IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G.,

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each a minor by Next Friend, Jill Katz;

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W.S., M.S., and D.S., each a minor by Next )

Friend, Robert Strange;

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M.P., a minor by Next Friend, Michael

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Patterson;

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A.C., a minor by Next Friend, Lana Capps; )

J.A., a minor by Next Friend, John

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Antonich;

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T.J. and A.J., each a minor by Next Friend, )

Lavada Johnson;

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A.E., a minor by Next Friend, Elizabeth )

Euer; and

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N.S., a minor by Next Friend, Tammy Smith, )

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Plaintiffs,

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vs.

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Matt Blunt, in his official capacity as

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Governor of the State of Missouri; and

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K. Gary Sherman, in his official capacity as )

Director of the Missouri Department of

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Social Services,

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Defendants. )

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Case No. 05-0726-CV-W-SOW

COMPLAINT 1. Adoption assistance subsidies are provided by the State of Missouri under federal and state law to help thousands of abused and neglected children, all of them currently or formerly in the custody of the Missouri foster care system, who have highly specialized medical, mental health or other special needs. Federal and state law provide subsidies for these children because, due to their special needs, they would likely not otherwise have a chance for a permanent family

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through adoption. Over 12,000 children are currently the beneficiaries of adoption assistance subsidies under contracts between the state of Missouri and the child’s adoptive parents. Of the over 11,000 abused and neglected children still in the Missouri foster care system, thousands more will be or hope to be the beneficiaries of adoption assistance subsidies that will address their special needs so they can be adopted out of state custody and into a permanent family. 2. In his January 26, 2005 State of the State address, Missouri Governor Matt Blunt promised to “facilitate permanent placement for children who cannot return home” to their parents. However, in a shortsighted, ill-conceived, and illegal effort to restrain future spending, the Missouri Legislature passed and Governor Matt Blunt signed Missouri Senate Bill 539 into law, which will become effective on August 28, 2005. The provisions of Senate Bill 539 that amend Missouri’s adoption and foster care law will cause thousands of current and future foster children in state custody to lose opportunities for a permanent family, as the state unlawfully denies adoption assistance to address their special needs. Indeed, the new law will undermine and undo years of efforts to obtain permanent homes for abused and neglected foster children in Jackson County under the requirements of the existing Modified Consent Decree in G.L., An Infant, by and through his Next Friend, et al., v. Stangler, No. 77-0242-CV-W-1.1 Furthermore, thousands of adopted, former foster children who are currently the beneficiaries of adoption assistance contracts entitling them to benefits until they reach the age of eighteen will suddenly find their contractual benefits modified or cut off entirely, and many of these children will also lose Medicaid benefits because their initial qualification for Medicaid was linked to their receipt of adoption assistance.

1 This case has been filed a related matter to the G.L. action, in which the Modified Consent Decree applies to all children in the legal custody of the Missouri Division of Family Services, Jackson County, Missouri Office. Pursuant to Local Rule 83.9 of the United States District Court for the Western District of Missouri, “related cases, by mutual consent of the judges to whom the cases are assigned, shall be transferred to the judge with the lowest number case, without regard to whether the lowest number case is pending.”

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3. These harms will all occur because Missouri Senate Bill 539 will retroactively and prospectively render all adoption assistance contracts valid for no more than one year, and will make all such agreements renewable at the discretion of the Director of the Missouri Department of Social Services (“DSS”). The statute further will deem all existing subsidy contracts, regardless of their current duration, to have expired one year after the agreement was first entered into for the child’s benefit. The new law violates the federal Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997 (collectively the “Adoption Assistance Act”), which prohibits states from unilaterally modifying or terminating adoption assistance contracts, and only allows individualized, periodic adjustments of subsidy amounts with the concurrence of the child’s adoptive parents. 4. Additionally, the adoption assistance provisions of Senate Bill 539 will arbitrarily create two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards, and will use a means test to deny the adoption assistance to one group of children and not the other. Specifically, the means test will only be imposed on the income of a child’s existing or prospective adoptive parents to deny or terminate a subsidy in cases where the income of the child’s biological parents (from whom they were removed and placed into foster care) failed to meet an income eligibility threshold for federal Title IV-E purposes. In so doing, the means test is not rationally related to the state’s interest in providing subsidies to the most needy children because the income of a current or former foster child’s biological parents bears no relationship whatsoever to the child’s need for an adoption assistance subsidy. The statute therefore violates the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution and cannot be enforced. Moreover, its retroactive

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nullification of legally enforceable contracts for adoption assistance and Medicaid coverage violates the Contracts Clause of the United States Constitution. 5. Plaintiffs, on behalf of themselves and all persons similarly situated, therefore seek an order declaring the adoption assistance provisions of Senate Bill 539 unconstitutional and in violation of and preempted by the federal Adoption Assistance Act; as well as enjoining the defendants from implementing its provisions.
JURISDICTION AND VENUE 6. This is an action brought pursuant to 42 U.S.C. §1983, alleging violations of the United States Constitution and federal statutory law. This court has jurisdiction over the federal claims pursuant to 42 U.S.C. §§1331 and 1343. 7. Venue in this district is proper pursuant to 28 U.S.C. §1391(b) because the claims arise in this district.
PARTIES Plaintiffs 8. Named Plaintiff E.C., by her Next Friend Jill Katz, resides in the legal custody of the Division of Family Services in Jackson County, Missouri. E.C. is a member of the G.L. v. Stangler, et al. class. She has lived in numerous foster homes since entering foster care at the age of 7 and has tired of moving from one home to another. E.C. has formed a bond with her current foster mother and wishes to be adopted by her. She desperately wants to enjoy safety and stability in her life. E.C. is ineligible for Title IV-E adoption assistance and fears that her foster mother will not have the financial capacity to adopt her absent adoption assistance. See Declaration of “E.C.” attached as Exhibit A.

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9. Named Plaintiff J.C., by his Next Friend Jill Katz, is a 16 year-old now living in the legal custody of the Division of Family Services in Jackson County, Missouri. J.C. is a member of the G.L. v. Stangler, et al. class. He has lived in foster care since 1997, following the death of his mother and a short stay with his legal guardian. Since 1997, J.C. has been placed into more foster homes than he can recall. He wishes to be adopted and has experienced several adoptive placements that disrupted before finalization. J.C. believes that a family would give him a better understanding of himself and a place to call home on Christmas. He can only remember Christmas holidays spent in temporary care in the company of temporary caretakers. J.C. fears that the absence of an adoption subsidy will prevent his dream of realizing an adoptive family. See Declaration of “J.C.” attached as Exhibit B. 10. Named Plaintiffs T.G., B.G. and A.G., by their Next Friend Jill Katz, are 9, 6 and 4 yearold biological siblings living with their potential adoptive parents, Elizabeth W. Fischer and John S. Fischer, in Jackson County, Missouri. They are members of the G.L. v. Stangler et al. class. T.G. is in the 4th Grade and is considered cognitively/developmentally delayed. B.G., who was subjected to abuse in her biological home, has long-term conditions, including bipolar and attachment disorders. All three children have been diagnosed with post-traumatic stress disorder and take prescription medication. The Fischers have initiated adoption proceedings with respect to the three siblings. The Fischers have received notice from the state that the three children may not qualify for Title IV-E adoption assistance and that the Senate Bill 539 means test will determine their eligibility for state funded adoption subsidies. The Fischer’s monthly income is approximately $7,800, and they fear that adoption assistance will not be offered. The state now pays the Fischers $1800 per month in foster care maintenance payments, with two of the children being paid at the behavioral rate. The three siblings all would have been eligible for Title IV-E

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assistance, but for errors in family court documents only detected by the state after the timeframe for perfecting Title IV-E eligibility had expired. See Affidavit of Elizabeth W. Fischer attached as Exhibit C. 11. Named Plaintiffs W.S., M.S., and D.S., by their parent and Next Friend Robert Brian Strange, are boys aged 10, 7 and 6, respectively, who were adopted from the Missouri foster care system in 2000 as a sibling group. The boys were all in the G.L. v. Stangler et al. class prior to their adoption. They now live with their adoptive parents, Robert and Jennifer, in Cass County, Missouri. The boys were initially removed from their biological home after M.S. sustained severe burns when held against a hot water heater by his mother. D.S. is developmentally disabled. The Stranges annual income is about $62,400. They currently receive three separate $275 adoption assistance payments each month under the adoption assistance agreements they executed with the state of Missouri on behalf of each of the boys. The Stranges cannot support the medical, educational, emotional and physical needs of the boys absent the adoption assistance. The state of Missouri has sent a notice letter to the Stranges stating that W.S.’s and M.S.’s adoption assistance payments will terminate if the family’s gross annual income exceeds the Senate Bill 539 means test. See Affidavit of Robert Brian Strange attached as Exhibit D. 12. Named Plaintiff M.P., by his parent and Next Friend Michael Patterson, is a16 year-old adopted child who currently resides with his father in Jackson County, Missouri. Named Plaintiff J.L., by his Next Friend Jill Katz, is a 16 year-old foster child who has been placed with Mr. Patterson by the Jackson County Office of the Children’s Division. J.L. is a member of the G.L. v. Stangler et al. class, as was M.P. before his adoption. Mr. Patterson currently receives a monthly $651 adoption subsidy under an adoption assistance agreement he executed with the state of Missouri on behalf of M.P. Mr. Patterson cannot afford M.P.’s physical, emotional,

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medical and educational needs absent the adoption subsidy. The state of Missouri has sent a notice letter to Mr. Patterson stating that M.P.’s adoption assistance payments will terminate if his gross annual income fails the Senate Bill 539 means test, which he expects to occur. J.L. has asked Mr. Patterson to adopt him; however, Mr. Patterson is unsure whether he can afford to raise J.L. without an adoption subsidy. Mr. Patterson is financially more able to care for J.L. as a foster parent, because J.L. receives monthly foster care maintenance payments from the Children’s Division in his current foster status. See Affidavit of Michael Patterson attached as Exhibit E, and Declaration of J.L. attached as Exhibit F. 13. Named Plaintiff A.C., by his parent and Next Friend Lana Capps, is a 5 year-old boy who was adopted from the Missouri foster care system in 2002. A.C. and Ms. Capps live in Boone County, Missouri. A.C. suffers from a congenital heart disorder that has necessitated 14 hospitalizations during his young life. He will require additional heart surgeries. Ms. Capps earns approximately $3,600 a month. She currently receives a monthly $651 adoption subsidy under an adoption assistance agreement she executed with the state of Missouri. Ms. Capps cannot afford A.C.’s necessary and regular medical care absent the adoption subsidy. The state of Missouri has sent a notice letter to Ms. Capps stating that A.C.’s adoption assistance payments will terminate if her gross annual income exceeds the Senate Bill 539 means test – that is, 200% of the federal poverty level for a family of two, or $25,660 under current federal guidelines. Ms. Capps earns approximately $43,200 a year and, therefore, will exceed the Senate Bill 539 means test and lose A.C.’s subsidy payments under the new law. See Declaration of Lana Capps attached as Exhibit G. 14. Named Plaintiff J.A., by his parent and Next Friend John Antonich, is a 15 year-old boy. He was adopted from the Missouri foster care system in 2004 after some 6 years in foster care.

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J.A. lives with his adoptive parents in Jefferson County, Missouri. While in foster care, J.A. lived in 23 different foster homes between the ages of 8 and 10. He later was placed into group care after a suicide attempt. J.A. suffers from severe anxiety, attention deficit hyperactive disorder (“ADHD”), oppositional defiant behavior, and depression. The depression condition has required hospitalization. J.A. also has required intensive tutoring to improve his challenged educational growth. Mr. earns approximately $4,580 a month. The family currently receives a monthly $651 adoption subsidy under an adoption assistance agreement they executed with the state of Missouri. This family cannot afford the considerable educational, psychiatric and behavioral care necessary to address J.A.’s special needs absent the adoption subsidy. The state of Missouri has sent a notice letter to the Mr. and Mrs. Antonich stating that their adoption assistance payments will be terminated if their annual income exceeds the Senate Bill 539 means test – 200% of the FPL for a family of 3 is $32,180 under current federal guidelines. Mr. Antonich earns approximately $54,960 per year, and his income will, therefore, surpass the Senate Bill 539 means test. See Declaration of John H. Antonich attached as Exhibit H. 15. Named Plaintiffs T.J. and A.J., by their parent and Next Friend Lavada Johnson, are 7 and 5 years old, respectively. They were adopted from the Missouri foster care system. Ms. Johnson, who is 60 years old, also supports two children in therapeutic foster care. T.J. suffers from severe asthma, sinus disease, ADHD and hypoglycemia and requires daily medication. A.J. suffers from chronic lung disease, chronic and persistent asthma and ADHD and also requires daily medication. Ms. Johnson earns approximately $1,160 a month. She currently receives monthly $651 adoption subsidy payments under the adoption assistance agreements she executed with the state of Missouri. Ms. Johnson cannot afford the considerable medical, psychiatric, educational and emotional care necessary to address T.J.’s and A.J.’s special needs absent the

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adoption subsidy. The state of Missouri has sent a notice letter to Ms. Johnson stating that the children are Title IV-E eligible, but that her adoption assistance agreements will automatically expire in 2006. See Declaration of Lavada Johnson attached as Exhibit I. 16. Named Plaintiff A.E., by her parent and Next Friend Elizabeth Euer, is a 14 year-old girl. A.E. was adopted from the Missouri foster care system in 2004. A.E. lives with her adoptive family in St. Charles County, Missouri. A.E. suffers from bipolar disorder, ADHD, and posttraumatic stress disorder due to abuse. A.E. receives weekly psychiatric assistance to address her unpredictable behavior and frequent violent outbursts. A.E. is delayed educationally and tests lower than her actual grade. Ms. Euer earns approximately $2,075 a month. She currently receives a monthly $651 adoption subsidy under an adoption assistance agreement she executed with the state of Missouri. Ms. Euer cannot afford the considerable educational, psychiatric and behavioral care necessary to address A.E.’s special needs absent the adoption subsidy. The state of Missouri has sent a notice letter to Ms. Euer stating that A.E.’s adoption assistance payments may be terminated based upon the Senate Bill 539 means test. DSS staff subsequently has indicated orally that A.E. may be Title IV-E eligible, making A.E.’s Title IV-E status unclear. DSS staff also has indicated that any Title IV-E adoption assistance agreement would be automatically limited to one year in duration. See Declaration of Elizabeth Euer attached as Exhibit J. 17. Named Plaintiff N.S., by his parent and Next Friend Tammy Smith, is a 3 year-old boy who was adopted from the Missouri foster care system in 2002 by Ms. Smith and her spouse, Harold Smith. N.S. lives with his adoptive parents in Boone County, Missouri. N.S. suffers from severe asthma and takes 4 different medications daily to control the condition. N.S. also requires two breathing treatments twice daily. The asthma condition occasionally results in

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asthmatic crises and has required as many as 11 visits to the hospital in one 13-month span. Because of N.S.’s condition and special needs, the Smiths have had to modify their home, including, but not limited to, the removal of carpeting and the installation of special flooring and bedding. The Smiths earn approximately $3,250 a month. They currently receive a monthly $651 adoption subsidy under an adoption assistance agreement they executed with the state of Missouri. The Smiths cannot afford N.S.’s necessary and regular medical care or his special educational requirements absent the adoption subsidy. The state of Missouri has sent a notice letter to the Smiths stating that N.S.’s adoption assistance payments, made under Title IV-E, will expire within one year and made renewable at the discretion of the DSS Director. The Smiths have obtained approval to adopt a second child, but have serious concerns that such a decision will cause a financial hardship absent an adoption subsidy. See Declaration of Tammy Smith attached as Exhibit K.
Defendants 18. Defendant Matt Blunt is the Governor of Missouri, and is sued in his official capacity. His business address is Office of the Governor, Room 216, State Capitol Building, Jefferson City, Missouri 65101. Pursuant to Article IV of the Missouri State Constitution, Governor Blunt is directly responsible for ensuring that all Missouri agencies, including DSS, comply with applicable federal and state laws. Governor Blunt signed Senate Bill 539, which will take effect on August 28, 2005. 19. Defendant Gary Sherman is the Director of the Missouri DSS and is sued in his official capacity. His business address is Office of the Director, Broadway State Office Building, P.O. Box 1527, Jefferson City, Missouri 65102. In his role as Director of DSS, Defendant Sherman is

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directly responsible for managing DSS and for supervising the adoption assistance programs in the state of Missouri as described by federal and Missouri law.
CLASS ACTION ALLEGATIONS 20. This action is properly maintained as a class action pursuant to Fed. R. Civ. P. 23(a) and (b)(2). 21. The class is defined as: “All future, current and former foster children in the Missouri foster care system, who have been or will be adopted, and who are or would be the beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.” A Means Test Subclass is defined as: “All class members for whom Senate Bill 539 would impose a means test on the income of their current or prospective adoptive parent(s) to terminate or deny ongoing adoption assistance subsidy payments for the benefit of those Class members.” An Existing Contracts Subclass is defined as: “All Class members that are beneficiaries of existing adoption assistance agreements between their adoptive parents and the Missouri Department of Social Services that were executed on or before August 27, 2005.” 22. The plaintiff class and subclasses are sufficiently numerous. As of June 2005, there were approximately 11,196 foster children in the Missouri foster care system. On average, these children have been in the custody of the Children’s Division for over 26 months and, at the end of June 2005, there were 2,002 foster children awaiting adoption. Furthermore, in the Fiscal Note analyzing the budgetary impact of Senate Bill 539, the Department of Social Services estimated that without the bill it would have an average monthly caseload of 12,474 former foster children receiving adoption assistance subsidies. Therefore, the class as a whole is comprised of at least 14,000 current and former foster children who are either adopted or awaiting adoption and joinder of all class members is impracticable.

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23. Furthermore, the same can be said for each of the subclasses. In the Fiscal Note for Senate Bill 539, the Department of Social Services reported that the bill would impose a means test on the adoptive parents of 43% (5,364) of its former foster children now receiving adoption assistance and that just over half, or 2,685, would fail the test and lose the assistance payment. The Means Test Subclass, therefore, is sufficiently numerous such that joinder would be impracticable. Moreover, more than 12,000 Class members are currently beneficiaries of adoption assistance agreements between their adoptive parents and the Department of Social Services, making the Existing Contracts Subclass sufficiently numerous to satisfy Rule 23(a). 24. The questions of law and fact raised by the Named Plaintiffs are common to and typical of those raised by the putative class. Each Named Plaintiff and each putative class member is subject to Defendants’ laws, practices and policies concerning adoption assistance subsidy contracts, and is subject to Senate Bill 539 and Defendants’ unlawful pattern and practice of implementation. 25. Common questions of law include:
a. whether Senate Bill 539 violates Plaintiffs’ rights under the Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. §§ 620-629(i) and 670-679(b), and relevant federal regulations;
b. whether Senate Bill 539 denies members of the Means Test Subclass equal protection under law as prohibited by the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution; and

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c. whether Senate Bill 539 impairs the rights and obligations of the contracts that benefit the members of the Existing Contracts Subclass as prohibited by the Contracts Clause, Article I, Section 10 of the United States Constitution.
26. Common questions of fact include: a. whether Defendants are retroactively and prospectively rendering all adoption assistance subsidy contracts for the benefit of class members valid for no more than one year; b. whether Defendants are retroactively and prospectively rendering all adoption assistance subsidy contracts for the benefit of class members annually renewable at the discretion of the DSS Director; c. whether Defendants are deeming all existing subsidy contracts for the benefit of class members, regardless of their current duration, to have expired one year after the agreement was first entered into; d. whether Defendants have created two groups of otherwise similarly situated abused and neglected, special needs children, all of them current or former wards of the Missouri foster care system, and will apply a means test to deny or terminate the subsidy benefit for one of these groups of children (whom the state previously deemed ineligible under Title IV-E) but not the other (whom the state previously deemed eligible under Title IV-E); and, e. whether Defendants are nullifying the primary terms of pre-existing, long-term adoption assistance agreements between the Missouri Department of Social Services and parents that adopted former wards of Missouri’s foster care system.

