a]dult [h]ome residents from the community."). See also Benjamin v. Dep't of Pub. Welfare, 768 F. Supp. 2d 747, 750 (M.D. Pa. 2011) (noting that individuals in facilities were segregated where they lived in units ranging from 16 to 20 people, primarily received services on the grounds of the facilities and had limited opportunities to interact with nondisabled peers).
In appearance, adult care homes closely resemble institutional settings. Many facilities are structured in long corridors or wards, with some wards organized by type of disability and mental illness. Staff and administrators maintain areas, including office space and restrooms, that are separate from the areas of the facilities that are freely accessible to residents. The offices in some adult care homes display video screens on which the movements and activities of residents are monitored. Staff dispense medications by cart or residents are required to queue at a medication-station, and many residents see on-site doctors and psychiatrists. Paging systems interrupt individuals' days on a regular basis at many facilities.
The rules and practices of adult care homes impose significant barriers to integration and interactions with nondisabled persons. Residents in many facilities are subject to curfews after which the facility doors are locked, as well as highly regimented meal and medication times. In many facilities, residents and visitors must sign in and sign out, and some facilities do not permit residents to leave the grounds unaccompanied, or otherwise restrict where residents may go. Some facilities have alarmed doors that alert any time a door is opened, while other facilities require staff to enter key codes for entry and exit, thereby stripping residents of their liberty to move about freely and with dignity.
Residents consistently described the regimentation and control exerted over them by facility staff and policies. Some residents reported that they can only leave the facility to attend

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medical appointments and, as a result, their days are "depressing" and "boring." One resident explained that the adult care home "controls when you get up, when you eat, and when you go to bed." A resident of another facility described her life as "living on a closed ward" because she is locked in at all times and does not have the freedom to walk into town. Another resident secured ajob outside the facility, but was let go within the first few days because he was unable to get there from the facility. Likewise, a resident explained that she misses the "freedom" of doing things with people in her community and that it is upsetting to her when staff talk to her "like [she] will be there until [she] die[s]."
To the extent activities exist, they are largely infantile and consist of activities such as bingo, arts and crafts, puzzles, movie-watching, and board games. Due to the lack of activities that are meaningful for adults and the restrictions on community access, many residents reported that they spend their days smoking and napping to pass the time. One resident stated that most of the residents of his adult care home spend their days "vegetating" and "smoking" because there is nothing else to do, while another resident stated that he "roams" the facility property to pass the time.
Some adult care homes take residents on organized trips to nearby shopping centers or stores, but these outings contribute little to community integration. Such outings are limited and rigidly scheduled. Residents travel together as a group, typically in the facility's bus or van, and the number of individuals attending the outing is usually limited to the number of individuals who can fit in the vehicle. Some residents reported they are in need of clothing and other necessities but have no way of getting to the store.
The facilities provide virtually no privacy, and individuals are assigned to small, shared rooms with one to three other people. Typically, residents cannot lock their bedroom doors, and staff retain room keys of individuals who can. Regardless of whether a room is locked or a door is shut, staff in many facilities maintain the ability to enter at any given time. One resident stated, for example, that despite her attempts to keep her door closed, it is frequently left open by staff. Bathroom areas are congregate and often not lockable, with towels and other items often stored in separate areas not readily available to residents. Common areas tend to be very large, impersonal settings that afford little privacy.
Residents have very little choice or autonomy in their daily lives. Often, they are assigned roommates and have little or no choice in what they eat or with whom they sit for meals. In many facilities, residents do not manage their own funds, nor do these facilities present it as an option. Likewise, facilities typically control individuals' medications and residents reported that staff have made errors in distributing medications. In many facilities, residents are not permitted to do their own laundry, and in most facilities, residents are not permitted to cook their own meals.
Given these and other characteristics, adult care homes are institutional, segregated settings that through their restrictive practices and control over individualization and independence limit a person's ability to interact with other people who do not have disabilities.