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27. The legal violations shared by the Named Plaintiffs are typical of those shared by each member of the putative class and sub-classes. The harms suffered by the Named Plaintiffs are typical of the harms suffered by all children in the putative class. 28. Each Named Plaintiff appears by a next friend pursuant to Fed. R. Civ. P. 17(c) and each next friend is sufficiently familiar with the facts of the child’s situation to fairly and adequately represent the child’s best interests in this litigation. 29. The Named Plaintiffs will fairly and adequately protect the interests of the members of the putative class. The Named Plaintiffs and the putative class are represented by John Amman and Amy Sanders of the Saint Louis University Legal Clinic, St. Louis, Missouri; James P. Meuhlberger, Lori Burns-Bucklew and Nicholas P. Mizell of Shook Hardy & Bacon, Kansas City, Missouri; Marcia Robinson Lowry, Ira P. Lustbader and Sara M. Bartosz of Children’s Rights, Inc, New York, New York; Thomas Kennedy and Deborah Greider of the Kennedy Law Office, Alton, Illinois; and James Wilson and Stephen Reynolds of Berg, Borgmann, Wilson & Wolk, LLP, St. Louis, Missouri. The above counsel for Plaintiffs collectively have extensive experience in complex child welfare class actions and are willing and able to vigorously prosecute this action. Counsel for Plaintiffs know of no conflicts among members of the putative class or subclass. 30. Defendants have acted or refused to act in a manner generally applicable to the putative class, making class-wide declaratory and injunctive relief appropriate and necessary.

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SYSTEMIC ALLEGATIONS CONCERNING THE MISSOURI ADOPTION ASSISTANCE SUBSIDY PROGRAM
Defendants’ Unilateral Modification or Termination of All Subsidy Contracts 31. Congress enacted the Adoption Assistance Act to “establish a program of Federal support
to encourage adoptions of children with special needs.” 1980 U.S. Code Cong. And Admin
News at 1448, 1460. Children with special needs are those for whom the State has “determined
that the child cannot be returned to the home of his parents” and that “there exists with respect to
the child a specific factor or condition (such as his ethnic background, age, or membership in a
minority or sibling group, or the presence of factors such as medical conditions or physical,
mental, or emotional handicaps) because of which it is reasonable to conclude that such child
cannot be placed with adoptive parents without providing adoption assistance under this section
or medical assistance under title XIX” and “except where it would be against the child’s best
interests . . . a reasonable, but unsuccessful effort has been made to place the child with
appropriate adoptive parents without providing adoption assistance under this section or medical
assistance under title XIX.” 42 U.S.C. § 673(c).
32. The June 28, 2005 Child Welfare Policy Manual of the U.S. Department of Health and
Human Services, Administration for Children Youth and Families, includes a Policy
Announcement stating that:
The legislative history [of the adoption Assistance Act] indicates that Congress was concerned primarily with moving children in State foster care systems into permanent adoptive homes when appropriate. The Title IV-E adoption assistance program, therefore, was developed to provide permanency for children with special needs in public foster care by assisting States in providing ongoing financial and medical assistance on their behalf to the families who adopt them.
ACYF-CB-PA-01-01 (1/23/01).

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33. The Missouri Child Welfare Manual, Section 4 Chapter 30, subsection 30.1 similarly states: “adoption or legal guardianship is a desired outcome for children who cannot be reunified with their families.” The Missouri Child Welfare Manual states that “[a]doption subsidy is a service that may be used to assist in providing permanency for children who, because of special needs, might not otherwise be adopted, and for whom a family is not readily available.” Additionally, the same provision in the manual states that “[s]ignificant to the use of the adoption/legal guardianship subsidy, is the realization that without this resource the family would not otherwise have the resources to provide permanency to a special needs child.” 34. The subsidized federal adoption assistance program provides federal matching funds to states once a state determines that a child in foster care is eligible for such assistance. The federal funding structure under Title IV-E provides federal reimbursement rates for states that establish “qualifying plans” to provide adoption assistance. 35. The State of Missouri has a qualifying Title IV-E State Plan and receives federal funding for adoption assistance. The Missouri Department of Social Services is the state agency responsible for submitting the Missouri State Plan to the Secretary of Health and Human Services for approval. The Missouri State Plan requires the state’s foster care and adoption assistance programs to comply with federal law. Missouri state law, § 453.074 1.(1) and (6) S.R.Mo. (2005) states that “the division of family services shall have the following duties in the administration of the subsidy program: . . . Comply with all federal laws relating to adoption subsidies in order to maintain the eligibility of the state of Missouri for federal funds.” 36. The Missouri State Plan also provides that all children who are, or have been, in the custody of the Division of Family Services after 1999, are considered to have “special needs” for the purposes of adoption assistance subsidies. Similarly, Section 4 Chapter 30.2 and 30.4(C) of

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the Missouri Child Welfare Manual states that all abused and neglected children currently or
formerly in the custody of the Division’s foster care program are considered special needs and
thus are eligible for an adoption assistance subsidy.
37. The federal Adoption Assistance Act prohibits states from unilaterally modifying or
terminating adoption assistance subsidy contracts. 42 U.S.C. § 673(a)(3) provides, in part:
The amount of the payments [adoption subsidies] to be made in any case under clauses (i) and (ii) of paragraph (1)(B) shall be determined though agreement between the adoptive parents and the State or local agency administering the program under this section, which shall take into consideration the circumstances of the adopting parents and the needs of the child to be adopted, and may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.
38. The June 28, 2005 Child Welfare Policy Manual of the U.S. Department of Health and
Human Services, Administration for Children Youth and Families, includes the following Policy
Announcement:
States may limit the duration of payments under an adoption assistance agreement for individual eligible children to a period which may end prior to the child’s eighteenth birthday, if the decision is made on a case-by-case basis, taking into consideration the provisions of [672(a)(2)]. States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.
ACYF-CB-PA-01-01 (1/23/01) (emphasis added).
39. Missouri state law, 453.073.1 R.S.Mo. (2005), unchanged by Senate Bill 539, states:
“Determination of the amount of monetary need is to be made by the division at the time of the
placement, if practicable, and in reference to the needs of the child, including consideration of
the physical and mental condition, and age of the child in each case[.]”
40. Senate Bill 539, when it becomes effective on August 28, 2005, will amend the language
of Missouri state law, 453.073 R.S.Mo. (2005), and specifically 453.073.3(4), to state: “The time

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period for which the subsidy is granted shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the Director. All existing agreements will have deemed to have expired one year after they were initially entered into.” 41. On its face, Senate Bill 539 unlawfully imposes a blanket policy that renders all current and prospective adoption assistance subsidy contracts of one-year duration, renders all such contracts annually renewable at the discretion of the DSS Director and without the concurrence of the adoptive parents, and thus violates the Adoption Assistance Act. 42. Senate Bill 539, if allowed to take effect, threatens to irreparably harm thousands of future, current and former foster children by unlawfully deeming all subsidy agreements, current and prospective, to expire in one year. 43. Moreover, Senate Bill 539 threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the court-supervised consent decree entered in G.L. et al. v. Gary Stangler et al, No. 77-0242-CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. See July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al. The instability and uncertainty that Senate Bill 539 will introduce into the adoptive arena threatens to undermine these important gains for Missouri’s vulnerable children in Jackson County.

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Defendants’ Arbitrary Creation of Two Groups of Similarly Situated Children for Granting or Denying Adoption Assistance Subsidies
44. Senate Bill 539 also modifies Missouri state law 453.073(4) S.R.Mo. (2005), by adding a new subsection (6) which states: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” 45. Senate Bill 539 creates two groups of otherwise similarly situated abused and neglected special needs children, all of them current or former wards of the Missouri foster care system. For one group of children, at the time of the initial adoptive placement (which for most children occurred while the child was still in foster care), the child did not meet the Title IV-E eligibility requirements. For these children, the State will apply a means test to their current or prospective adoptive parents. If the child’s adoptive parents’ income is more than two hundred percent of the federal poverty level (currently $32,180 annually for a family of three), a subsidy will be denied, or, if the subsidy was ongoing, the subsidy will be terminated. 46. For another group of children, at the time of the initial adoptive placement, the child did meet the Title IV-E eligibility requirements. For these children, the State will not apply a means test to their current or prospective adoptive parents. 47. Federal law creates four distinct Title IV-E eligibility categories for adoptive children qualified to receive Title IV-E adoption assistance benefits by virtue of their special needs status. These four eligibility categories are as follows: (1) the special needs child was eligible for AFDC benefits (as defined in 1996) during the month in which court proceedings for adoption were initiated or was eligible for said benefits within 6 months prior to that time, or (2) the special needs child was eligible for Supplemental Security Income (“SSI”) programs under the Social Security Act before adoption, or (3) the special needs child’s parent was in foster care and

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receiving Title IV-E funds that covered both the parent and the child when the adoption was initiated, or (4) the special needs child previously received adoption assistance, and his or her adoptive parent died or the adoption was dissolved. The special needs child need only meet one of the above four eligibility prongs to claim a right to Title IV-E adoption assistance. 48. In a May 13, 2005 press release, Governor Blunt publicly stated that the changes made by Senate Bill 539 are “to ensure that taxpayer funded assistance is getting to the most needy.” However, the means test and the categorizing of children to whom it will be applied bear no rational relationship to the governmental purpose of using state funded subsidies for the “most needy.” Children who were previously deemed by the state to be eligible under Title IV-E are no more or less needy than the children who were previously deemed ineligible under Title IV-E. Similarly, the adoptive parents of children who were previously found IV-E eligible are not more or less in need of an adoption assistance subsidy than the adoptive parents of children who were previously found to be IV-E ineligible. This is because the requirements determining eligibility for Title IV-E at the time of the adoptive placement bear no relationship to the child’s individual need for a subsidy or the individual circumstances of the child’s current or prospective adoptive parent. 49. For example, if a IV-E eligible foster child was adopted five years ago and a subsidy has been provided for the child’s benefit, the means test of Senate Bill 539 would not apply, and the adoption assistance would continue regardless of whether the current income of the child’s adoptive parents is more than 200% of the FPL. However, if a IV-E ineligible child with severe and profound special needs was adopted five years ago and a subsidy has been provided for the child’s benefit, a means test will be now applied to the family’s income, and the adoption

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assistance would not continue if the current income of the child’s adoptive parents is more than 200% of the FPL. 50. The only way to equally apply a means test would be to means test every current or prospective adoptive parent. However, the federal Adoption Assistance Act prohibits means testing. The HHS Child Welfare Policy Manual provides in Section 8.2A.2, “the use of a means test is prohibited in the process of selecting a suitable adoptive family ….” Child Welfare Policy Manual, Section 8.2A.2. 51. The means test in Senate Bill 539 is arbitrary and bears no rational relationship to the state’s interest in limiting state tax dollars to the most needy children. Senate Bill 539, if allowed to take effect, threatens to irreparably harm children in the means test subclass. Defendants’ Unilateral Termination of Medicaid Health Benefits to Beneficiaries of State-
Funded Adoption Subsidies 52. Prior to and until the effective date of Senate Bill No. 539, the State of Missouri has furnished and will continue to furnish state-funded adoption assistance benefits to special needs children pursuant to the provisions of Missouri Revised Statutes, Chapter 453, Section 453.073, Subparts 1 through 3(1)-(6). Section 453.073, Subparts 1 through 3(1)-(6) make no provision for family income means testing in determining either the eligibility of a particular child for adoption assistance or the amount of that assistance. 53. Pursuant to the provisions of the Adoption and Safe Families Act of 1997 (“ASFA”), all children receiving either Title IV-E funded or non-Title IV-E, state-funded adoption assistance benefits must also be made eligible for and receive Medicaid health care coverage under the State’s Medicaid Plan, as duly approved by the Department of Health and Human Services. 42 U.S.C. 675 et. seq. Prior to and until the effective date of Senate Bill No. 539, all children receiving either Title IV-E or state-funded adoption assistance benefits in Missouri were and will

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continue to be provided with Medicaid health care coverage, regardless of the gross income of their respective adoptive families. 54. Senate Bill No. 539 amends Missouri Revised Statutes, Chapter 453, Section 453.073 to include a Subpart 4 that provides: “[t]he subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” Subpart 4 thereby subjects state-funded adoption assistance benefits to blanket means testing. 55. As a direct result of Senate Bill No. 539, and specifically the inclusion of the Subpart 4 means test provision, many special needs children who under preexisting Missouri law were eligible for and received Medicaid health care coverage by virtue of their status as recipients of state-funded adoption assistance benefits no longer will receive adoption assistance or Medicaid health care coverage. These effected children will fall into two categories: (a) non-IV-E special needs children placed into adoptive homes where the earner(s) have a gross income exceeding 300% of the FPL (the income threshold for Medicaid coverage under Missouri’s 1115 SCHIP Demonstration Waiver) and (b) non-IV-E special needs children placed into adoptive homes where the earner(s) have a gross income above 200% and below 300% of the FPL and possess the resources to secure “affordable health care coverage” – defined, by Senate Bill No. 539, Section 208.640(2), as private health care coverage with a premium amount equaling 133% or less than the average premium required in the state’s consolidated health care plan. See Title XXI of the Social Security Act, 42 U.S.C. 1397 et. seq. Senate Bill No. 539 contains no grandfather clause preserving state-funded adoption assistance and Medicaid rights bestowed prior to the effective date of the new law, and the above categories of children will include both those special needs children who already have qualified for and received adoption assistance under prior law

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in Missouri and those special needs children whose prospective adoptive placements will be within families with gross incomes exceeding 200% of the FPL, under the new means test. 56. As applied to the Means Test Subclass, Senate Bill No. 539 violates the clear intent and requirement of the Adoption Assistance Act to assure government-funded health insurance coverage for all special needs adopted children to meet their unique physical and emotional needs. The means test introduced by Senate Bill No. 539 will deprive numerous special needs children in Missouri of health care coverage previously guaranteed under the Adoption Assistance Act, and further violates the Equal Protection rights of these children. Any means test that will deny Medicaid or other health insurance coverage to the Means Test Subclass bears no rational relationship to providing state-funded subsidies to the most needy children. 57. The denial of Medicaid or other health benefits to the Means Test Subclass threatens to irreparably harm these children by denying them critical health care coverage. Defendants’ Unilateral Impairment of Existing Adoption Assistance Agreements Entered
into by the State of Missouri for the Benefit of its Special Needs Children 58. Senate Bill 539, on its face, will substantially impair existing adoption assistance agreements in Missouri. The Adoption Assistance Act requires that a binding agreement be executed between the state and the adoption assistance recipient. Likewise, RSMO 453.073 provides: “a written agreement shall be entered into by the division and the parents. The agreement shall set forth the following terms and conditions: (1) The type of allotment ;(2) The amount of assistance payments;(3) The services to be provided; (4) The time period for which the subsidy is granted.” 59. The state-authored, standard form Adoption Assistance Agreement customarily and routinely entered into between the state of Missouri and adoptive parents, as parties and signators, provides for the continuation of benefits until (1) the 18th birthday of the adopted child,

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or (2) termination of the parents’ rights to the child, or (3) the parent is no longer financially responsible for the child, or (4) the child is no longer in the legal custody of the parents, or (5) the child has moved out of the home or (6) the child or both adoptive parents have died. In contravention of this essential contractual understanding, Senate Bill 539 explicitly provides that “all existing agreements will have deemed to have expired one year after they were entered into ….” Section 453.073.1(4). 60. Senate Bill 539 further provides that “[t]he agreement can be renewed for subsequent years at the discretion of the director.” Section 453.073.1(4). Also, children in the Means Test subclass will have their contractual benefits denied or terminated. The new law thereby interferes with and frustrates the clear and reasonable expectation of adoptive parents when they act to adopt a special needs foster child and enter into an adoption assistance agreement that government-paid subsidies will continue until the adoptive child attains the age of majority. This continuous benefits stream forms the very essence of the adoption assistance agreement from the perspective of both contracting parties – the parents, who accept legal responsibility for a special needs child, and the state, which secures permanency for the foster child in a stable family setting and frees itself of legal custody. 61. The impairment of existing contractual rights to be caused by Senate Bill 539 serves no legitimate governmental purpose, and certainly not the best interests of the state’s most needy – its vulnerable, special needs children adopted out of foster care. Instead, the new law completely interferes with and undermines the essential contractual promises and valuable consideration exchanged by the state in order to secure adoptive parents for special needs children. This retroactive nullification of the state’s covenants and commitments violates the Contacts Clause

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of the United States Constitution, as it constitutes a substantial impairment of pre-existing contractual rights.
CAUSES OF ACTION PURSUANT TO 42 U.S.C. § 1983 FIRST CAUSE OF ACTION: ADOPTION ASSISTANCE ACT
(Asserted on behalf of All Class Members) 62. Each and every allegation of the Complaint is incorporated as if fully set forth herein. 63. Senate Bill 539 on its face violates the Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. 620-627, 670-679a (collectively the “Adoption Assistance Act”), and by virtue of their foregoing actions and inactions, Defendants are engaging in a policy, pattern, and practice of depriving Plaintiffs of rights individually conferred upon them by the Adoption Assistance Act and the regulations promulgated thereunder (45 C.F.R. Parts 1355-1357). These rights include, but are not limited to: the right to have adoption assistance subsidy payments for their benefit individually determined by mutual agreement with the State or local agency administering the subsidy program that takes into consideration on a case by case basis the needs of the child and the circumstances of the adopting parents; the right not to have adoption assistance subsidy payments readjusted, modified or terminated without the concurrence of the adoptive parents and based on the individualized needs of the child; the right not to be subject to a blanket policy that automatically limits the duration of adoption subsidy agreements; the right to health insurance coverage for any child who has been determined to have special needs for whom there is in effect an adoption assistance agreement funded solely by State funds; the right to be accurately determined for eligibility for adoption assistance; and the right to the State’s compliance with the terms of the Title IV-E State Plan concerning adoption assistance. See 42 U.S.C. § 671(a)(3);

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671(a)(12); 671(a)(21); 673(a)(1); 673(a)(2); 673(a)(3); 673(c); 675(3); and 45 C.F.R. Parts 1355-1357. SECOND CAUSE OF ACTION: EQUAL PROTECTION UNDER THE FOURTEENTH
AMENDMENT TO THE UNITED STATES CONSTITUTION (Asserted on behalf of the Means Test Subclass)
64. Each and every allegation of the Complaint is incorporated as if fully set forth herein. 65. The foregoing actions and inactions of the Defendants are inconsistent with the exercise of reasonable professional judgment and also amount to a pattern, practice and custom of deliberate indifference to the constitutional rights of children in the Means Test Subclass. 66. Missouri Senate Bill 539 and Defendants’ foregoing actions and omissions intentionally and arbitrarily create two groups of otherwise similarly situated abused and neglected, special needs children, all of them current or former wards of the Missouri foster care system, and will deny or terminate adoption assistance subsidy benefits, Medicaid and other services to the Means Test Subclass but not other similarly situated children, through the use of a means test on the income of their current or prospective adoptive parents. Defendants’ implementation of the means test and denial or termination of adoption assistance subsidies, Medicaid and other services for the benefit of the Means Test Subclass bears no rational relation to a legitimate state interest and violates their Equal Protection rights.
THIRD CAUSE OF ACTION: CONTRACTS CLAUSE OF THE UNITED STATES CONSTITUTION
(Asserted on behalf of the Existing Contracts Subclass) 67. Each and every allegation of the Complaint is incorporated as if fully set forth herein. 68. As a result of Defendants’ foregoing actions and inactions, the essential rights and obligations in the long-term, pre-existing contracts of which members of the Existing Contracts Subclass are intended third-party beneficiaries will be substantially impaired without serving a

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legitimate governmental purpose. This substantial impairment of contractual rights through the

retroactive application of a newly enacted statute violates the Contract Clause, Article I., Section

10 of the United States Constitution.