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Our findings are consistent with State-sponsored reports acknowledging that adult care homes are not the most integrated setting appropriate for individuals with mental illness. In a recent report regarding the co-location of different populations in adult care homes, a task force comprised of State officials and employees, as well as various stakeholders, recognized that adult care homes "are not optimal for community integration," and that "[r]esidents of ACHs may be cut off from active participation in the local community because of the lack of transportation and the structured format (i.e., the schedule of meals and personal care) of many residential care homes.,,12
A 2005 report issued by DHHS similarly acknowledged that "many with mental illnesses continue to live in long term care settings because there are not yet more appropriate alternatives available to them in their communities" and that adult care homes are not designed to allow persons with mental illnesses "to achieve a greater measure of independence." 13 Likewise, a 2009 draft report prepared by a State-contracted consultant concluded that "[a]dult [c]are [h]omes are, in fact, highly likely to qualify as restricted settings, and that there is a substantial basis for being concerned about ADA and Olmstead issues in North Carolina.,,14
B. The Majority of Adult Care Home Residents with Mental Illness Could Be Served in More Integrated Settings
States have an obligation to provide services in community-based settings where such placement is appropriate for, and not opposed by, persons with disabilities. Olmstead, 527 U.S. at 607. Individuals with mental illness in adult care homes could be served in more integrated settings. The placement of persons with mental illness in adult care homes is not based on a determination that such placement is clinically necessary. Instead, people with mental illness tend to end up in adult care homes simply because there are no available residential services in the community. As the State has acknowledged, adult care homes are not the most appropriate settings for persons with mental illness, because, among other things, they are not designed to provide any recovery-oriented or rehabilitative services, or to afford people with mental illness opportunities for achieving greater independence and community integration. 15
12 SHORT- AND LONG-TERM SOLUTIONS FOR CO-LOCATION IN ADULT AND FAMILY CARE HOMES: A REpORT OF THE NCIOM TASK FORCE ON THE CO-LOCATION OF DIFFERENT POPULATIONS IN ADULT CARE HOMES, North Carolina Institute of Medicine, at 34 (January 2011).
13 STUDY OF ISSUES RELATED TO PERSONS WITH IVlENTAL ILLNESS IN LONG-TERM CARE FACILITIES, Dep't of Health and Human Servs., at 4 (December 1,2005).
14 STUDY OF ADULT CARE HOMES, FAMILY CARE HOMES, GROUP HOMES AND PERMANENT SUPPORTIVE HOUSING FOR PEOPLE WITH DISABILITIES IN NORTH CAROLINA, DRAFT 3, Technical Assistance Collaborative, at 51 (January 11,2009).
15 See. e.g., STUDY OF ISSUES RELATED TO PERSONS WITH MENTAL ILLNESS IN LONG-TERM CARE FACILITIES, Dep't of Health and Human Servs., at 4 (December 1,2005).

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In contrast, and as the State has also acknowledged, supportive housing-integrated, community-based housing that provides tenants with all the rights of tenancy and services and supports that meet their needs-is an appropriate and effective service setting for persons with serious mental illness. 16 Supportive housing is a setting in which individuals live in their own home and receive services to support their success as tenants and their integration into the community. The State has recognized that supportive housing is both cost-effective and achieves positive outcomes in terms of housing and health stability and improvement in quality of life for persons with mental illness. 1? Thus, supportive housing can meet the needs of adult care home residents with mental illness. Accord Disability Advocates, 653 F. Supp. 2d at 228 (finding that "supported housing provides individuals with mental illness with a permanent place to live coupled with flexible support services customized to each individual's specific needs.").
Moreover, there are people with the same diagnoses and symptoms as adult care home residents who live successfully in more independent settings, with the supports and services existing in the State's community mental health system. See Disability Advocates, 653 F. Supp. 2d at 245 (evidence that adult home residents had same diagnoses as people with mental illness in supported housing supported finding that such residents were qualified to receive services in the community). During the course of our investigation, community service providers communicated their belief that most persons with mental illness in adult care homes could be served successfully in more independent settings. Cf. id. at 247 (evidence that community providers did not "view [a]dult [h]ome residents as having needs incompatible with supported housing" supported finding that people with mental illness in assisted living facilities could be served in more integrated setting).
After visiting many adult care homes, interviewing numerous adult care home residents with mental illness, speaking with community mental health service providers and consumers, and reviewing hundreds of resident records, our mental health expert similarly concluded that most adult care home residents with mental illness can be served successfully in supportive housing. He found that people with mental illness in adult care homes are not materially different than individuals with mental illness who currently thrive in community-based settings. He further concluded that the types of services and supports that exist in North Carolina's community mental health service system are well able to meet the needs of people with mental illness confined to adult care homes.
In addition to being qualified for community-based service settings, people with mental illness in adult care homes would not be opposed to' moving to integrated settings if they had a choice and a realistic opportunity to do so. Olmstead, 527 U.S. at 607. Throughout our investigation, residents emphaticaily expressed their desire to leave their adult care homes and become members of their communities once again. For example, one resident told us she very
16 See SUPPORTIVE HOUSING AS AN ALTERNATIVE TO PSYCHIATRIC HOSPITALIZATION, Dep't of Health and Human Servs., at 1 (March 15,2011).
17 See SUPPORTIVE HOUSING AS AN ALTERNATIVE TO PSYCHIATRIC HOSPITALIZATION, Dep't of Health and Human Servs., at 1-2, 47 (March 15,2011).

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much wants to move out to her own place again because she "want[s] to live [her] life before [she] die[s]," and to "feel like [she has] a home again." Another resident stated that she wants to move back into her own place because she "want[s] to be free." The facility is always noisy; people are always telling her what to do all day; and there is nothing to do. Similarly, another resident reported that in the facility she is "just a number" and she would very much like to move out. Likewise, another resident explained that in the facility he "feel[s] cut out," and he wants to "live [his] life and be part of society." And another resident relayed that "[he] would do anything to get out; this is a prison." These sentiments were echoed by numerous other residents we met during our visits.
C. North Carolina Administers Its Mental Health System in a Way that Segregates Individuals with Mental Illness in Institutional Settings
Under the ADA, public entities are required to "administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities." 28 C.F.R. § 35.130(d). A state is liable under the ADA where it administers its programs or services in a manner that unnecessarily segregates persons with disabilities in privately owned facilities. 28 C.F.R. § 35.130(b) (prohibiting public entities from using contractual or other arrangements, or utilizing criteria or methods of administration, that have the effect of subjecting qualified individuals with disabilities to discrimination). See also Disability Advocates, 598 F. Supp. 2d at 317 ("It is immaterial [for purposes of Title II liability] that DAI's constituents are receiving mental health services in privately operated facilities."); Rolland v. Celluci, 52 F. Supp. 2d 231,237 (D. Mass. 1999) (holding that it is immaterial for purposes of Title II ADA claim that plaintiffs lived in private nursing facilities, rather than state-operated facilities).
Despite its acknowledgement that supportive housing is a good investment for North Carolina and a preferred placement for people with mental illness, the State relies on institutional adult care homes as settings in which to provide services to persons with mental illness. The State plans, oversees, funds, and regulates programs and services for individuals with mental illness in a manner that leaves thousands of individuals with mental illness isolated in large, segregated adult care homes. Due to the State's policies and practices, adult care homes are the only service setting available to many individuals with mental illness, even though such facilities are not the most integrated setting appropriate.
The State has failed to develop a sufficient capacity of community-based mental health service settings. Although some supportive housing exists in North Carolina's service system, the State has not developed it in sufficient capacity to meet the needs of unnecessarily institutionalized persons. As the State has acknowledged, individuals with mental illness end up in adult care homes because existing housing programs are woefully inadequate. ls
18 SERVING PERSONS WITH DISABILITIES IN ApPROPRIATE SETTINGS: THE NORTH CAROLINA PLAN, Dep 't of Health and Human Servs., at 32-33 (April 2003) ("Often people with severe and persistent mental illness end up in Adult Care Homes because there are no other appropriate residential services in the community .... The existing housing resources are woefully inadequate to address the housing needs of people with severe and persistent mental