PRAYER FOR RELIEF

69. WHEREFORE, the Plaintiff children respectfully request that this Court:

a.

Assert jurisdiction over this action;

b.

Order that all Plaintiffs may maintain this action as a class action pursuant

to Rule 23(b)(2) of the Federal Rules of Civil Procedure;

c.

Declare pursuant to Rule 57 of the Federal Rules of Civil Procedure: (1)

that the portion of Senate Bill 539 replacing Missouri state law Section 453.073

conflicts with, violates and is preempted by the federal Adoption Assistance and

Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of

1997, and regulations promulgated thereunder; (2) that the portion of Senate Bill 539

replacing Missouri state law Section 453.073 is unconstitutional on its face under the

Equal Protection Clause of the Fourteenth Amendment to the United States

Constitution; (3) that the portion of Senate Bill 539 replacing Missouri state law

Section 453.073 violates Plaintiffs’ rights under the Contracts Clause, Article I,

Section 10 of the United States Constitution;

d.

Permanently enjoin defendants from enacting or implementing the portion

of Senate Bill 539 replacing Missouri state law Section 453.073 and otherwise

prevent these provisions from taking effect;

e.

Order appropriate remedies to ensure Defendants’ future compliance with

federal law concerning adoption assistance subsidies;

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f.

Award Plaintiffs their reasonable attorneys fees and costs pursuant to 42

U.S.C. § 1988 and 1920 and Federal Rule of Civil Procedure 23(e) and (h); and

g.

Grant such other and further equitable relief as the Court deems just,

necessary and proper to protect Plaintiffs from further harm by Defendants.

DATED: August 15, 2005

Respectfully Submitted,

SHOOK, HARDY & BACON L.L.P.

By /s/ Loretta Burns-Bucklew James P. Muehlberger, #51346 Loretta Burns-Bucklew, #32053 Nicholas P. Mizell, #51716 Pamela Macer, #55033 Kathleen A. Jeanetta, #48384
2555 Grand Blvd. Kansas City, Missouri 64108-2613 Phone: (816) 474.6550 FAX: (816) 421-5547

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1733417v1

CHILDREN’S RIGHTS, INC.
Marcia Robinson Lowry, Esq. Ira P. Lustbader, Esq. Sara Bartosz, Esq. 404 Park Avenue South, 11th Floor New York, New York 10016 Tel: (212) 683-2210 Fax: (212) 683-4015
SAINT LOUIS UNIVERSITY LEGAL CLINIC
John J. Ammann, Director Amy Sanders, Asst. Prof. 321 North Spring St. Louis, Missouri 63108 Tel: (314) 977-2778 Fax: (314) 977-3334
LAW OFFICES OF THOMAS E. KENNEDY, III, L.C.
Thomas E. Kennedy, III, Esq. Deborah Greider, Esq. 2745 E. Broadway, Ste. 101 Alton, Illinois 62002 Tel: (618) 474-5326 Fax: (618) 474-5331
BERG BORGMANN WILSON & WOLK, L.L.P.
James Wilson, Esq. Stephen Reynolds, Esq. Windsor Building, Suite 850 7711 Bonhomme Avenue St. Louis, Missouri 63105 Tel: (314) 725-5955 Fax: (314) 725-0559
ATTORNEYS FOR PLAINTIFFS
Page 29 of 29

 
 Case 2:05-cv-00726-SOW Document 123 Filed 08/04/2006 Page 1 of 3

IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G., each )

a Minor by Next Friend, Jill Katz;

)

W.S., M.S., and D.S., each a minor by Next )

Friend, Robert Strange;

)

M.P., a minor by Next Friend, Michael

)

Patterson;

)

A.C., a minor by Next Friend, Lana Capps; )

J.A., a minor by Next Friend, John Antonich;)

T.J. and A.J., each a minor by Next Friend, )

Lavada Johnson; and

)

N.S., a minor by Next Friend, Tammy Smith, )

)

Plaintiffs,

)

)

vs.

)

)

K. Gary Sherman, in his official capacity as )

Director of the Missouri Department of

)

Social Services,

)

)

Defendant.

)

Case No. 05-0726-CV-C-SOW Senior District Court Judge Scott O. Wright

AMENDED ORDER AND FINAL JUDGMENT GRANTING PERMANENT INJUNCTIVE RELIEF
This cause coming to be heard on Plaintiffs’ Complaint and Defendant’s Answer thereto, the Court having conducted a trial on the merits on April 27, 2006, all parties having been present through and represented by counsel, the Court having considered and weighed the evidence introduced into the trial record, and having made certain factual and legal determinations reflected in the Court’s separate findings of fact and conclusions of law, the Court also having read the proposed findings of fact, conclusions of law and legal memoranda

1

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submitted by the parties and having heard oral argument by counsel, IT IS HEREBY PROVIDED: THE COURT FINDS: 1. Plaintiffs have prevailed on the merits of the statutory and constitutional causes averred in Counts I, II and III of their complaint. 2005 Missouri Senate Bill 539’s proposed amendments to Missouri Revised Statutes Section 453.073.3(4) and Section 453.073.4 violate federal law. 2. Plaintiffs have demonstrated that they will suffer irreparable harm absent the entry of permanent injunctive relief, 3. The irreparable harm to be suffered by Plaintiffs absent injunctive relief substantially outweighs any threat of harm to Defendants flowing from this permanent injunction order, and 4. The public interest is and will be served by the entry of permanent injunctive relief. THE COURT FURTHER ORDERS:
1. The preliminary injunction order previously entered by this Court in this cause is vacated and replaced by this order. 2. Defendant, K. Gary Sherman, in his official capacity as the Director of the Missouri Department of Social Services, along with DSS’s officers, agents, employees and attorneys, are permanently enjoined from implementing the provisions of Missouri Senate Bill 539, that amend Missouri Revised Statutes § 453.073, as well as any rules or regulations promulgated in furtherance of the challenged provisions of Missouri Senate Bill 539. No act may be taken to put into operation or otherwise give any effect to the intent of the provisions of Missouri Senate Bill 539 that amend Missouri Revised Statutes § 453.073.
2

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3. Plaintiffs are entitled to recover their expenses of litigation, including reasonable attorneys fees and nontaxable costs, pursuant to 42 U.S.C. § 1988 and Fed. R. Civ. P. 23(h). 4. The Court today issues amended findings of fact and conclusions of law consistent with this order.

Date: 8/4/06

/s/Scott O. Wright Scott O. Wright Senior United States District Judge

3

 
 Case 2:05-cv-00726-SOW Document 124 Filed 08/04/2006 Page 1 of 75

IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G.,

)

each a minor by Next Friend, Jill Katz;

)

W.S., M.S., and D.S., each a minor by Next )

Friend, Robert Strange;

)

M.P., a minor by Next Friend, Michael

)

Patterson;

)

A.C., a minor by Next Friend, Lana Capps; )

J.A., a minor by Next Friend, John Antonich;)

T.J. and A.J., each a minor by Next Friend, )

Lavada Johnson; and

)

N.S., a minor by Next Friend, Tammy Smith, )

)

Plaintiffs,

)

)

vs.

)

)

K. Gary Sherman, in his official capacity as )

Director of the Missouri Department of

)

Social Services,

)

)

Defendant.

)

)

No. 05-726-CV-W-SOW

AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF THE COURT’S
AMENDED ORDER AND FINAL JUDGMENT GRANTING PERMANENT INJUNCTIVE RELIEF
Plaintiffs seek to permanently enjoin harmful and unlawful changes to Missouri’s
adoption subsidy program in Missouri Senate Bill 539.1 Specifically, plaintiffs challenge (1)

1 The certified class includes “all future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a court-ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.” (September 29, 2005 Order of Judge Scott O. Wright.) Following a full evidentiary hearing, a preliminary injunction was issued on September 8, 2005. After a trial on the merits conducted on April 27, 2006, on May 1, 2006, this Court issued an Order Granting Permanent Injunctive Relief with a further order to be entered including findings of fact and conclusions of law. This Court entered an Amended Order and Final Judgment Granting Permanent Injunctive Relief as of today’s date.
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changes to Missouri Revised Statutes Section 453.073.3(4) concerning the imposition of a blanket policy that retroactively makes all existing adoption subsidy contracts expire on their one year anniversary, makes all new contracts automatically expire annually, with renewals in all circumstances at the sole discretion of the DSS Director2; and (2) the creation of a new Section 453.073.4 concerning the imposition of a means test on the income of existing or prospective adoptive parents of a targeted group of foster children.3
Plaintiffs assert (1) that the automatic expiration, blanket one year duration and discretionary renewal provisions violate and are preempted by the Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. §§ 620-629(i) and 670-679(b) (collectively “AACWA”); (2) that the means test in Senate Bill 539 violates the Equal Protection Clause of the Fourteenth amendment to the U.S. Constitution; and (3) that both challenged provisions, as they pertain to those children with existing subsidy contracts, violate the Contracts Clause of the U.S. Constitution.
Plaintiffs’ showing of a significant risk of irreparable harm if the law is not permanently enjoined has not been rebutted by any contrary facts in the record. Plaintiffs have adduced evidence showing that (1) hundreds, if not thousands, of children who already have contracts entitling them to adoption assistance maintenance subsidies until they turn 18 will have those subsidies permanently terminated as a result of the challenged law; (2) children still in state custody in foster care who are targeted by the challenged law will be disadvantaged in relation to other foster children in their chances of ever getting adopted; (3) children still in state custody in foster care who are targeted by the challenged law will be
2 Senate Bill 539 amends Section 453.073.3(4) of RSMo to require: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will be deemed to have expired one year after they were initially entered into.” (Senate Bill 539 at 453.073.3(4).) 3 Senate Bill 539 amends Section 453.073.4 of RSMo to require: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.3(4).)
2

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forced to stay in custody longer as a direct result of the challenged law; (4) the new law will have the likely effect of deterring parents from adopting special needs foster children and will likely shrink the pool of available adoptive parents for such children - even without implementation of Senate Bill 539, there are currently almost 2,000 children in foster care awaiting adoption; and (5) even Title IV-E eligible children who currently hold contracts for subsidies will at best continue to receive payments until June 30, 2006, after which renegotiation is solely at the discretion of the DSS Director.
While the risk of harm to plaintiffs is considerable, no harm will befall defendant from a permanent injunction. The evidence presented in the record shows that defendant made obvious and questionable assumptions in projecting savings from the challenged law. Additionally, it is undisputed that foster care is significantly more expensive than adoption assistance subsidies, and defendant concedes that the law will directly result in children spending longer time in foster care. The State will not save money under Senate Bill 539; it will lose money.
Plaintiffs have firmly established success on the merits of their claims. Section 453.073.3(4) plainly applies to all subsidy contracts, both “IV-E eligible” children and “non IV-E eligible” children. The automatic expiration, blanket one year duration and discretionary renewal policy violates, and are preempted by, the plain language of 42 U.S.C. 673(a)(3), which prohibits any change in the amount of the subsidy (including shrinking the amount to zero by automatically terminating the contract) without the concurrence of the adoptive parents. The challenged provision also violates several explicit official issuances of the federal Department of Health and Human Services (HHS). The Court was presented at trial with an undisputed and unrebutted letter from HHS to defendant Sherman, outlining the very same violations of federal law and official HHS issuances.
Defendant’s only defense to preemption under the statute is that all contracts (even those for IV-E eligible children) expire in one year, but that DSS “intends” at present not to
3

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do what their own statute allows for the IV-E eligible children. This supposed “intent” – never reduced to even a written policy and included solely as a position in litigation – is belied by Senate Bill 539 and current DSS policies unchanged by the new law. DSS policy makes an explicit distinction between contracts that are reviewed and may be “renewed” and those that “expire” and must be “renegotiated.” See Plaintiffs’ Exh. 48, at 30.4.G. Since Senate Bill 539 deems every contract to “expire” on its one-year anniversary, defendant’s position is logically inconsistent and easily rejected. Defendant would remain free to change the “intent” next month.
Plaintiffs have established success on their Equal Protection claim. Defendant’s argument that the two groups -- those targeted for the means test and those not targeted – are not similarly situated because of the different funding streams misses the point entirely: the federal AACWA is silent on means testing non-IV-E eligible children, but does not require defendant to target that group for discriminatory treatment – the federal law actually bans means testing, as does accepted adoption subsidy policy and practice standards. Missouri has chosen to target the non-IV-E eligible children for affirmative discriminatory treatment. The only way to equally apply the Senate Bill 539's means test would have been to means test all adoptive parents, but the federal statute expressly bans that practice.
The means test triggers strict scrutiny because it infringes on plaintiffs’ fundamental right to be free from unnecessarily prolonged government confinement, and the law is not narrowly tailored to a compelling state interest. Even if the Court were to evaluate the means test using rational basis scrutiny, it would not survive. Senate Bill 539's means test is not rationally related to directing money to the most needy children and families because: (1) the income of the biological parents of the targeted group is not rationally related to these children’s adoptive parents’ income; (2) the adoptive parents’ gross income test imposed by the new law is not rationally related to the child’s needs or the family’s actual expenses; (3) all of the children excluded are by definition as needy as those not excluded under the new
4

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law; and (4) the state expends 40% of state dollars on subsidies for all IV-E eligible children without regard to the adoptive parents’ income. Finally, the means test is not rationally related to saving the state money because the evidence shows that the state will lose money under the new law.
Plaintiffs have also established success on their Contracts Clause claim. It is not disputed that the subsidy agreements are legal contracts and that the State is a party to the contracts, triggering heightened scrutiny. Nor is it disputed that the retroactive termination impairs children’s rights under the contracts – indeed the impairment is total since children will permanently lose their subsidies and Medicaid benefits. Defendant’s false cost savings argument fails to provide a sufficient governmental justification for the substantial impairment. Defendant points only to a “termination without cause” provision in the individual contracts, which is plainly void under both applicable contract law and public policy.
Finally, a permanent injunction will further the public interest. The parties do not dispute that the central premise of the entire federal-state adoption subsidy program, accepted good subsidy policy and practice, and the State’s own policies, is to increase opportunities for the adoption of special needs foster children so they do not grow up as state wards. The challenged provisions run directly counter to this important public policy; the permanent injunction promotes this critical public interest.
For all these reasons, as set forth in the findings of fact and conclusions of law presented below, the Court is entering a permanent injunction in this case.
I. FINDINGS OF FACT Adoption Assistance Subsidies: Promotion of Permanency for Special Needs Foster Children
1. The state of Missouri, through the Department of Social Services (“DSS”), Children’s Division, acts to remove children who are subject to abuse and/or neglect at home into the temporary custody of the state and to provide care and services to those 5

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vulnerable children until a permanent placement can be secured, either through reunification with their biological parent(s) or through adoption by a new family when reunification is not in the child’s best interests. Such services are referred to as “permanency” services. (DSS Child Welfare Manual, Sec. 1, Ch. 1, Ex. 77, at 1.1, 1.2.) 2. DSS has statutory responsibility and authority for accepting and investigating all reports of child abuse or neglect within the state under RSMo Ch. 210 and for serving the needs of Missouri’s abused and neglected children through temporary foster care and permanency services under RSMo Ch. 207 and 211. (See DSS Child Welfare Manual, Philosophical Base of Child Welfare Practice, Ex. 76.) 3. Defendant, K. Gary Sherman, is the Director of DSS and, in that capacity, oversees the administration and management of the Children’s Division and the implementation of its child welfare programs and services, including adoption services. (RSMo Section 660.010.1; Sherman Dep., Jan 26, 2006, at 4-5.) 4. The DSS Children’s Division serves the citizens of Missouri and is charged with advancing the public’s interest in the safety and well being of Missouri’s children, including all special needs foster children residing in state custody. (DSS Child Welfare Manual, Sec. 1, Ch. 1, Ex. 77, at 1.2.) 5. As of December 31, 2005, there were 10,772 foster children in the custody of DSS’s Children Division. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 1.) 6. For all children adopted from DSS custody in FY2003 and FY2004, the average length of stay in foster care was 33 and 31.7 months, respectively, which is longer than the national standard of 24 months promulgated by the U.S. Department of Health and Human Services. (Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1.)
6

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7. As of December 31, 2005, a total of 1891 foster children in DSS custody had been assigned a permanency plan or goal of adoption. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 1.) As of January 31, 2006, a total of 1919 foster children in DSS custody had been assigned a permanency plan or goal of adoption. (Caseload Counter, http://www.dss.mo.gov/mis/clcounter/history.htm., Ex. 53.)
8. As of December 31, 2005, the total number of foster children who were adopted and receiving adoption assistance maintenance subsidies was 11,450. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 2.)
9. As of December 31, 2005, 8,845 of 11,450 former foster children who were adopted and receiving adoption assistance maintenance subsidies, received subsidies funded by a combination of federal and state funds, also known as Title IV-E subsidies. (Id. at 2.)
10. For those children receiving adoption assistance maintenance subsidies paid with a combination of federal and state funds, the allocation is 62% federal funding and 38% state funding. (69 Fed. Reg. 68,372 (Federal Financial Participation in State Assistance Expenditures, FY2006), Ex. 92.)
11. As of December 31, 2005, 2,605 of 11,450 former foster children who were adopted and receiving adoption assistance maintenance subsidies received subsidies funded by solely state funds.
12. Children enter state foster care systems because they are abused and/or neglected, and for some reason their biological parent(s) could not keep them safe. The goal of the foster care system is to attempt reunification with biological parent(s) and to create a plan to help parents make the necessary changes in their lives or living conditions so that their child or children can be returned to their care. Foster care is intended to be a short-term, temporary stay for children. (CWLA, Family Foster Care Standards, Ex.
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114, at 0.13; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3; trial testimony Wiedemeier Bower.) 13. Nationally, approximately 55 percent of children are returned to their biological homes. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3, citing to AFCARS data, 2005, Ex. 82; trial testimony of Wiedemeier Bower.) 14. In some cases, however, where children cannot be safely returned to their birth parents, their permanent case plan will be identified as adoption, and social workers working on behalf of these children will begin to look for permanent adoptive homes for them. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3-4; trial testimony of Wiedemeier Bower.) 15. A majority of children in foster care who need permanent adoptive homes require additional services to meet their special needs, often due to the circumstances of their abuse or neglect. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3-4; trial testimony of Wiedemeier Bower.) The array of services they need to address their special needs is both extensive and varied, and can include, without limitation, specialized medical care, dental care, mental health care, physical therapy, occupational therapy, play or talk therapy, or educational tutoring. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115 at 4; trial testimony of Wiedemeier Bower.) 16. Missouri state policy, as stated in the DSS Child Welfare Manual, provides, “[i]n keeping with the philosophical base that every child is entitled to a safe, secure and permanent home, the Children’s Division is obligated to make a diligent search for appropriate adoptive placements for those children for whom adoption has become the permanent plan.” (DSS Child Welfare Manual, Sec. 4, Ch. 27, Ex. 78, at 27.1.) 17. Congress enacted the Title IV-E Adoption Assistance Act to “establish a program of federal support to encourage adoptions of children with special needs.” (1980 U.S. Code Cong. and Admin. News, Ex. 36, at 1448, 1460.)
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18. The State of Missouri has a qualifying “State Plan for Title IV-E of the Social Security Act Foster Care, Independent Living and Adoption Assistance” (“Missouri State Plan”) and receives federal funding for adoption assistance. Missouri’s DSS is the state agency responsible for submitting the Missouri State Plan to the Secretary of Health and Human Services for approval and for administering the plan. (Missouri Title IV-E State Plan, Ex. 45.)
19. The Missouri Title IV-E State Plan states “As a condition of the receipt of Federal funds under title IV-E of the Social Security Act … the [state agency] … hereby agrees to administer the program in accordance with the provisions of this State plan, title IV-E of the Act, and all applicable Federal regulations and other official issuances of the Department.” ( Missouri Title IV-E State Plan, Ex. 45, at 2.) (emphasis added)
20. The state of Missouri, through DSS, is to provide basic shelter, food and care to all foster children in its legal custody. To meets this obligation, DSS remits foster care maintenance payments to all foster families, group homes and child-placing agencies licensed by the state to provide day-to-day care to the foster child population. (DSS Child Welfare Manual, Sec. 4, Ch. 11, Atmt. A, Ex. 101; Missouri State Plan, Ex. 45, at Sec. 2.) The obligation of the state to remit these foster care maintenance payments continues until a child exits from state legal custody by virtue of reunification, adoption or attainment of adulthood. (See generally, HHS Child Welfare Policy Manual, Section 8.3 (foster care maintenance payment programs.)) (DSS Child Welfare Manual, Sec. 4, Ch. 11, at 11.12, Ex. 123; trial testimony of Wiedemeier Bower.)
21. The Federal Child Welfare Policy Manual of the United States Department of Health and Human Services (“HHS”), Administration for Children and Families, states: … “the legislative history [of the Adoption Assistance Act] indicates that Congress was
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concerned primarily with moving children in State foster care systems into permanent adoptive homes when appropriate. The Title IV-E adoption assistance program, therefore, was developed to provide permanency for children with special needs in public foster care by assisting States in providing ongoing financial and medical assistance on their behalf to the families who adopt them.” (Federal Child Welfare Policy Manual, ACYF-CB-PA-01-01, Jan. 23, 2001, Ex. 40; expert report of Jeanette Wiedemeier Bower, Ex. 115, at 3, 4; trial testimony of Wiedemeier Bower.) 22. Missouri State DSS policy defines a special needs child as “any child in the custody of the Children’s Division, Division of Youth Services, Department of Mental Health or a Missouri licensed child-placing agency and who meets one of the following conditions: minority parentage; handicapping condition – mental, physical or emotional; member of a sibling group …; guarded prognosis …; is over five years of age, without any of the above characteristics. Children who meet the criteria for special needs may qualify for adoption subsidy.” (DSS Child Welfare Manual, Sec. 4, Ch. 27, Ex. 47, at 27.4.2.) 23. Missouri State DSS policy states: “[c]hildren placed in the custody of the Division with a history of abuse and/or neglect may be defined as children having special needs and are, therefore, eligible for subsidy.” All current or former foster children are designated as “special needs” for purposes of an adoption assistance subsidy in Missouri. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.C; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 5; trial testimony of Wiedemeier Bower.) 24. Adoptive children meeting the definition of “special needs” in Missouri receive adoption assistance subsidies funded by either a combination of federal and state dollars or solely by state dollars. Children with adoption subsidies funded by a combination of federal and state dollars are also referred to as Title IV-E eligible
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children. (Trial testimony of Jeanette Wiedemeier Bower.) Children with adoption subsidies funded by state dollars only are referred to as non-Title IV-E eligible children. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1; testimony of Weidemeier Bower.) 25. There is significant value to society and to an individual foster child to have that specific child move from the foster care system into a permanent, adoptive home when reunification is not possible. (CWLA, Adoption Standards, Ex. 85, at 5; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 26. CWLA standards state that “. . . subsidies may make possible the adoption of children who have special medical needs or are a part of a special population for whom these benefits are intended.” (CWLA, Family Foster Care Standards, Ex. 114, at 2.100; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 27. The federal adoption assistance program has been credited with significantly decreasing the number of children languishing in foster care by finding them permanent adoptive families. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4, citing Bussiere, in Segal, 1985, Ex. 87; trial testimony of Wiedemeier Bower.) With adoption subsidies, more children find permanent loving homes and fewer graduate or “age out” of the foster care system. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 28. A widely accepted policy reason behind the provision of adoption subsidies for children is that it eliminates financial barriers to adoption for parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6-7; trial testimony of Wiedemeier Bower.) 29. The Missouri Child Welfare Manual states: “[s]ignificant to the use of an
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adoption/legal guardianship subsidy, is the realization that without this resource a family would not otherwise have the resources to provide permanency to a special needs child.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1.) 30. The federal Child Welfare Policy Manual states that the intended beneficiaries of adoption assistance payments are the special needs children themselves, not their adoptive parents. (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.4.) ("Unlike other public assistance programs in the Social Security Act, the IV-E adoption assistance program is intended to encourage an action that will be a lifelong social benefit to certain children and not to meet short term monetary needs during a crisis. Further, the adoptive parents' income is not relevant to the child's eligiblity for the program.") (Expert report of Jeanette Wiedemeier Bower, Ex. 115, at 4-5; trial testimony of Wiedemeier Bower.) Federal and State Adoption Assistance Subsidies 31. Special needs children qualify for adoption subsidies funded with a combination of state dollars and federal dollars (using federal Title IV-E funds) by meeting one of the following eligibility categories: (1) the special needs child was eligible for Aid for Families With Dependent Children program (AFDC) benefits (as defined in 1996) during the month in which court proceedings for adoption were initiated, or was eligible for said benefits within 6 months prior to that time; or (2) the special needs child was eligible for Supplemental Security Income (“SSI”) programs under the Social Security Act before adoption; or (3) the special needs child’s parent was in foster care and receiving Title IV-E funds that covered both the parent and the child when the adoption was initiated; or (4) the special needs child previously received adoption assistance, and his or her adoptive parent died or the adoption was dissolved. The special needs child need only meet one of the above four eligibility prongs to claim a right to Title IV-E adoption assistance. (See 42 U.S.C. Sec. 673; Expert
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Report of Jeanette Wiedemeier Bower, Ex. 115, at 5-6; trial testimony of Wiedemeier Bower) 32. The primary qualification for Title IV-E eligibility for adoption assistance subsidies is through AFDC eligibility. The other categories involve a relatively small group of children. The SSI eligible children are generally medically fragile or medicallyoriented; the minor-child-of-a-foster-child eligibility allows infants in foster care to receive IV-E eligibility if the parent in custody is IV-E eligible and the minor-parent and minor-child live together; and the death/dissolution eligibility assumes that the child’s adoption is finalized and the child is coming back into the care of the department after the adoptive parents’ death or the legal dissolution of the adoption. (See 42 U.S.C. Sec. 673; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6.) 33. In general, an AFDC child is a child who is removed from a low-income birth family where only one parent is in the home such that there is a deprivation of parental support. To receive Title IV-E adoption assistance, the child must be removed from their biological home either through a voluntary placement agreement or as a result of a judicial determination that continuation in the home would be contrary to the welfare of the child. If the AFDC child is special needs and meets either of these removal qualifications, the child will receive a federal-state funded adoption assistance subsidy upon adoptive placement. (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2B.13; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6; trial testimony of Wiedemeier Bower.) 34. Eligibility for a federally subsidized adoption assistance agreement under IV-E is based upon 1996 AFDC income thresholds, which have not been adjusted for inflation. See 42 U.S.C. 673(a)(3). What was defined as “poor” ten years ago remains the standard today under the Title IV-E adoption assistance program. (Expert Report
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of Jeanette Wiedemeier Bower, Ex. 115, at 6) 35. Special needs children not meeting one of the four Title IV-E eligibility prongs
receive adoption assistance payments under the terms of the state-funded adoption subsidy program in Missouri. As stated in the Missouri Department of Social Services (“DSS”) Child Welfare Manual, “[a]n adoption subsidy is a service that may be used to assist in providing permanency for children who, because of special needs, might not otherwise be adopted, and for whom a family is not readily available.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1.) 36. Missouri has provided a single system for adoption assistance maintenance subsidies to both IV-E eligible and non IV-E eligible children continuously for over 25 years. (Simmens, Preliminary Injunction hearing, at 38-41.) 37. The DSS Child Welfare Manual states that an adoption subsidy agreement must be approved by the Division Director and executed on a Form CS-SA-2 contract document. “The CS-SA-2 … is a legally binding agreement.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.2.) The CS-SA-2 Adoption Subsidy Agreement is a pre-printed form contract prepared by DSS and presented to adoptive parents for signature on behalf of their special needs adopted child. (Form CS-SA-2, Ex. 99) 38. The Form CS-SA-2 Adoption Subsidy Agreement states the contractual obligations of the State to the adoptive parent and the adopted children. The State agrees to subsidize adoptive parents for “maintenance,” “recurring expenses for special services” and other “nonrecurring expenses.” (Form CS-SA-2, Ex. 99, at 2.) 39. Form CS-SA-2 Adoption Subsidy Agreement states the contractual obligation of the State “to provide the necessary authorization for participation [of the adopted child] in the Missouri Medicaid Plan….” (Form CS-SA-2, Ex. 99, at 2.) 40. The DSS Child Welfare Manual states: “[s]ubsidy agreements … are considered a
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contract, which must be reviewed annually and renewed prior to the end of the Missouri fiscal year (i.e., June 30, 2XXX). Contracts are automatically renewed unless changes are agreed to as a result of the annual review or requested by the adoptive parent(s) or legal guardian(s). However if approved services on the attachment (CS-SA-2 ATT/CS-LG-2 ATT) have expired, a new attachment must be developed between the family and the agency.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.G.) 41. In FY2006, which runs from July 1, 2005 through June 30, 2006, approximately 11,400 children formerly in the Missouri foster care system will be beneficiaries of adoption assistance subsidy contracts between Missouri and the children’s adoptive parent(s). (Defendant’s Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, at 2.) 42. All adoption subsidy agreements executed by the state of Missouri utilize state funds to meet the government’s monthly payment obligations. Title IV-E adoption subsidy agreements are funded 62% by federal matching dollars and 38% by state dollars. State-only adoption subsidy agreements are funded 100% by state dollars. (69 Fed. Reg. 68,372 (Federal Financial Participation in State Assistance Expenditures, FY2006), Ex. 92.) The Governmental Purpose Underlying Senate Bill 539 43. Missouri Governor Matt Blunt signed Senate Bill 539 into law on April 26, 2005. By its terms, Senate Bill 539 has an effective date of August 28, 2005. (Current Bill Summary, published at: www.senate.mo.gov, Ex. 34). 44. Governor Blunt and the Missouri legislature enacted Senate Bill 539 with the stated intent to “reform Missouri’s social welfare system to ensure that taxpayer funded assistance is getting to the most needy ….” (Press Release from the Office of Governor Matt Blunt, May 13, 2005, Ex. 54, at 1.) As stated in the accompanying
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emergency rule, the law was necessary “to achieve a balanced state budget for SFY 2006.” (Emergency Rule 13 CSR 35-38.020, Ex. 50.) Emergency Rule 13 CSR 3538.020 became effective on August 28, 2005, and expired on February 23, 2006. 45. The State of Missouri and the Department of Social Services (“DSS”), through duly authorized and responsible state officials, have identified a single governmental purpose to be advanced by the means test provision of Senate Bill 539: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the state’s most needy families. (Renne Dep., Jan. 26, 2006, at 31-32; Boies Dep., Jan. 18, 2006, at 103; Kinkade Dep., Jan. 18, 2006, at 64; Martin Dep., Dec. 13, 2005, at 37; Martin, Preliminary Injunction hearing, at 164.) 46. William Boies, a Budget Analyst 2 in the Budget and Planning Division of the state Office of Administration (“OA”), testified at his deposition regarding the origin and development of the adoption subsidy means test provision during the FY2006 budget process in Missouri. Boies testified that following the November 2004 gubernatorial election, the FY2006 budget process (for the FY beginning July 1, 2005) was turned over to Governor-Elect Blunt’s transition team. Michael Keathley, who was later named Commissioner of OA by Governor Blunt, headed the transition team within OA. (Boies Dep., Jan. 18, 2006, at 2, 20-25.) 47. William Boies testified in his deposition that Keathley, upon joining OA in November or December 2004, took note of the historic rate of growth in the costs of the adoption subsidy program in Missouri when reviewing the FY2006 departmental budget submitted by DSS and inquired about the program. Mr. Keathley specifically inquired about methods that could be used to control further growth in the program and suggested means testing recipient adoptive families to reduce cost. (Boies Dep., Jan. 18, 2006, at 32-39.)
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48. Thereafter, OA and DSS staff developed a means test scheme with the intended purpose of reducing costs within the Missouri adoption subsidy program by directing a decreased subsidy appropriation to low income adoptive families only, regardless of the needs of the adoptive child. The only governmental purpose to be served by the means test was cost reduction. (Boies Dep., Jan. 18, 2006, at 103.)
49. William Boies testified at his deposition that he never heard discussion of any other governmental purpose or justification for the new eligibility scheme. (Boies Dep., Jan. 18, 2006, at 103.)
50. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, testified at her deposition that the only policy justification she heard discussed for the Senate Bill 539 means test was “cost savings.” (Martin Dep., Dec. 13, 2005, at 37.)
51. Amy Martin also testified at her deposition that she was not able to identify any way in which the Senate Bill 539 provisions regarding adoption subsidies would serve to benefit children, whether they were in adoptive or foster care. (Id. at 38.)
52. Steve Renne, Acting Director of DSS through April 1, 2005, now Deputy Director of DSS, also testified to his understanding that the Senate Bill 539 means test was designed simply to achieve cost reductions in the state’s adoption subsidy program. (Renne Dep., Jan. 26, 2006, at 31-32.)
53. Defendant K. Gary Sherman, the current Director of DSS, testified at his deposition that he played no role in the development of Senate Bill 539 and its adoption subsidy provisions due to the timing of his nomination for DSS Director by Governor Blunt and subsequent Senate confirmation, which occurred less than one month before the enactment of Senate Bill 539. (Sherman Dep., Jan. 26, 2006, at 5, 10, 11, 23.)
54. Boies participated in a final FY2006 DSS budget presentation to Governor Blunt in
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January 2005, conducted by means of a telephone conference that occurred shortly before the January “State of the State” address. During this conference, the means test and cost reduction scheme, later made law through Senate Bill 539, were presented to and discussed with Governor Blunt. Neither the Governor nor his staff identified additional policy bases for the means test. (Boies Dep., Jan. 18, 2006, 98102.) 55. On Jan 26, 2005, Governor Blunt submitted a budget that called for reductions in the adoption subsidy program consistent with a means test set at 200% of the federal poverty level (“FPL”.) (Initial Summary of Missouri Governor’s Budget Proposal, Feb. 11, 2005, Ex. 51.) 56. The federal poverty guidelines, which include the FPL, are published annually by HHS for administrative purposes, including for use in determining financial eligibility for certain federal programs. (HHS Poverty Guidelines, 2005 Ex. 42.) 57. DSS staff, specifically Patrick Luebbering, Assistant Deputy Director of the Family Support and Children’s Division, prepared a memorandum in the course of researching the fiscal impact of the proposed changes in the adoption subsidy program, entitled, “Bullet Points for Means Testing Adoption Subsidy,” (“Bullet Points Memo”) that stated among other things:
(a) “By implementing a means test on only the state only adoptions, children who are not IV-E eligible will be put at a disadvantage to being adopted versus children that are IV-E eligible.” (b) “By reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy.”
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(c) “Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer.” (d) “Projecting an accurate amount for the savings is difficult.” (Bullet Points Memo, Ex. 93; Luebbering Dep., Dec. 13, 2005, at 50.) The Bullet Points Memo was distributed from DSS to OA, and from OA to the Office of the Governor in revised form. (Boies Dep., Jan. 18, 2006, at 84-87) Senate Bill 539, Section 453.073.3(4): Blanket Annual Renewal and Automatic Expiration Provision 58. Senate Bill 539 amends Section 453.073.3(4) of RSMo to provide: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) The text of Section 453.073.3(4), as amended by Senate Bill 539, makes no distinction between and applies to both federal/state funded and state-only funded adoption assistance agreements. 59. The HHS Child Welfare Policy Manual, Section 8.2D.2, states: “States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.” (HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.2) 60. Senate Bill 539 violates federal policy which prohibits the blanket limitation on duration or termination of all adoption assistance agreements. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 8-10; trial testimony of Wiedemeier Bower.) 61. The HHS Child Welfare Policy Manual, Section 8.2D.5, provides: “Once an adoption assistance agreement is signed and in effect, it can be terminated under three
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circumstances only: (1) the child has attained the age of 18 (or 21 if the state has determined that the child has a mental or physical disability which would warrant the continuation of assistance); (2) the State determines that the adoptive parents are no longer legally responsible for the support of the child; or (3) the State determines that the adoptive parents are no longer providing any support to the child.” ( HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.5.) 62. HHS Child Welfare Policy Manual, Sec. 8.2B.9 similarly states: “Once a child has been determined eligible and is receiving adoption assistance, a State may terminate the assistance only under the circumstances specified at section 473(a)(4) of the Social Security Act.” (HHS Child Welfare Manual, Ex. 59, at Sec. 8.2B.9.) 63. The DSS Child Welfare Manual states that the Division may close an adoption subsidy upon one of the following events, “(a) The child reaches age 18 or age 21 (if child’s condition is extraordinary); or … (b) At the request of the family; or … (c) Upon determination that the child is no longer receiving any financial support from the adoptive family; or … (d) Upon determination that the adoptive parent(s) are no longer legally responsible for the support of the child (TPR has occurred); or … (e) In the event of death of the subsidized child; or … (f) In the event of the death of both adoptive parents or the death of a single adoptive parent if the subsidy was granted to a single adoptive parent ….” (See DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.11.) 6. 4. Fred Simmens, the DSS Director from August 2003 to October 2005, testified that he agreed that, apart from the exceptions set forth by the federal statutes, any changes to the subsidy contracts would have to be agreed to by the parents. (Preliminary Injunction hearing, at 57-58.) 65. Senate Bill 539 violates federal policy, DSS policy, and good and accepted subsidy practice, which prohibit the termination of adoption subsidy agreements in cases other