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. Instead of allocating resources to community-based settings, the State has opted to fund a substantial portion of the cost of providing care in adult care homes. Through its State-County Special Assistance Program, North Carolina subsidizes the cost for individuals with disabilities to live in adult care homes. This state supplement-which provides support for nearly threequarters of the residents in adult care homes and amounts to roughly $550 per person per month for persons receiving Supplemental Security Income-makes up the difference between a person's income and the total cost of residing in an adult care home (approximately $1182 per person per month). Aside from limited circumstances, the State has not made this supplement available to persons with disabilities living in the community.
The State also operates its personal care service ("PCS") program in a manner that perpetuates the institutional bias in its service system. North Carolina offers PCS as an optional Medicaid State Plan service, which provides assistance with certain activities of daily living to eligible Medicaid beneficiaries in their own homes, as well as to eligible Medicaid beneficiaries in adult care homes and certain other facilities. The State's criteria for receipt ofPCS by persons living in their own homes are more stringent than the criteria for persons living in adult care homes. As a result, it is more difficult to obtain PCS in a community-based setting than in an adult care home, and the ease of obtaining PCS in an adult care home further advances the institutional bias existing in the system.
Additionally, North Carolina has long used-and continues to use-adult care homes as places to discharge persons leaving its psychiatric hospitals. From 2001 to 2010, the State discharged from psychiatric hos~itals to adult care homes and family care homes 7,595 individuals with mental illness. l Many residents with whom we spoke reported that, upon discharge from a hospital, they were provided with no choice of service setting other than an adult care home or selection of adult care homes. Similarly, other residents reported that they were placed in an adult care home by their State Department of Social Services social worker, without any opportunity to choose an alternative setting.
The State also exerts direct control over the availability of adult care home beds through the certificate of need process. New adult care home beds cannot be developed without a certification from the State that a need for those beds exists. Thus, the State has authority to issue certifications based on availability of other programs in which mental health services are provided. It has used this authority to enable the development of adult care home beds to the detriment of community-based alternatives.
illness."). See also DMH SCOPE OF WORK.: TECHNICAL ASSISTANCE COLLABORATIVE, Div. of Mental Health, Developmental Disabilities and Substance Abuse Servs., Attachment B, at 1 ("Adults with mental illness, developmental disabilities or substance abuse need safe, affordable housing with appropriate service availability in order to live successfully in the community. The need for supported housing is especially critical for the 6,000+ adults with serious mental illness ... who currently reside in adult care facilities in North Carolina.").
19 ADULT CARE HOME REpORT: HOSPITAL DISCHARGES 2000-2010, DHHS Div. of State Operated Healthcare Facilities.

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The State's failure to redirect resources and its failure to prioritize community-based settings over institutional care has confined thousands of people with mental illness unnecessarily and indefinitely in adult care homes and puts many others at risk of unnecessary institutionalization.
D. Individuals with Mental Illness Are At Risk of Unnecessary Institutionalization in Adult Care Homes
The ADA's integration mandate applies both to people who are currently institutionalized and to people who are at risk of unnecessary institutionalization. See Radaszewski v. Maram, 383 F.3d 599 (7th Cir. 2004) (ADA applied to individual at risk of entering nursing home); Fisher v. Okla. Health Care Auth., 335 F.3d 1175 (lOth Cir. 2003) (same); Marlo M. v. Cansler, 679 F. Supp. 2d 635 (E.D.N.C. 2010); Pitts v. Greenstein, No. 10-635-JJB-SR, 2011 WL 1897552, *3 (M.D. La. May 18,2011) ("A State's program violates the ADA's integration mandate if it creates the risk of segregation; neither present nor inevitable segregation is required. ").
Because of the State's reliance on adult care homes and its failure to deploy resources to develop a sufficient capacity of community-based options, many people with mental illness in the community are at risk of entering an adult care home to obtain services. Additionally, because of the lack of community-based options, many people with mental illness discharged from psychiatric and other hospitals, as well as jails, will have no choice but to enter an adult care home to receive services in the State's mental health service system.
E. Serving People with Mental Illness in Integrated Settings Can Be Reasonably Accommodated
Providing services to adult care home residents with mental illness in community-based settings can be reasonably accommodated. The types of services needed to support people with mental illness in community-based settings already exist in North Carolina's community-based mental health service system. These services include ACT Teams, Community Support Teams, case management services, peer support services, supported employment services, and crisis services and are capable of supporting people with mental illness with varying needs in community-based settings. Additionally, the State could redirect the Special Assistance and Medicaid funds it already spends to support persons with mental illness in adult care homes to support them in community-based settings. The amount of money spent on Special Assistance is roughly equivalent to what it would cost to support a person in supported housing, and some of the Medicaid services provided to adult care home residents are the same services they would need in the community.
Given the array of mental health services in North Carolina and the existence of funds that could be redirected to community-based settings, providing services to people with mental illness in more integrated settings can be reasonably accommodated.

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v. RECOMMENDED REMEDIAL MEASURES
To remedy the deficiencies discussed above and protect the civil rights of individuals with mental illness who receive services in adult care homes, the State should promptly implement the minimum remedial measures set forth below.
A. Serving Individuals with Mental Illness in the Community
The State must develop sufficient supported housing to enable those unnecessarily confined to adult care homes and those at risk of entry into adult care homes to receive services in the most integrated setting appropriate to their needs. Supported housing is permanent housing with tenancy rights and support services that enable individuals with mental illness to attain and maintain integrated, affordable housing. Support services offered to people in supported housing are flexible and available as needed, but are not mandated as a condition of tenancy.
The State should realign its funds away from institutional adult care homes to prioritize integrated, community settings. All new supported housing should be scattered site, with no more than 10% of a residential setting allocated to persons with disabilities.
The State must ensure that people with mental illness who move to supported housing are connected to the array and intensity of services and supports they need to successfully transition to and live in supported housing. These services, which already exist in North Carolina's mental health service system, include ACT Teams, Community Support Teams, case management services, peer support services, supported employment, and a range of crisis services. For each service recipient, an individual service plan should be developed and implemented by a case manager who is clinically responsible for ensuring that all components of the service plan and all needed services are provided in a coordinated manner.
The State should ensure that its quality management systems are sufficient to assure that all mental health services funded by the State are of good quality and are sufficient to help individuals achieve positive outcomes, including increased integration, independence, and selfdetermination in all life domains (e.g., community living, employment, education, recreation, healthcare, and relationships); stable community living; avoidance of harms; and decreased hospitalization and institutionalization.
B. Discharge and Transition Planning
The State must iniplement an effective plan to transition people with mental illness unnecessarily institutionalized in adult care homes to supported housing. Each person with mental illness in adult care homes should receive an independent, professionally appropriate, and person-centered assessment, by a transition team, of his or her preferences, strengths, and needs

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All assessments should include an individualized analysis of the services and supports necessary to ensure successful transition to and residence in supported housing. Discharge assessments should be based on the principle that with sufficient supports and services, individuals with mental illness can live in an integrated community setting.

The State should ensure that community mental health service providers and peer specialists conduct frequent and effective in-reach to adult care home residents to build trust and actively support them in moving to more integrated settings, including supported housing. Inreach should include full explanations of the benefits of living in supported housing and about available community-based services.
No one who is qualified for supported housing should be placed in an adult care home, or other congregate setting, unless after being fully informed, he or she declines the opportunity to receive services in supported housing. The State should ensure that the steps taken to assure informed choice are documented. Individuals with mental illness who remain in an adult care home after the assessment process should be assessed regularly for transition to a more integrated setting, and more frequently upon request.

V. CONCLUSION
Please note that this findings letter is a public document. It will be posted on the Civil Rights Division's website. Although we will provide a copy of this letter to any individual or entity upon request, as a matter of courtesy, we will not post this letter on the Civil Rights Division's website until ten calendar days from the date of this letter.
We hope to continue working with the State in an amicable and cooperative fashion to resolve our outstanding concerns with respect to the State's failure to provide its services and programs in the most integrated setting appropriate.
We hope that you will give this letter careful consideration and that it will assist in facilitating a dialogue swiftly addressing the areas that require attention.

We are obligated to advise you that, in the unexpected event that we are unable to reach a resolution regarding our concerns, the Attorney General may initiate a lawsuit pursuant to the ADA once we have determined that we cannot secure complifuice volUJ.'1tarily, 42 U.S.C. § 2000d-1, to correct deficiencies of the kind identified in this letter. We would prefer, however,

20 The DOJ's separate, on-going investigation of the State's psychiatric hospitals similarly determined that the hospitals failed to adequately assess hospital residents. This general failure included failing to assess residents' strengths and needs for discharge planning. Our psychiatric hospital investigation determined that the hospitals' discharge planning was virtually non-existent, and did not include any meaningful transition service planning, or coordination with community service provider entities.

-16to resolve this matter by working cooperatively with the State and are confident that we will be able to do so. The Department of Justice attorney assigned to this investigation will be contacting the State's attorneys to discuss this matter in further detail. If you have any questions regarding this letter, please call Allison Nichol, Chief of the Civil Rights Division's Disability Rights Section, at (202) 514-8301.
Sincerely,
Thomas E. Perez Assistant Attorney General