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than the categories proscribed, and allows only periodic readjustments of subsidies on a case by case basis, with the concurrence of the adoptive parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 8-10; trial testimony of Wiedemeier Bower.) 66. Specifically, Section 453.073.3(4) of Senate Bill 539 explicitly causes all existing adoption agreements to “expire” upon their one-year anniversary and, if implemented, would trigger the provision of Section 30.4.G of the DSS Child Welfare Manual requiring that if approved services in the subsidy agreement have “expired,” a new attachment must be renegotiated without automatic renewal. 67. An August 29, 2005 letter from Linda K. Lewis, Regional Administrator of the United States Department of Health and Human Services, to DSS Director K. Gary Sherman states, “The Administration for Children and Families has determined that Missouri is out of compliance with title IV-E requirements because SB 539 states that the period for which all subsidies will be granted will not exceed one year and the director has the discretion as to whether the agreement can be renewed for subsequent years.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) 68. The August 29, 2005 HHS letter further states, “Federal requirements state that once a child is determined eligible for title IV-E adoption assistance, he or she remains eligible and the subsidy continues for reasons specified in the Federal policy [Child Welfare Policy Manual, Section 8.2B.9 and Social Security Act – Section 473]. The Federal policy further states that States may not have a blanket policy which limits the duration of adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents … [Child Welfare Policy Manual, Section 8.2D.2 and Social Security Act – section 473]. The Missouri legislation, however, states that the period for which all subsidies will be granted will not exceed one year.”
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(Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) 69. The August 29, 2005 letter also states, “Federal policy [Child Welfare Policy Manual Section 8.2D.5 and Social Security Act – section 473; and 45 CFR 1356.40(b)] provides that once a child is determined eligible for adoption assistance under IV-E, he or she remains eligible and the subsidy continues unabated. Once an adoption assistance agreement is signed and in effect, it can only be terminated if 1) the child has reached the age of 18 (or the age of 21 if the State has determined that the child has a mental or physical disability which would warrant continuation of assistance), 2) the State determines that the adoptive parents are no longer legally responsible for the support of the child, or 3) the State determines that the adoptive parents are no longer providing any support to the child. Missouri’s legislation, however, states that the agreement can be renewed for subsequent years “at the discretion of the director” and therefore violates Federal policy.”(Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) Senate Bill 539, Section 453.073.4: Means Test 70. Senate Bill 539 amends Section 453.073.4 of RSMo to provide: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.4.) 71. The use of an income standard for adoptive parents to determine a child’s eligibility for adoption assistance subsidies is commonly referred to as a “means test.” 72. The means test established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards of the foster care system. The means test will be applied to deny adoption subsidy benefits to one group of children and not the
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other. Specifically, for one group in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the AFDC eligibility standard for Title IV-E purposes, the means test will be imposed on the income of the children’s existing or prospective adoptive parents to deny or terminate their adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes, no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; trial testimony of Wiedemeier Bower.) 73. HHS policy, reflected in Federal Policy Announcement, PIQ-90-02, October 2, 1990, states, “Congress at first considered the inclusion of a ‘means test’ as a requirement under the Title IV-E adoption assistance program … the restriction was later dropped after the Committee noted ‘we should not design a program to foster adoptions only in those families with the least financial capacity to care for these special needs children.’” (Federal Policy Announcement, PIQ-90-02, October 2, 1990, Ex. 41, at 1, citing Congressional Record – Senate – S11704, Aug. 3, 1979.) 74. The HHS Child Welfare Policy Manual, Section 8.2A.2, states: “The use of a means test is prohibited in the process of selecting a suitable adoptive family, or in negotiating an adoption assistance agreement, including the amount of the adoption assistance payment.” (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2A.2.) 75. Fred Simmens, the DSS Director from August 2003 to September 2005, testified that in his 26 years with the agency, he had never suggested a means test for people who adopt special needs children. (Preliminary Injunction hearing, at 38.) Mr. Simmens testified that he had concerns about the adoption subsidy revisions in Senate Bill 539 because they were changing longstanding policy in the state to treat all children the
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same, whether or not they were receiving federal funds through Title IV-E. (Id. at 3940.) Mr. Simmens testified that this longstanding policy was a very fair system. (Id. at 41.) Mr. Simmens further testified that the adoption subsidy program was an important one, and was a factor that encouraged parents to adopt children with special needs. (Id. at 44, 41.) 76. Steve Renne, the Acting Director of DSS at all relevant times until April 1, 2005, and now Deputy Director of DSS, testified that in the 20-plus years he had worked for Missouri’s Department of Social Services, a means test had never before been proposed and that he had never before personally advocated such a test. (Renne Dep., Jan. 26, 2006, at 16.) He testified that a non-IV-E eligible child could have more significant needs than a IV-E eligible child, (id. at 52-53), and that the means test does not ensure that the most needy children receive subsidies due to the fact that the subsidy is based on the adoptive family’s income. (Id. at 52.) Renne testified that, as a “bureaucrat,” he would not recommend different treatment among the two groups of adoptive children that Senate Bill 539 creates. (Id. at 50-51.) 77. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, also agreed that from a policy standpoint, the natural birth parents’ income had “no relevance” in determining whether a child should get an adoption subsidy. (Martin Dep., Dec. 13, 2005, at 85.) 78. As a factual matter, an adoptive child’s special needs are in no way correlated with his or her birth family’s income. For example, if two brothers who suffered from fetal alcohol syndrome as well as other behavioral disabilities were removed separately from their biological mother’s home at times when her income differed, one boy might receive a subsidy jointly funded by state and federal dollars, and the other a purely state-funded subsidy. Adoptive parents would be faced with the situation of
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being financially able to adopt one brother and not the other, or face the prospect of not being able to meet both boys’ needs. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11-12; trial testimony of Wiedemeier Bower.) 79. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division, also testified that there could be families who had adopted more than one child, where one child might be Title IV-E eligible and the other not. Under the SB 539 scheme, the same family could possibly lose the adoption subsidy for one child, but keep it for the other. When asked if that made sense to her, she testified, “It’s difficult for me to get my head around.” (Preliminary Injunction hearing, at 188.) 80. If a family were moving ahead with the adoption of a IV-E eligible child, the state would never inquire of the income of the adoptive parents no matter how high the income. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 81. DSS cannot state the number of class member children currently receiving adoption assistance subsidies funded by state and federal funds and whose adoptive parents earn more than 200% of the federal poverty level. (Defendants’ First Supplemental Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 102, at 2-3.) 82. The Senate Bill 539 means test is an irrational mechanism for directing funds to the “most needy” because it uses the gross income of putative or existing adoptive families as an eligibility threshold and fails to account for actual family expenses and other pertinent circumstances that clearly impinge upon a family’s ability to adopt and provide for a special needs child. (Emergency Rule 13 CSR 35-38.020, Ex. 50, at (12)(C); Preliminary Injunction hearing, at 162-163.)
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The Challenged Provisions of Senate Bill 539, if Implemented, Will Serve to Increase the Cost of Child Welfare to the State of Missouri
83. The State of Missouri and the Department of Social Services (“DSS”), through duly authorized and responsible state officials, have identified a single governmental purpose to be advanced by the means test provision of Senate Bill 539: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the state’s most needy families. (Renne Dep., Jan. 26, 2006, at 31-32; Boies Dep., Jan. 18, 2006, at 103; Kinkade Dep., Jan. 18, 2006, at 64; Martin, Preliminary Injunction hearing, at 164.)
84. Prior to enactment of the Senate Bill 539 mean test provision, DSS prepared a fiscal impact analysis in order to project the cost savings to be generated by the new eligibility scheme in relation to state-only adoption subsidy agreements. Specifically, Patrick Luebbering, an Assistant Deputy Director within DSS, performed a fiscal impact analysis of the proposed means test at the request of the state’s Office of Administration, the agency charged with compiling the annual statewide budget for the Office of the Governor. This fiscal impact analysis concluded that the Senate Bill 539 means test provision would yield a projected annual cost savings of $9,716,863 in the state’s adoption subsidy program, assuming that the income threshold was set at 200% of FPL. (Luebbering Dep., Dec. 13, 2005, at 29-32; Fiscal Impact Analysis, Ex. 103, at Bates 1 PRP 28-7.)
85. The fiscal impact analysis prepared by Mr. Luebbering served as the sole basis for the later April 25, 2005 Fiscal Note authored by the Missouri legislature’s Committee on Legislative Research, Oversight Division for purposes of informing elected legislative members and the general public regarding, among other things, the anticipated fiscal implications of the Senate Bill 539 means test. (Luebbering Dep., Dec. 13, 2005, at 81-82; 134-136; Summary of Fiscal Impact, Ex. 104; Fiscal Note, Ex. 35; Kinkade
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Dep., Jan. 18, 2006, at 73-78.) 86. The April 25, 2005 Fiscal Note published by the Committee on Legislative Research
includes and adopts the fiscal analysis prepared by Mr. Luebbering. (Fiscal Note, Ex. 35.) 87. The fiscal analysis prepared by Mr. Luebbering erroneously and irrationally projected that cost savings would flow from the Senate Bill 539 means test. The means test, if implemented, actually will increase the overall cost to the state to finance its child welfare program. 88. First, the projected $9,716,863 reduction in adoption subsidy costs is overstated due to the subsequent decision by the Missouri legislature to fund the state’s adoption subsidy program in FY2006 at 250% of FPL, as opposed to 200% of FPL, as provided in Senate Bill 539. This legislative action, alone, served to reduce the annual cost savings to be generated by the means test from $9,716,863 to $5,886,654 (the savings figures derived by Mr. Luebbering’s fiscal impact analysis performed at 200% and 250% of FPL, respectively). (Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 89. Second, the fiscal impact analysis substantially over-counted the number of existing state-only adoption subsidy recipients to be effected by the Senate Bill 539 means test. The fiscal impact analysis assumed that 43% of all existing adoption subsidy recipients in Missouri received state-only funded benefits, as opposed to Title IV-E federally subsidized benefits. (Luebbering Dep., Dec. 13, 2005, at 62-68, 72, 78; Fiscal Impact Analysis, Ex. 103, at Bates 1 PRP 28-7.) 90. This assumption was erroneous for two reasons. First, DSS audited all existing stateonly funded adoption subsidy files in the Spring of 2005 to confirm whether Title IVE eligibility had been properly denied in the first instance. As a result of the audit process, DSS determined that over 1,000 existing state-only adoption subsidy agreements were actually eligible for Title IV-E federal funding and, therefore,
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retroactively re-designated those cases to Title IV-E status. (Morris Dep., Dec. 12, 2005, at 50-53; State-Only Adoption Subsidy Case Review, Ex. 107, at 1PRP 27-2.) Second, the state of Missouri reported a Title IV-E adoption subsidy penetration rate of 82% as of the summer of 2005, meaning that only 18% of adoption subsidy recipients in the state were then receiving state-only funded subsidy payments. Mr. Morris testified that the state of Missouri never has reported a Title IV-E adoption subsidy penetration rate below 70% to his knowledge. (Morris Dep., Dec. 12, 2005, at 27-31.) 91. The $5,886,654 in projected cost savings, as calculated by Mr. Luebbering at 250% of FPL, reflects the patently erroneous and irrational assumption that 43% of all adoption subsidy recipients in Missouri are state-only funded. This projected cost savings figure, when recalculated to reflect the fact that only 18% of all adoption subsidy recipients in Missouri are state-only funded, falls to $2,452,772. Put another way, Mr. Luebbering overstated the size of the relevant non-Title IV-E population by a factor of 2.4 (43% versus 18%), resulting in a projected cost savings figure that was also overstated by a factor of 2.4. 92. Moreover, the fiscal impact analysis substantially over-counted the number of prospective state-only adoption recipients to be affected by the Senate Bill 539 means test. The fiscal impact analysis simply carried forward to the population of prospective adoption subsidy recipients the assumption that 43% of the program’s recipients in Missouri receive state-only funded benefits. (Luebbering Dep., Dec. 13, 2005, at 76, 78.) 93. This assumption was erroneous for two reasons. First, as reflected above, the accurate figure for the current percentage of state-only adoption subsidy recipients within the overall adoption subsidy population in Missouri is 18%. Second, the fiscal impact analysis projected a total FY2006 adoption subsidy population in Missouri of 12,474,
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an estimate that assumed growth in the subject population of 1300 new adoptive children per year. In reality, the state of Missouri experienced a steady decline in the annual number of finalized adoptions from FY2002 through the present as follows: 1,515 in FY2002, 1,429 in FY2003, 1,356 in FY2004, 1,123 in FY2005, and 1,008 projected for FY2006 based upon the actual number of finalized adoptions through the first three quarters of the year. (Table 28, February 2006 Children’s Services Management Report, Ex. 120.) 94. The fiscal impact analysis overstated the prospective effect of the means test by assuming too large a prospective recipient population to be means tested. (Renne Dep., Jan. 26, 2006, at 20-23; Martin Dep., Dec. 13, 2005, at 35-36.) Indeed, as of December 31, 2005, the total number of foster children who were adopted and receiving adoption assistance maintenance subsidies in Missouri was 11,450, fully 1,000 children lower than assumed by Mr. Luebbering. (Defendant’s Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, at 2.) 95. Additionally, as demonstrated below, the $2,452,772 adjusted figure must further be reduced to account for significant, additional governmental costs to flow from implementation of the mean test that were not adequately addressed, if at all, in Mr. Luebbering’s fiscal analysis. 96. First, the fiscal impact analysis adopted by the state of Missouri underestimated the cost implications of the Senate Bill 539 means test provision in terms of the additional expenses it would impose by causing disruption to existing and putative adoptions. The major component of this increased governmental cost relates to the continuing obligation of DSS to pay monthly foster care maintenance payments to that group of otherwise adoptable children who remain in temporary foster care longer because the means test prevented finalization of their adoptions. (Fiscal Impact Analysis, Ex. 103, at 1 PRP 28-4.)
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97. As stated in the “Bullet Points” memorandum prepared by Mr. Leubbering, “[b]y reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy … Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer … Projecting an accurate amount for savings is difficult.” (Bullet Points Memo, Ex. 93.)
98. Though the fiscal impact analysis properly assumed that the eligibility means test would serve to prevent or disrupt a number of adoptions due to the financial constraints it would impose on adoptive families, it arbitrarily and unreasonably assumed that these disruptions would result in additional foster care stays for displaced children of only six months duration on average. (Luebbering Dep., Dec. 13, 2005, at 98-99; Fiscal Impact Analysis, Ex. 103, at 1 PRP 28-4.) No state witness has provided an empirical or any other rational basis for this six-month figure. (Luebbering Dep., Dec. 13, 2005, at 98-99; Kinkade Dep., Jan. 18, 2006, at 96; Boies Dep., Jan. 18, 2006, at 80-83.)
99. The assumption of an average six-month additional stay in state foster care is arbitrary and demonstrably erroneous based upon DSS adoption policy and Missouri law. Specifically, Section 29.4 of the DSS Child Welfare Manual sets forth agency policy, consistent with RSMo. §453.077.1, that any adoption of a child from temporary state care may not be finalized by a court until the child has lived in the putative adoptive placement for a period of no less than six months. (DSS Child Welfare Manual, Sec. 4, Ch. 29.4, Ex. 80.) The pre-finalization period also must include vital pre-placement activities such as the completion of an adoptive home study, a thorough assessment of the child’s readiness and suitability for the adoptive placement facilitated by a series
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of supervised pre-placement visits between the child and adoptive family, and a determination of the child’s eligibility for adoption subsidy assistance. (Id.) 100. Existing, and readily available, DSS data supports the conclusion that adoptive disruptions will cause children to experience additional foster care stays of 24 months or longer as the state seeks to identify and qualify new adoptive parents. The state of Missouri has reported the following percentages of children exiting foster care into finalized adoptions within 24 months of removal from home: 33.10% in FFY2003, 33.70% in FFY 2004, and 38.6% in FFY2005. (DSS Adoption/Guardianship Subsidy Fact Sheet, February 2, 2006, Ex. 95, at 1.) Based upon these reported statistics by DSS, some 61.4% to 66.9% of the children in state legal custody who attain finalized adoptions only to do so after residing in temporary care for a period in excess of 24 months. 101. An October 2005 Yellow Sheet published by the Missouri State Auditor reported that the average length of stay in foster care for children exiting to adoption was 33 months in FY2003 and 31.7 months in FY2004. (Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1.) 102. The number of children awaiting adoption in Missouri whose biological parents already have lost their parental rights through court ordered termination has been increasing. This subgroup of children in temporary care has risen from 1,527 on September 30, 2000 to 1,660 on September 30, 2002 to 1,919 as of January 2006. (HHS AFCARS Performance Data, Missouri Context Data, Ex. 83, at VI-202; Caseload Counter, http://www.dss.mo.gov/mis/clcounter/history.htm., Ex. 53.) 103. Based upon the above readily available DSS adoption data, the state of Missouri should reasonably anticipate additional foster care stays of 24 months, or even longer, for difficult-to-place, special needs children whose adoptive placements disrupt as a result of the means test. Mr. Luebbering’s cost figure of $427,635, which assumes 6
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month additional stays for children experiencing disrupted adoptions (with a means test at 250% of FPL), is understated by a factor of at least 3, or by some $1.5 million. (Savings from Means Test, Ex. 106, at Bates 1 PRP 28-35.) 104. The fiscal impact analysis likewise failed to account for the increased administrative and caseworker costs directly attributable to adoptive disruptions occasioned by the Senate Bill 539 means test. As noted in the April 25, 2005 Fiscal Note published by the Committee on Legislative Research, Oversight Division, “additionally, there may be some additional cost in staff time due to children staying in care longer. However the impact is unknown.” (Fiscal Note, Ex. 35, at 9.) Though unknown in terms of its precise amount, this increased overhead is not inconsequential. Fred Simmens testified that he agreed that there were expenses to foster care outside the maintenance payment to foster parents, such as administrative costs for caseworkers, deputy juvenile officers, and court time (Preliminary Injunction hearing, at 46-47), and that this comment in the Fiscal Note essentially meant that “this fiscal note did not calculate what the added expense was going to be by kids being in foster care longer.” (Id. at 47, 69-71.) 105. In a recent peer review publication of the University of Chicago, University of North Carolina Professor Richard Barth stated “the burgeoning numbers of children receiving adoption subsidies have led some states to be concerned about or even to curtail adoption subsidy levels … This study uses longitudinal adoption subsidy and foster care placement data to estimate the relative costs of foster care and adoption …” and concluded, “[o]n balance, adoption achieves substantial governmental savings.” (“A Comparison of the Governmental Costs of Long-Term Foster Care and Adoption,” Richard P. Barth, Chung Kwon Lee, Judith Wildfire, and Shenyang Guo, University of Chicago Social Service Review, March 2006, Ex. 105, at 1.)
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Senate Bill 539 Means Test: Elimination of a Threshold into Medicaid for Special Needs Children
106. The DSS Child Welfare Manual expressly recognizes that the “Adoption and Safe Families Act of 1997 requires that Medicaid is provided for children who have a state funded adoption assistance agreement.” (DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.3.)
107. The state of Missouri provides Medicaid coverage to children under a variety of programs including: (1) “MC+ for Children” which covers children under the age of one whose family income is at or less than 185% of the FPL, children between the ages of one and six whose family income is at or less than 133% of the FPL, and children from ages six to eighteen whose family income is at or less than 100% of the FPL; (2) “MC+ for Kids,” Missouri’s State Children’s Health Insurance Program (SCHIP), 1115 Demonstration Waiver which covers children whose family income is at or less than 300% of the FPL and who do not otherwise benefit from employersubsidized health care insurance or other health care coverage; and (3) “Children’s Division Adoption Subsidy” which provides coverage to all children receiving statefunded adoption assistance payments. (DSS Missouri Medicaid Description, published at http://www.dss.mo.gov/dms/global/pages/about.htm, Ex. 55)
108. Prior to the implementation of the Senate Bill 539 means test, special needs children adopted by families with an income above 300% of the FPL remain eligible for Medicaid coverage under the “Children’s Division Adoption Subsidy” program because they receive adoption subsidies, though they are not qualified for Medicaid coverage under the means tests employed in Missouri’s alternative Medicaid programs. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.3)
109. Section 208.640.2 of Senate Bill 539 amends RSMo to provide that “[p]arents and guardians of uninsured children with incomes between one hundred fifty-one and three hundred percent of the federal poverty level who do not have access to 33

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affordable employer-sponsored health care insurance or other affordable health care coverage may obtain coverage pursuant to this section.” 110. Upon implementation of the Senate Bill 539 means test, special needs children adopted by families earning more than 300% of the FPL will lose their adoption subsidy eligibility and, therefore, their access into the state’s Medicaid program through the Children’s Division Adoption Subsidy program. (Senate Bill 539, Ex. 34, at 208.640.2, 453.073.) 111. Upon implementation of the Senate Bill 539 means test, special needs children adopted by families earning above 200% of the FPL and carrying available employersponsored health care coverage will be entitled to Medicaid coverage only if the family purchases such coverage under Section 208.640.2. Prior to the implementation of the Senate Bill 539 means test, these same special needs children qualify for Medicaid under the Children’s Division Adoption Subsidy program at no additional cost to the adoptive family. 112. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, testified that SB 539 includes “vague” language about the ability of families to keep Medicaid if they are means-tested out. She testified that the view she and the Children’s Division have taken, however, is that children whose subsidies are denied or terminated under the implementation of SB 539 will continue to keep their Medicaid. She further characterized Medicaid as an “essential” benefit under adoption agreements. (Martin Dep., Dec. 13, 2005, at 1819.) 113. Counsel for defendant stipulated on the record that all children adopted from DSS temporary care must be and will be provided with Medicaid coverage, regardless of the income of their adoptive parent. Counsel for defendant further stipulated that the
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state intended to implement Senate Bill 539 consistent with this obligation. (Preliminary Injunction hearing, at 6-9.) Senate Bill 539: Threat of Irreparable Harm to Current Foster Children and Adopted Foster Children in Missouri 114. As of August 17, 2005, the Children’s Division projected that at least 1274 special needs children currently receiving an adoption subsidy under an existing contract with DSS will lose their benefit as a result of the Senate Bill 539 amendments. (Adoption Subsidy and Legal Guardianship, Ex. 121, at Bates 1 PRP 41-17.) 115. It is undisputed that the direct result of the adoption subsidy provisions of Senate Bill 539, if implemented, will be longer stays by special needs children in government foster care. (Bullet Points Memo, Ex. 93.) 116. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539, if implemented, also will create uncertainty in relation to the financial capacity of existing adoptive families and putative adoptive parents to meet the serious, and oftentimes expensive, medical, educational and emotional needs of the special needs children they adopt or wish to adopt. The essential bargain underlying an adoption assistance agreement is the promise by the adoptive parent(s) to accept legal custody, and the concurrent responsibilities and duties, of a special needs child until he or she reaches the age of majority in exchange for the state’s commitment to provide monthly assistance payments to make the adoption financially possible without causing undue economic burden on the adoptive family. Senate Bill 539 threatens to undermine or completely withdraw the state’s end of this vital bargain. The resulting uncertainty will cause a reduction in the number of adoptions and will prolong the stays of special needs children in temporary foster care placements much to their emotional detriment. (Trial testimony of Wiedemeier Bower.) 117. Fred Simmens, the DSS Director from August 2003 to October 2005, testified that he
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agreed that the means test in SB 539 could have a negative impact on the level of confidence that foster parents and prospective adoptive parents have in some portions of the child welfare system in Missouri, based on the “reasonable assumption” that parents might feel that the state broke its promise to them in the subsidy contracts. (Preliminary Injunction hearing, at 78.) 118. Steve Renne, Acting Director of DSS at all relevant times until April 1, 2005, now Deputy Director of DSS, agreed that Missouri’s adoption subsidy program helped to move children from foster care to adoptive families more quickly than if there were not a subsidy program. (Renne Dep., Jan. 26, 2006, at 9.) He also testified that an adoption subsidy can make the difference between adopting and not adopting for some families. (Id. at 39.) He testified that SB 539’s scheme regarding adoption subsidies provided no direct benefits to children. (Id. at 32.) 119. Martin testified that her department recognized that 1) some children may remain in foster care for longer periods of time under SB 539; 2) some children may come back into foster care due to the inability of families to support their needs; and 3) the bill was “unfair” to those children who are not eligible for IV-E federal funds. (Martin Dep., Dec. 13, 2005, at 14-17; DSS Bill Review, Ex. 97, at Bates 1 PRP 40-123.) Martin testified that if adoptive families were means tested out, but kept their child, the loss of the adoption subsidy could present a hardship to the family. (Martin Dep., Dec. 13, 2005, at 39.) 120. Martin testified that DSS had a fact sheet observing that children are less likely to be abused if they are adopted, as opposed to remaining in foster care. (Id. at 52-54; DSS Fact Sheet, Ex. 98, at Bates 1 PRP 40-145.) Martin further testified that she was aware of and accepted studies that found it is harmful for children to stay in foster care longer, and that it is preferable to be in an adoptive family as opposed to staying in foster care longer. (Martin Dep., Dec. 13, 2005, at 29.)
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121. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 will also deter foster parents from adopting special needs children placed into their temporary physical custody. These foster parents currently receive for the duration of the child’s foster care episode a dependable stream of foster care maintenance payments from the state to assist in the care of the child. If Senate Bill 539 takes effect, foster parents will become less inclined to adopt a special needs foster child and thereby exchange the certain stream of foster care maintenance payments for the, oftentimes, reduced flow of adoption assistance payments, particularly when the stream of adoption assistance benefits is rendered uncertain in duration and amount. (Trial testimony Weidemeier Bower.)
122. As children spend more time in foster care, they are likely to be subjected to multiple moves in custody, which is harmful. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 14; trial testimony Weidemeier Bower.)
123. Senate Bill 539 also threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the court-supervised consent decree entered in G.L., An Infant, by and through his Next Friend, et al. v. Gary Stangler et al, No. 77-0242-CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. (July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al., Ex. 56.)
Harm to Named Plaintiffs: Impact of Senate Bill 539 on Adoption Assistance Agreements E.C.
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124. Named Plaintiff E.C., by her Next Friend Jill Katz, resides in the legal custody of the Children’s Division of the Missouri Department of Social Services in Jackson County, Missouri. E.C. is a member of the class of foster children privy to the consent decree entered in G.L., An Infant, by and through his Next Friend, et al. v. Stangler, et al., No. 77-0242-CV-W-1 (United States District Court for the Western District of Missouri). (Trial testimony of E.C.; Preliminary Injunction hearing, at 22.)
125. E.C. has lived in numerous foster homes since entering foster care at the age of seven and has tired of moving from one home to another. E.C. has lived in her current foster home for two years, has formed a bond with her current foster mother, and wishes to be adopted by her. She desperately wants to enjoy safety and stability in her life. (Trial testimony of E.C.; Preliminary Injunction hearing, at 23-26.
126. The Children’s Division had previously determined that E.C. was ineligible for Title IV-E adoption assistance, but in February 2006, the Children’s Division found that it had determined E.C.’s Title IV-E eligibility status in error, and that E.C. is in fact entitled to federally funded adoption assistance, if she is adopted. (Katz Dep., February 23, 2006, at 12-13.) This also means that a family who wishes to adopt E.C. will not be subjected to a means test as provided for in Missouri Revised Statute section 453.073.4, as amended by Senate Bill 539, nor will such a family risk losing adoption assistance in the future because their income has surpassed the level permitted by the amended statute.
127. E.C.'s foster mother, Niann Hines received monthly foster care maintenance payments from DSS to care for E.C. Though she wished to adopt E.C., Ms. Hines feared that loss of the foster care maintenance payments, coupled with E.C.’s non-IV-E adoption subsidy status, would impose an economic hardship and prevent her from fully providing for E.C.’s special needs. Upon learning that E.C. is actually eligible for a Title IV-E adoption subsidy, Ms. Hines shortly thereafter instituted proceedings to
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adopt E.C. (Trial testimony of Niann Hines.) A.C.
128. Named Plaintiff A.C., by his parent and Next Friend Lana Capps, is a six-year-old boy who was adopted from the Missouri foster care system in 2002. A.C. and Ms. Capps live in Boone County, Missouri. (Declaration of Lana Capps, Ex. 7; Capps Dep., February 28, 2006, at 6, 9, 10.)
129. A.C. suffers from a congenital heart disorder that has necessitated 14 hospitalizations and two open-heart surgeries during his young life. He will require additional heart surgeries. (Declaration of Lana Capps, Ex. 7.)
130. Ms. Capps earns approximately $3,600 a month. She currently receives a monthly adoption subsidy of $651 under an adoption assistance agreement she executed with the State of Missouri. The adoption subsidy is a significant portion of Ms. Capps’ monthly income, and without it Ms. Capps ability to meet A.C.’s necessary and regular medical, emotional, psychological, and educational needs will be severely and negatively affected. (Declaration of Lana Capps, Ex. 7.)
131. The Children’s Division determined that A.C. is not eligible for federally funded adoption assistance under Title IV-E because A.C.’s natural mother had income that exceeded Title IV-E guidelines at the time A.C. was removed from the home and placed into foster care. ((Declaration of Lana Capps, Ex. 7; Capps Dep., February 28, 2006, at 32; Letter to L. Capps from L. Cole, July 29, 2005, Ex. 119, PR 14-285.)
132. Because A.C. is ineligible for Title IV-E adoption assistance, the State of Missouri has subjected Ms. Capps’ income to a means test and has determined that her income exceeds the amount permitted by Missouri Revised Statute section 473.053.4, as amended by Senate Bill 539. If Senate Bill 539 is permitted to take effect, the statefunded monthly maintenance adoption subsidy of $651 that Ms. Capps has received since she adopted A.C. will terminate. (Declaration of Lana Capps, Ex. 7.)
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J.C. 133. Named Plaintiff J.C., by his Next Friend Jill Katz, is a 16-year-old now living in the legal custody of the Children’s Division, Missouri Department of Social Services, in Jackson County, Missouri. J.C. is a member of the G.L. v. Stangler, et al. class. (Preliminary Injunction hearing, at 31-32.) 134. J.C. has lived in foster care since 1997, following the death of his mother and a short stay with his legal guardian. J.C.’s father’s parental rights have been terminated. Since 1997, J.C. has been placed into more foster homes and group homes than he can recall, and he presently resides in a group home. (Preliminary Injunction hearing, at 32-33.) 135. J.C. wishes to be adopted and has experienced several adoptive placements that disrupted before finalization. After J.C.’s mother died and his legal guardian had relinquished custody, it was discovered that J.C. had been the victim of severe abuse while in his mother’s care. These experiences left J.C. physically and emotionally traumatized and have necessitated ongoing therapy and treatment. J.C.’s condition and prognosis have improved, but he continues to require therapy and medication. (Child Profile, January 28, 2000, Ex. 108, at Bates RP 3 – 2000-2007) 136. J.C. would like to have a family that he can count on and trust, and J.C. believes he could have a better life if he were adopted. In foster care, J.C. has not been able to do some of the things that other 16-year-olds do, such as go with friends to the mall or get a driver’s license, and J.C. has not been able to spend the Christmas holidays with a family since he has been in foster care. J.C. fears that the absence of an adoption subsidy will prevent his dream of having an adoptive family. (Preliminary Injunction hearing, at 32-34; Katz Dep., February 23, 2006, at 5-6; Judgment, TR02-00083, In the Interest of J.C., Ex. 74.)
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T.F., B.F. and A.F. 137. Named Plaintiffs T.F., B.F. and A.F., (formerly known as T.G., B.G., and A.G.), by their Next Friend Jill Katz are biological siblings, ages ten, seven, and five, living with their adoptive parents, Elizabeth W. Fischer and John S. Fischer, in Jackson County, Missouri. Prior to their adoption of T.F., B.F., and A.F., Mr. and Mrs. Fischer were foster parents to the three children through the Missouri foster care system. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 56.) 138. T.F., B.F, and A.F. were severely neglected by their biological parents with farreaching consequences for the children. T.F. is diagnosed with ADHD and has required residential treatment in the past. T.F. continues to be evaluated for other possible disorders. B.F., who was also subjected to abuse in her biological home, has long-term conditions, including bipolar and attachment disorders. B.F. has also required hospitalization for her disorders, including after the finalization of her adoption by Mr. and Mrs. Fischer. A.F. has been diagnosed with post-traumatic stress disorder for which she receives therapy and takes prescription medication. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 17-22.) 139.As foster parents for T.F., B.F., and A.F., Mr. and Mrs. Fischer received approximately $1,800 per month in foster care maintenance and subsidies, which included the behavioral rate for T.F. and B.F. Federal law prohibits the payment of Title IV-E adoption assistance benefits in amounts in excess of the pre-existing foster care maintenance payments. See 42 U.S.C. 673(a)(3). (Missouri Title IV-E State Plan, Ex. 45, at Sec. 4, Requirement 3(c).) Because of the preliminary injunction granted by the Court in this cause, the state now pays the Fischer’s approximately $1,500 per month in adoption assistance maintenance payments. T.F. and B.F. continue to be paid at the behavioral rate. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep.,
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February 21, 2006, at 10-11.) 140. All three siblings would have been eligible for federally-funded assistance under Title
IV-E but for errors in family court documents only detected by the state after the time frame for perfecting Title IV-E eligibility had expired. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 14-15.) 141. Because the three children do not qualify for Title IV-E adoption assistance, if the means test in Senate Bill 539 is enforced, the Fischer’s eligibility for state-funded adoption subsidies will depend upon their income. The Fischer’s monthly income is approximately $7,800 – well above the level permitted by Senate Bill 539. Thus, the Fischer’s will lose the adoption assistance they now receive for their three adopted children, which constitutes approximately 15% of their present family income. (Affidavit of Elizabeth Fischer Ex. 3.) W.S., M.S. and D.S. 142. Named Plaintiffs W.S., M.S., and D.S., by their parent and Next Friend Robert Brian Strange, are boys aged 10, 7 and 6, respectively, who were adopted from the Missouri foster care system in 2000 as a sibling group. The boys were all in the G.L. v. Stangler et al. class prior to their adoption. (Trial testimony of Robert Strange.) 143. W.S., M.S. and D.S. now live with their adoptive parents, Robert and Jennifer Strange, in Cass County, Missouri. The boys were initially removed from their biological home after M.S. sustained severe burns when held against a hot water heater by his mother. D.S. is developmentally disabled. (Trial testimony of Robert Strange.) 144. The Strange’s annual income is about $62,400. They currently receive three separate $275 adoption assistance payments each month under the adoption assistance agreements they executed with the state of Missouri on behalf of each of the boys. The Strange’s cannot support the medical, educational, emotional and physical needs
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of the boys absent the adoption assistance. (Trial testimony of Robert Strange.) 145. The state of Missouri sent a notice letter to the Strange’s stating that W.S.’s and
M.S.’s adoption subsidies will terminate permanently if the family’s gross annual income exceeds the Senate Bill 539 means test. The letter further gave notice that should the family’s gross income meet the means test, all three boys’ adoption assistance agreements will, by operation of Senate Bill 539, permanently expire within the year. (Trial testimony of Robert Strange.) M.P. 146. Named Plaintiff M.P., by adoptive parent and Next Friend Michael Patterson, is a 16year-old adopted child who currently reside with his father in Jackson County, Missouri. M.P. was a member of the G.L. v. Stangler et al. class prior to his adoption. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 4-7.) 147. M..P. was placed in Michael Patterson’s home as a foster child. Mr. Patterson has been a foster parent to over 20 children in the past eight years. In addition to M.P., Mr. Patterson has adopted four other children from foster care, three of whom are now adults and living on their own. Mr. Patterson is proud that all of his three grown children graduated from high school, and the youngest was offered a college scholarship. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 7-8, 18-19.) 148. M.P. was removed from his home and placed in foster care in 1992 because of neglect and his mother’s drug abuse. He was placed in Mr. Patterson’s foster home in December 2002 after having lived in over 15 foster homes and children’s shelters. Mr. Patterson received the behavioral rate for M.P.’s foster care because of problems that M.P. was experiencing both at home and at school. Mr. Patterson has adopted M.P. and continues to receive the behavioral rate as maintenance under an adoption
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subsidy agreement executed with DSS. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 16-18; Psychological Evaluation, July 15, 2003, Ex. 109, at Bates PR12 / 43-47.) 149. Mr. Patterson has been informed that M.P. is not eligible for federal adoption assistance under Title IV-E, and that therefore, under Senate Bill 539, M.P.’s adoption assistance for maintenance will terminate permanently if Mr. Patterson’s gross annual income fails the bill’s means test. Mr. Patterson expects that his income will exceed the level permitted by Senate Bill 539. Mr. Patterson has been further informed that even if his gross income passes the means test, M.P.’s adoption assistance agreement will, by operation of Senate Bill 539, permanently expire at the end of one year. (Affidavit of Michael Patterson Ex. 5; Letter to M. Patterson from F. Simmens of DSS, May 25, 2005, Ex. 63; Letter to M. Patterson from F. Simmens of DSS, July 25, 2005, Ex. 64, at 1.) J.A. 150. Named Plaintiff J.A., by his parent and Next Friend John Antonich, is a 15 year-old boy. He was adopted from the Missouri foster care system in 2004 after some 6 years in foster care. J.A. lives with his adoptive parents in Jefferson County, Missouri. (Trial testimony of J.A..) 151. While in foster care, J.A. lived in 23 different foster homes between the ages of 8 and 10. He later was placed into group care after a suicide attempt. J.A. suffers from severe anxiety, attention deficit hyperactive disorder (“ADHD”), oppositional defiant behavior, and depression. The depression condition has required hospitalization. J.A. also has required intensive tutoring to improve his challenged educational growth. (Testimony of John Antonich at preliminary injunction hearing.) 152. Mr. Antonich earns approximately $4,580 a month. The Antonich’s currently receive a monthly $651 adoption subsidy under an adoption assistance agreement they
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executed with the state of Missouri. The Antonich’s cannot afford the considerable educational, psychiatric and behavioral care necessary to address J.A.’s special needs absent the adoption subsidy. (Testimony of John Antonich at preliminary injunction hearing.) 153. The state of Missouri has sent a notice letter to the Antonich’s stating that their adoption subsidies will be terminated permanently if their annual income exceeds the Senate Bill 539 means test – 200% of the FPL for a family of 3 is $32,180 under current federal guidelines. Mr. Antonich earns approximately $54,960 per year, and his income will, therefore, surpass the Senate Bill 539 means test. The letter further gave notice that should the family’s gross income meet the means test, J.A.’s adoption assistance agreement will, by operation of Senate Bill 539, permanently expire within the year. (Testimony of John Antonich at preliminary injunction hearing.) T.J. and A.J. 154. Named Plaintiffs T.J. and A.J., by their parent and Next Friend Lavada Johnson, are 7 and 5 years old, respectively. They were adopted from the Missouri foster care system. Ms. Johnson, who is 60 years old, also supports two children in therapeutic foster care. (Trial testimony of Lavada Johnson.) 155. T.J. suffers from severe asthma, sinus disease, ADHD and hypoglycemia and requires daily medication. A.J. suffers from chronic lung disease, chronic and persistent asthma and ADHD and also requires daily medication. (Trial testimony of Lavada Johnson.) 156. Ms. Johnson earns approximately $1,160 a month. She currently receives monthly $651 adoption subsidy payments under the adoption assistance agreements she executed with the state of Missouri. Ms. Johnson cannot afford the considerable medical, psychiatric, educational and emotional care necessary to address T.J.’s and A.J.’s special needs absent the adoption subsidy. (Trial testimony of Lavada Johnson.)
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157. The state of Missouri has sent a notice letter to Ms. Johnson stating that the children are Title IV-E eligible, but that her adoption assistance agreements will automatically expire in 2006. (Trial testimony of Lavada Johnson.)
N.S. 158. Named Plaintiff N.S., by his parent and Next Friend Tammy Smith, is a four-year-old boy who was adopted from the Missouri foster care system in 2002 by Mrs. Smith and her husband, Harold Smith. N.S. lives with his adoptive parents in St. Charles County, Missouri. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 6-7.) 159. N.S.’s natural mother consented to the termination of her parental rights shortly after N.S. was born. The parental rights of N.S.’s natural father were terminated by default. (Order, Judgment and Decree of Court, St. Louis County, June 12, 2002, Ex. 111, at Bates PR 20 / 9-11.) 160. At the time of N.S.’s adoption, Mr. and Mrs. Smith executed an adoption subsidy agreement with the Division of Family Services (now Children’s Division) that provides a monthly adoption assistance maintenance payment at the standard rate until the year 2020 when N.S. will be eighteen years old. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 6-7.) 161. N.S. suffers from severe asthma and takes four different medications daily to control the condition. N.S. also requires two breathing treatments twice daily. The asthma condition occasionally results in asthmatic crises and has required as many as 11 visits to the hospital in one 13-month span. (Declaration of Tammy Smith Ex. 10.) 162. Because of N.S.’s severe asthma and allergies, Mr. and Mrs. Smith requested that N.S.’s adoption assistance maintenance payment be increased to the medical rate of $651 per month, and that request was granted by the Division of Family Services in 2004. Mr. and Mrs. Smith use the additional money to pay for daycare services not
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provided by the state, co-pays for N.S.’s medical care, and N.S.’s medications not covered by insurance. Because of N.S.’s condition and special needs, the Smith’s have had to modify their home, including, but not limited to, the removal of carpeting and the installation of special flooring and bedding, and the increased payment helps to cover that expense. Utility costs are higher for the Smith’s because windows in the home must be kept closed. Finally, N.S.’s frequent illnesses have required Mrs. Smith to be absent from her job, so much that she uses her allowable time off as quickly as she earns it, and thus the maintenance payment helps to make up for income lost when Mrs. Smith is forced to take unpaid leave in order to care for N.S. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 14-15.) 163. N.S. is eligible for federally funded adoption assistance under Title IV-E. The state, however, has informed Mr. and Mrs. Smith that their subsidy agreement will expire within one year and have to be renegotiated. (Declaration of Tammy Smith Ex. 10.) 164. The Smith’s have obtained approval to adopt a second child, but they are concerned that the changes in the adoption subsidy program will make adoption a financial hardship, and they have lost confidence that the state will adhere to its agreements in these matters. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 21.)
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II. CONCLUSIONS OF LAW: Elements of Proof for Permanent Injunctive Relief
1. Entry of an injunction is proper where (1) there is a threat of irreparable harm to the movant, (2) the threatened irreparable harm outweighs the injury that granting the injunction will inflict on other litigants, (3) the movant has a probability or likelihood of success on the merits, and (4) the public interest will be served by granting an injunction. Dataphase Systems v C L Systems, Inc., 640 F.2d 109, 114 (8th Cir. 1980) (en banc). The standard for granting a permanent injunction is essentially the same as for a preliminary injunction, except that to obtain a permanent injunction the movant must attain success on the merits. Bank One v. Guttau, 190 F.3d 844, 847 (8th Cir. 1999) (citing Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n.12 (1987)). The grant of a permanent injunction lies within the discretion of the trial court and is subject to review for abuse of that discretion. Randolph v. Rogers, 170 F.3d 850, 856 (8th Cir. 1999).
2. This Court entered a preliminary injunction on September 9, 2005. By order dated September 29, 2005, this Court certified a plaintiff class in this action comprised of “all future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a court-ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.”
Federal and State Statutory and Regulatory Scheme for Missouri Adoption Subsidy Program
3. Defendant, K. Gary Sherman, is the Director of DSS and, in that capacity, oversees and is legally responsible for the administration and management of the Children’s Division and the implementation of its child welfare programs and services, including adoption services. (RSMo Section 660.010.1; Sherman Dep., Jan. 26, 2006, at 4, 1921.) 48

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4. The federal Title IV-E adoption assistance program provides federal matching funds to states that establish HHS-approved “qualifying plans” to provide adoption assistance for children with special needs. 42 U.S.C. §671.
5. The state of Missouri has a qualifying “State Plan for Title IV-E of the Social Security Act Foster Care, Independent Living and Adoption Assistance” (“Missouri State Plan”) and receives federal funding for adoption assistance purposes. (Missouri Title IV-E State Plan, Ex. 45.)
6. Missouri state law, § 453.074.1, states that “the division of family services shall have the following duties in the administration of the subsidy program: . . . Comply with all federal laws relating to adoption subsidies in order to maintain the eligibility of the state of Missouri for federal funds.” § 453.074.1 RSMo. As a matter of law, DSS is required to operate its entire adoption subsidy program in compliance with federal law.
7. Additionally, the Missouri State Plan requires that “[a]s a condition of the receipt of Federal funds under title IV-E of the Social Security Act … the [state agency] … hereby agrees to administer the program in accordance with the provisions of this State plan, title IV-E of the Act, and all applicable Federal regulations and other official issuances of the Department.” (Missouri Title IV-E State Plan, Ex. 45, at 2.) As a matter of law, DSS is required to operate its entire adoption subsidy program in compliance with federal law.
8. As held by the Eighth Circuit Court of Appeals, “The state of Missouri has availed itself of the funds offered by Congress through the [Adoption Assistance Act]. Although Congress may not require a state to participate in a program created pursuant to the Spending Clause, once a state agrees to take the funds offered through such programs the state is bound to comply with federally imposed conditions . . . . The [Adoption Assistance Act] requires Missouri to submit to the Secretary of Health
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and Human Services (HHS) a state plan for providing foster care and adoption assistance that meets the standards enacted by Congress. 42 U.S.C. § 671. In Missouri, the Department of Social Services, through its Division of Family Services, has been designated to administer the state plan and assure compliance with the [federal] Act. Mo.Rev.Stat. §§ 207.010, 207.060, 660.010 (2000).” Missouri Child Care Ass’n v. Cross, 294 F.3d 1034, 1036 (8th Cir. 2002) (internal quotation marks and citation omitted). 9. As a matter of law, the state of Missouri has agreed through its State Plan to comply with federal regulations and official HHS issuances in administering its entire adoption subsidy program to Title IV-E eligible and state-only recipients. (Missouri Title IV-E State Plan, Ex. 45.) 10. Available to the public on-line since September of 2001, the federal Child Welfare Policy Manual provides official issuances of the U.S. Department of Health and Human Services (HHS) on the interpretation of federal law and federal regulations in the area of child welfare, including adoption subsidies. (Federal Child Welfare Policy Manual, Ex. 113; http://www.acf.hhs.gov/j2ee/programs/cb/laws_policies/laws/cwpm/index.jsp; trial testimony of Jeanette Wiedemeier Bower.) 11. Children with “special needs” are those whom the State has “determined . . . cannot be returned to the home of his parents” and for whom “there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance under this section or medical assistance under title XIX.” See 42 U.S.C. § 673(c).
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12. Missouri law and Missouri DSS policy include all foster children in the custody of the Children’s Division of DSS as “special needs” children for purposes of adoption assistance subsidies. See Mo.Rev.Stat. § 453.073.2.
13. As a matter of law, all class members are thus “special needs” children under federal and state law.
14. The federal Adoption Assistance Act, Section 673(a)(3), requires, in part: “[t]he amount of the payments [adoption subsidies] to be made in any case under clauses (i) and (ii) of paragraph (1)(B) shall be determined though agreement between the adoptive parents and the State or local agency administering the program under this section, which shall take into consideration the circumstances of the adopting parents and the needs of the child to be adopted, and may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.”
15. Section 673(a)(21) of the Adoption Assistance Act requires that a state’s Title IV-E plan must: “provide for health insurance coverage … for any child who has been determined to be a child with special needs, for whom there is in effect an adoption assistance agreement (other than an agreement under this part [42 USCS §§670 et seq.] between the state and an adoptive parent or parents, and who the state has determined cannot be placed with an adoptive parent or parents without medical assistance ….”
16. As a matter of law, all current or former DSS foster children are entitled to full medical benefits upon adoption regardless of the income of their adoptive parents. See Section 673(a)(21).
17. Federal law prohibits the payment of Title IV-E adoption assistance benefits in amounts in excess of the pre-existing foster care maintenance payments. (Missouri Title IV-E State Plan, Ex. 45, at Sec. 4, Requirement 3(c).) See 42 U.S.C. 673(a)(3).
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18. The federal Adoption Assistance Act, Section 675(3), requires that “[t]he term “adoption assistance agreement” means a written agreement, binding on the parties to the agreement, between the State agency, other relevant agencies, and the prospective adoptive parents of a minor child which at a minimum (A) specifies the nature and amount of any payments, services, and assistance to be provided under such agreement, and (B) stipulates that the agreement shall remain in effect regardless of the State of which the adoptive parents are residents at any given time.” See 42 U.S.C. §675(3).
19. Section 453.073 RSMo requires: “a written agreement shall be entered into by the division and the parents. The agreement shall set forth the following terms and conditions: (1) The type of allotment; (2) The amount of assistance payments; (3) The services to be provided; (4) The time period for which the subsidy is granted.”
20. Senate Bill 539 amends Section 453.073.3(4) of RSMo to require: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) Section 453.073.3(4) of Senate Bill 539, on its face, applies to both Title IV-E eligible (federal/state funded) and non-Title IV-E eligible (state-only funded) adoption assistance agreements.
21. Senate Bill 539 amends Section 453.073.4 of RSMo to require: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) Section 453.073.4, on its face, applies to non-Title IV-E eligible adoption assistance agreements.
22. HHS regulations require that “there must be no income eligibility requirement (means
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test) for the prospective adoptive parent(s) in determining eligibility for adoption assistance payments.” 45 CFR 1356.40(c). (1) Plaintiffs’ Success on the Merits Plaintiffs have succeeded on the merits of the statutory and constitutional causes averred in Counts I, II and III of their complaint.
COUNT I: Violation of Adoption Assistance Act 23. Under 42 U.S.C. § 1983, a federal cause of action exists against anyone acting
pursuant to state authority that violates any “rights, privileges or immunities secured by the Constitution and laws of the United States.” Pediatric Specialty Care, Inc. v. Arkansas Dep’t of Human Services, 293 F.3d 472, 477 (8th Cir. 2002) (quoting 42 U.S.C. § 1983). Section 1983 provides a federal claim for violations of both federal constitutional and statutory law. Id. (citing Maine v. Thiboutot, 448 U.S. 1, 4 (1980).
24. The Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. §§ 620-629(i) and 670-679(b), constitutes controlling federal statutory law under the Supremacy Clause of the United States Constitution. See Blum v. Bacon, 457 U.S. 132, 145-56 (1986)(holding that, under the Supremacy Clause, federal Spending Clause legislation, such as the Adoption Assistance Act, supercedes conflicting state statutes and regulations). See also Missouri Child Care Association v. Cross, 294 F.3d 1034 (8th Cir. 2002)(the Adoption Assistance Act constitutes the supreme law of the land).
25. Moreover, Section 673(a)(3) of the Adoption Assistance Act is privately enforceable. See Pediatric Specialty Care, supra,, 293 F.3d 472, 477-78 (8th Cir. 2002) (setting forth private right of action standard); ASW v. Oregon, 424 F.3d 970, 975-78 (9th Cir. 2005) (§ 673(a)(3) creates private right of action); Missouri Child Care Ass’n v. Martin, 241 F. Supp. 2d 1032, 1041-42 (W.D. Mo. 2003) (on remand) (§§ 672 and
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675 confer enforceable private rights of action). 26. Three factors determine whether a particular statute creates a private right of action:
(1) whether the provision in question was “intend[ed] to benefit the putative plaintiff”; (2) whether the interest the plaintiff asserts is not so “vague and amorphous” that it is beyond the competence of the judiciary to enforce; and (3) whether the provision in question creates a binding obligation on the governmental unit. Pediatric Specialty, 293 F.3d 472, 477 (8th Cir. 2002)(citing Blessing v. Freestone, 520 U.S. 329, 340 (1997)). 27. Section 673(a)(3) meets the first prong of the private right of action test, as Plaintiffs are the intended recipients and beneficiaries of the adoption assistance benefits conferred under the federal statute. Missouri Child Care, 241 F. Supp. 2d 1032, 1041 (W.D.Mo. 2003)(the beneficiaries of Section 672 foster care maintenance payments are the foster children though their benefits may be paid indirectly through licensed providers); ASW, 424 F.3d 970, 975-78 (9th Cir. 2005). Section 673(a)(3) contains “rights creating language” that demonstrates a statutory intent to confer a private right of action. See Gonzaga University v. Doe, 536 U.S. 273 (2002)(where the Court clarified the three-pronged standard in Blessing. Id at 283); see also Masterman v. Goodno, 2004 U.S. Dist. LEXIS 354 at *20-24 (D.Minn. Jan. 8, 2004). 28. Section 673(a)(3) additionally satisfies the second prong of the private right of action test requiring that plaintiff assert an interest that is not so “vague and amorphous” as to be beyond the competence of the judiciary to enforce. Pediatric Specialty Care, 293 F.3d at 477 (citing Blessing, 520 U.S. at 340). See also Missouri Child Care, 241 F. Supp. 2d 1032, 1041 (W.D.Mo. 2003); ASW, 424 F.3d 970, 97578 (9th Cir. 2005) Section 673(a)(3) explicitly provides that the amount of any adoption assistance payments may be adjusted only with the “concurrence” of the adopting parents, and in consideration of specific factors, including the “the needs of
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the child being adopted.” 42 U.S.C § 673. As a matter of law, this statutory provision is well suited to court enforcement. 29. The final prong of the test, “whether the provision in question creates a binding obligation on the governmental unit,” is also satisfied by § 673(a)(3). Pediatric Specialty Care, 293 F.3d at 477 (citing Blessing, 520 U.S. at 340)(the statutory provision to be enforced must be couched in mandatory rather than precatory terms.”). Section 673(a)(3) states that the adoption subsidy “shall be determined through agreement between the adoptive parents and the state or local agency” and that the only circumstance where the subsidy may be “adjusted periodically” is “with the concurrence of the adopting parents.” (emphasis added). See also ASW, 424 F.3d 970, 975-78 (9th Cir. 2005) (concluding § 673(a)(3) creates a private right of action). 30. Section 453.073.3(4) places within the discretion of the DSS Director the unilateral authority to renew adoption subsidy agreements executed by the state of Missouri for both IV-E eligible and non-IV-E eligible subsidies. On its face, this provision conflicts with, violates, and is preempted by the express language of 42 U.S.C. 673(a)(3) which states that adoption subsidy agreements “may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.” (emphasis added.) 31. Section 453.073.3(4) further imposes a blanket one-year limitation upon the duration of all adoption subsidy agreements and causes all existing adoption subsidy agreements to expire automatically upon their one-year anniversary. On its face, this provision likewise conflicts with, violates, and is preempted by the express language of 42 U.S.C. 673(a)(3) which states that adoption subsidy agreements “may be readjusted periodically with the concurrence of the adopting parents …” 32. In evaluating an alleged statutory violation or conflict, courts first look to the plain
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meaning of the subject statutory provisions. Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984); See also Camacho v. Texas Workforce Comm’n, 408 F.3d 229, 236-37 (5th Cir. 2005). Additionally, official policy issuances of HHS, the federal agency charged with implementing the Title IVE program, are to be given deference. See id. at 844 (“a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of any agency”). 33. Here, the plain language of Section 673(a)(3) is dispositive; however, even if the Court were to look beyond this plain statutory language, Section 453.073.3(4), in imposing a blanket limitation on duration and automatic expiration, conflicts with and is preempted by the controlling official HHS issuance in the HHS Child Welfare Policy Manual, Section 8.2D.2, which states: “States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.” 34. Moreover, the blanket limitation on duration provision also conflicts with and is preempted by the controlling official HHS issuance in the HHS Child Welfare Policy Manual, Section 8.2D.5, requiring that adoption assistance payments must continue until (1) the child has attained the age of 18 (or 21 if the state has determined that the child has a mental or physical disability which would warrant the continuation of assistance); (2) the State determines that the adoptive parents are no longer legally responsible for the support of the child; or (3) the State determines that the adoptive parents are no longer providing any support to the child. ( HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.5.) 35. As a matter of law, under the challenged amendments to 473.073.3(4), all existing
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adoption subsidy contracts expire on June 30, 2006, and all new subsidy contracts will expire on their one-year anniversary. DSS policy, unchanged by the challenged provision, expressly distinguishes between review and automatic renewal on the one hand, and renegotiation upon expiration on the other hand. (Plaintiffs' Ex. 48; Defendant's Post Trial Proposed Findings of Fact para. 39; Plaintiffs' Post Trial Proposed Findings of Fact para. 77.) Defendant's assertion of an "intent" not to do what the challenged provision and DSS policy both say to the contrary -- taken as a litigation position and never reduced in writing within even a DSS policy -- is without merit. See, e.g., Idaho Dep’t of Health and Welfare v. United States Dep’t of Energy, 959 F.2d 149, 153 (9th Cir. 1992) (“We grant no deference to [a regulatory] interpretation put forth merely as a litigation position.”) 36. Finally, the Court has received into the evidentiary record an August 29, 2005 letter from Linda K. Lewis, Regional Administrator of the United States Department of Health and Human Services to DSS Director K. Gary Sherman. This letter sets forth the following official position of HHS: “[t]he Administration for Children and Families has determined that Missouri is out of compliance with title IV-E requirements because SB 539 states that the period for which all subsidies will be granted will not exceed one year and the director has the discretion as to whether the agreement can be renewed for subsequent years.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 37. The August 29, 2005 HHS letter further states, “Federal requirements state that once a child is determined eligible for title IV-E adoption assistance, he or she remains eligible and the subsidy continues for reasons specified in the Federal policy [Child Welfare Policy Manual, Section 8.2B.9 and Social Security Act – Section 473]. The Federal policy further states that States may not have a blanket policy which limits the duration of adoption assistance payments to a date earlier than the eighteenth birthday
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of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents … [Child Welfare Policy Manual, Section 8.2D.2 and Social Security Act – section 473]. The Missouri legislation, however, states that the period for which all subsidies will be granted will not exceed one year.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 38. The August 29, 2005 letter also states, “Federal policy [Child Welfare Policy Manual Section 8.2D.5 and Social Security Act – section 473; and 45 CFR 1356.40(b)] provides that once a child is determined eligible for adoption assistance under IV-E, he or she remains eligible and the subsidy continues unabated. Once an adoption assistance agreement is signed and in effect, it can only be terminated if 1) the child has reached the age of 18 (or the age of 21 if the State has determined that the child has a mental or physical disability which would warrant continuation of assistance), 2) the State determines that the adoptive parents are no longer legally responsible for the support of the child, or 3) the State determines that the adoptive parents are no longer providing any support to the child. Missouri’s legislation, however, states that the agreement can be renewed for subsequent years “at the discretion of the director” and therefore violates Federal policy.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 39. The Court gives due deference to this letter as well as official HHS policy issuances in construing of 42 U.S.C. Section 673(a)(3). Section 453.073.3(4) conflicts with and is preempted by the plain meaning of 673(a)(3) of the Adoption Assistance Act, the reasonable official HHS issuances under that Act, and as specifically construed and applied by HHS in the Lewis letter in administering the Title IV-E federal program.
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COUNT II: Equal Protection 40. Missouri Senate Bill 539 amends the state’s adoption subsidy law to include a new
Mo.Rev.Stat. § 453.073.4. The “means test” established in Section 453.073.4, as amended by Senate Bill 539, on its face, creates two classes out of an otherwise similarly situated pool of abused and neglected, special needs children, defined by Mo.Rev.Stat. § 453.073.2 as all current or former state wards of the Missouri foster care system. The means test will be applied both retroactively and prospectively to initially deny or terminate existing adoption subsidy benefits to one group of children and not the other. 41. Specifically, for one group, in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the 1996 Aid for Families With Dependent Children (AFDC) eligibility standard for Title IV-E purposes (also referred to as “non IV-E eligible” children), the new means test will be imposed on the income of the children’s existing or prospective adoptive parents to initially deny or terminate their existing adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes (“IV-E eligible” children), no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. Mo.Rev.Stat. § 453.073.4 creates an unlawful discriminatory classification under the Equal Protection Clause. 42. A single governmental purpose has been advanced for § 453.073.4 and its means test: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the most needy. 43. First, this classification infringes on the fundamental right of foster children -- their liberty interest in avoiding unnecessary government confinement -- and cannot
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survive strict scrutiny review. A discriminatory classification implicating a suspect class or a fundamental right triggers strict scrutiny. Plyler v. Doe, 457 U.S. 202, 216218 (1982); Lubin v. Panish, 415 U.S. 709, 721-22 (1974). Under strict scrutiny, a statute’s classification must be narrowly tailored to achieve a compelling state purpose. Plyler v. Doe, 457 U.S. at 216-218. 44. “Liberty from bodily restraint always has been recognized as the core of the liberty protected by the Due Process Clause from arbitrary governmental action.” Youngberg v. Romeo, 457 U.S. 307, 316 (1982) (citing Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1, 18 (1979) (Powell, J., concurring in part and dissenting in part). See also DeShaney v. Winnebago, 489 U.S. 189, 200 (1989); Ingraham v. Wright, 430 U.S. 651, 673-674 (1977); Collins v. Bellinghausen, 153 F.3d 591, 596 (8th Cir. 1998). 45. Unnecessarily prolonged confinement in government foster care invokes the substantive due process liberty interests of foster children. See DeShaney, 489 U.S. at 201 n.9; Taylor v. Ledbetter, 818 F.2d 791, 796-97 (11th Cir. 1987) (recognizing due process liberty interest of foster child in state custody in a damages action under § 1983); Kenny A. v. Perdue, 356 F.Supp.2d 1353, 1360-61 (N.D.Ga., 2005) (finding that “the evidence shows that foster children in state custody are subject to placement in a wide array of different types of foster care placements, including institutional facilities where their physical liberty is greatly restricted”). See also Norfleet ex rel. Norfleet v. Arkansas Dep’t of Human Servs., 989 F.2d 289, 293 (8th Cir. 1993) (foster children have constitutional right to “adequate medical care, protection and supervision”). See also Foucha v. Louisiana, 504 U.S. 71, 85-86 (1992) (plurality opinion) (four justices acknowledged that restraint on liberty is a fundamental right and violative of equal protection where the State had not provided a “particularly convincing reason.”) The asserted purpose of cost savings here fails to meet this articulation of heightened scrutiny.
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46. Defendant in this case concedes that Mo.Rev.Stat. § 453.073.4 will result in foster children staying in foster care for at least six months longer. This impingement of foster children’s substantive due process rights constitutes a violation of their fundamental rights, triggering strict scrutiny review. Section 453.073.4 must be enjoined because it is not narrowly tailored to serve a compelling state interest. The state’s asserted government purpose, cost savings, is not sufficient to withstanding this rigorous standard of review. See Shapiro v. Thompson, 394 U.S. 618, 632 (1969). The means test is not narrowly tailored, as it selectively tests some adoptive parents’ gross income without consideration of actual expenditures or even the child’s needs.
47. Second, even assuming arguendo that rational basis review applies, the means test in RsMo 453.073.4 is not rationally related to a legitimate government interest.
48. The means test established in Section 453.073.4, as amended by Senate Bill 539, on its face, creates two classes out of an otherwise similarly situated pool of abused and neglected, special needs children, defined by Mo.Rev.Stat § 453.073.2 as all current or former state wards. The means test will be applied to deny adoption subsidy benefits to one group of children and not the other. Specifically, for one group in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the AFDC eligibility standard for Title IV-E purposes, the means test will be imposed on the income of the children’s existing or prospective adoptive parents to deny or abrogate their adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes, no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. In the area of economics and social welfare, equal protection analysis requires that the state establish that the challenged classification is rationally related to some legitimate
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governmental purpose. Ranschburg, 709 F.2d 1207, 1209 (8th Cir. 1983) (citing United States Dep’t of Agric. v. Moreno, 413 U.S. 528, 533 (1973); Dandridge v. Williams, 397 U.S. 471, 485 (1970); Medora v. Colautti, 602 F.2d 1149, 1152 (3d Cir. 1979); Alcala v. Burns, 545 F.2d 1101, 1104 (8th Cir. 1976)). 49. A virtually identical social welfare classification in Missouri failed to withstand Equal Protection scrutiny in Ranschburg, 709 F.2d 1207 (8th Cir. 1983). In Ranschburg, plaintiffs challenged on Equal Protection grounds a utility subsidy program in Missouri that granted financial assistance to multiple classifications of disabled citizens, whose eligibility for a statutory utility program under state law was determined solely by their additional participation in other statutorily enumerated public assistance programs. Id. at 1208-09. Plaintiffs, deemed “disabled” under the purview of the Missouri Medical Assistance Program, were nonetheless denied utility subsidy benefits because they did not participate in any of the public assistance programs specifically enumerated in the challenged statute. Id. 50. Plaintiffs contended that because they were equally situated in terms of need and disability with those receiving the utility subsidy, the state had acted unconstitutionally in excluding them from the program benefits. See Id. at 1209-11. The state of Missouri defended its statutory scheme in the District Court, arguing that it rationally promoted the state’s legitimate interest in allocating limited public funds among the state’s most needy citizens. Id. The Court struck down the challenged statute finding that no legitimate governmental interest was served by the subject classification. 51. Upon review, the Eighth Circuit Court affirmed the District Court’s judgment striking down the utility subsidy law on Equal Protection grounds. The Circuit agreed that the state of Missouri generally possesses a legitimate interest in directing limited public funds to the most needy; however, it concluded that the challenged program’s
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eligibility classifications were irrational as they assured no greater need on the part of program recipients than was demonstrated by the non-recipient plaintiffs. Id. at 1210. 52. The Eighth Circuit held: “[a]lthough states may have great discretion in the area of social welfare, they do not have unbridled discretion. They must still explain why they chose to favor one group of recipients over another. Thus, it is untenable to suggest that a state’s decision to favor one group of recipients over another by itself qualifies as a legitimate state interest.” Id. at 1211. 53. The classification imposed by Senate Bill 539 is as irrational as the classification struck down in Ranschburg. The means test in Senate Bill 539 is not rationally related to a legitimate governmental interest, and is arbitrary and harmfully unfair. No rational thread ties Senate Bill 539's means testing of a child’s adoptive parents’ gross income, because that same child’s biological parents’ income exceeded an income standard, to the governmental interest in directing state funds to the most needy. Undisputedly needy children will be denied the benefit -- the children whose adoption assistance subsidies are selectively denied or terminated under the new law are, by definition, at least equally in need of the benefit as those who will receive the subsidies. 54. The challenged law is also unfair and not rationally related to saving money by directing state funds to the most needy because it will never apply a means test to the income of the adoptive parents of IV-E eligible children, no matter how high their gross income may be. Moreover, the state will continue to fund all IV-E eligible children, regardless of their adoptive parents’ gross income, with 38% state dollars. See 69 Fed. Reg. 68,372 (Nov. 24, 2004) (Federal Financial Participation in State Assistance Expenditures, FY 2006). At the same time, the law will deny or terminate adoption assistance subsidies completely to only certain special needs children whose adoptive parents’ gross income exceeds 200% of the federal poverty level or “FPL”
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($32,180 for a family of three) solely because their biological parents’ income exceeded the 1996 AFDC standard. State dollars will thus fund subsidies for children in adoptive homes with higher gross incomes than the homes where the state will deny or terminate subsidies for equally needy children. Adoptive parents with more than one adoptive child could arbitrarily lose the subsidy for one child, but retain it for another. (Preliminary Injunction hearing, at 188.) 55. Finally, the asserted governmental purpose underlying Senate Bill 539's means test is wholly illusory and non-existent because the bill’s means test will not save taxpayer money, but will increase the overall cost of child welfare in the State of Missouri. The State irrationally projected fiscal savings to flow from Senate Bill 539 based upon (1) the clearly erroneous assumption that 43% of all existing adoption subsidy beneficiaries in Missouri were non-IV-E eligible when, in actuality, only 18% were non-IV-E eligible, (2) the clearly erroneous assumption that the adoption subsidy population in Missouri would grow at the flat rate of 1300 per year when, in actuality, adoptions in Missouri had steadily declined from 1,515 in FY2002 to 1,123 in FY2005 according to readily available DSS adoption program data, (3) the arbitrary and false assumption that children whose adoptive placements are disrupted as a result of the means test will experience, on average, a six month additional stay in foster care, even though readily available state foster care performance data demonstrated that additional stays of 24 months or longer should be expected, (4) a complete failure to account for the significant administrative and caseworker costs required to serve the increased foster care population resulting from Senate Bill 539, even though these cost impacts were fully recognized and anticipated by DSS officials, and (5) a failure to properly account for the legislature’s FY2006 adoption subsidy program appropriation at 250% of FPL, instead of 200% of FPL. (Morris Dep., Dec. 12, 2005, at 27-31; Table 28, February 2006 Children’s Services
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Management Report, Ex. 120; Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1; Preliminary Injunction hearing, at 46-47; Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 56. As a matter of law, the Court holds that the asserted governmental purpose for the means test of Senate Bill 539 is arbitrary and clearly erroneous. State of Minnesota v. Clover Leaf Creamery, 449 U.S. 456, 464 (1981). In the face of readily available DSS adoption data and the recognized additional foster care costs to flow from Senate Bill 539's means test, the budgetary savings asserted by the state could not reasonably be conceived to be valid by any reasonable governmental decision-maker.
COUNT III: Contracts Clause 57. The Contracts Clause of the United States Constitution prohibits the states from
enacting legislation that “impair[s] the Obligation of Contracts . . .” on a retroactive basis. United States Constitution, Art. I, Sec. 10, cl. 1. In adjudicating the legality of a statute under the Contracts Clause, the court must determine “whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.” Energy Reserves Group, Inc. v. Kansas Power and Light Co., 459 U.S. 400, 411 (1983) (citing Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244 (1978)). See also, Koster v. City of Davenport, Iowa, 183 F.3d 762, 766 (8th Cir. 1999). 58. The United States Supreme Court has established a three-part analysis for a constitutional inquiry under the Contracts Clause: “(1) does a contractual relationship exist, (2) does the change in the law impair that contractual relationship, and, if so, (3) is the impairment substantial.” Koster, 183 F.3d at 766 (quoting Honeywell, Inc. v. Minnesota Life and Health Ins. Guar. Assoc., 110 F.3d 547, 551 (8th Cir. 1997)). 59. Significantly, when the State is a party to the subject contract, the Court does not grant the customary level of deference it affords a state legislature when “reviewing economic and social regulation[.]” Energy Reserves Group, 459 U.S. at 412-413
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(quoting United States Trust v. New Jersey, 431 U.S. 1, 22 (1977)). “Impairment of a State’s own contract … faces[s] more stringent examination under the Contract Clause than would laws regulating contractual relations between private parties.” Allied Structural Steel Company v. Spannaus, 438 U.S. 234, 245 n. 15 (1978)(citing United States Trust, 431 U.S. at 22-23). “When a State itself enters into a contract, it cannot simply walk away from its financial obligations.” Energy Reserves Group, 459 U.S. at 413 n.14. “Complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake.” Id. (quoting United States Trust, 431 U.S. at 26). 60. The Form CS-SA-2 Adoption Subsidy Agreements executed between the state of Missouri and adoptive parents, on behalf of their adopted children, constitute binding and enforceable contracts. 61. The Form CS-SA-2 Adoption Subsidy Agreement, Part 1, A, 1-5 obligates the State to “subsidize adoptive parents” for expenses which are categorized in the contracts as “maintenance,” “recurring expenses” and “non-recurring expenses.” 62. The Form CS-SA-2 Adoption Subsidy Agreement, Part I, C obligates the State “to provide the necessary authorization for participation [of the adopted child] in the Missouri Medicaid Plan….” 63. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 on their face impair the obligation of the state to subsidize the expenses of adopted parents through maintenance payments as stated in the Form CS-SA-2 Adoption Subsidy Agreement and the Form CS-SA-2 Attachments. 64. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 on their face impair the State’s contractual obligation to “provide necessary authorization for participation [of adopted children] in the Missouri Medicaid Plan” as stated in the Form CS-SA-2 Adoption Subsidy Agreement, Part I Sec. C.
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65. The impairment of contractual rights caused by Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 is substantial. Section 453.073.3(4) abrogates all existing agreements (“all existing agreements will have been deemed to have expired ….”). Section 453.073.3(4) transforms what were binding contractual obligations for adoption assistance into payments made “at the discretion” of the State and reviewable by the State alone on a yearly basis.
66. By making all pre-existing contracts expire after one year, Section 453.073.3(4) fundamentally alters the duration of existing contracts. Significantly, the State’s obligation to authorize the participation of adopted children in the Missouri Medicaid Plan becomes an item subject to a yearly review for eligibility under Sections 453.073.3(4) and 453.073.4.
67. Finally, Section 453.073.4 adds requirements and conditions for adoption assistance and Medicaid participation which were not part of the original contracts.
68. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 are unconstitutional under the Contracts Clause of Article I, Section 10 of the United States Constitution. Under the heightened scrutiny standard set forth in U.S. Trust, Allied Structural Steel and Energy Reserves, the subject statutory revisions are not reasonable as they are intended solely to further an asserted governmental interest in saving money. (See e.g. U.S. Trust, 431 U.S. at 26: “If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”)
69. As a matter of law, the Court finds that the state may not lawfully use the pre-printed termination clause of Form CS-SA-2 Adoption Subsidy Agreement, Sec. V.C, to terminate existing adoption assistance agreements. This provision states, “(f)urther, either party at any time may, upon thirty (30) days written notice, terminate this agreement without the necessity of showing good cause for this termination. The
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Division does not intend to terminate this Agreement unless legal, fiscal, or other circumstances necessitate some adjustment in the Missouri Adoption Subsidy Program expenditures or procedures.” (Form CS-SA-2, Ex. 99, at V.C.) 70. First, the V.B. termination clause undermines the federal and state statutory schemes providing for the existence of the contracts in the first place. Missouri contract law requires the severance of clauses that violate public policy. See Swain v. Auto Services, Inc., 128 S.W.3d 103 (Mo. Ct. App. 2003) and High Life Sales Company v. Brown-Forman Corp., 823 S.W.2d 493 (Mo. 1992) (forum selection clauses voided for reasons of public policy; remainder of arbitration agreements held valid). 71. Where a party terminates a contract according to its provisions, the contract and all rights thereunder are wholly abandoned. After termination of a contract, all of the parties' unperformed undertakings are ended. HGS Homes, Inc. v. Kelly Residential Group, Inc. 948 S.W.2d 251, 255 (Mo. Ct. App. 1997); Thumm v. Lohr, 306 S.W.2d 604, 609 (Mo. Ct. App.1957). Such a result is clearly against public policy and unenforceable. The Adoption Assistance and Child Welfare Act of 1980, 42 U.S.C. Sec. 620-629(i), the Adoption and Safe Families Act of 1997, 42 U.S.C. Sec 670679(b) and RSMO Chapter 453 were all enacted to help provide permanent homes for adopted children. 72. Second, operation of the termination clause would violate the principle that a party seeking to rescind or terminate a contract must act before the other party is placed in a position where it would be prejudiced by a rescission or termination. See e.g., Jetz Service Company, Inc. v. KC Citadel Apartments, L.L.C. Coinmach Corporation, 59 S.W.3d 527, 530 (Mo. Ct. App. 2001); Gilmartin Bros., Inc. v. Kern, 916 S.W.2d 324, 330 (Mo. Ct. App. 1995). While the parents did not adopt children solely because of the availability of financial assistance from the State, the parents relied upon the State to fulfill its contractual obligation to defray the considerable financial
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expenses required to raise and support special needs children. Adoptive parents, regardless of income, relied upon the State to provide financial assistance to special needs children until their eighteenth birthday. The State’s abandonment of the contracts is too late. Once the children were adopted, the parents became legally and morally obligated to raise their adopted children. 73. Finally, under Missouri law, specific contractual terms control over inconsistent general provisions. See e.g. A&L Holding Company v. Southern Pacific Bank, 34 S.W.3d 415, 418 (Mo. Ct. App. 2000); Tri-County Retreading, Inc. v. Bandag Inc., 851 S.W.2d 780 (Mo.Ct. App.1993). It is a well-accepted rule in Missouri that where one contract clause is general, and another is more limited and specific, the more specific clause acts to modify and nullify the more general clause. Id. at 784; In re Marriage of Buchmiller, 566 S.W.2d 256, 259 (Mo. Ct. App. 1978); Surface v. Ranger Insurance Company, 526 S.W.2d 44, 48 (Mo. Ct. App. 1975). 74. The purpose of the Form CS-SA-2 Adoption Subsidy Agreement is to make possible the permanent placement of special needs children in adoptive households. The general termination upon 30 days notice language in Part V., Paragraph B conflicts with the more specific contractual language contained in Part V. A(1)-(6) which identify particular events in the lives of the adoptive child and parent(s) that will terminate the agreement:
Assistance as agreed upon in this Agreement shall continue until: (1) The child’s 18th birthday or the age of 21 years … or; (2) The parent’s rights to the child have been terminated; (3) The parent is no longer financially responsible for the child; or (4) The child is no longer in the legal custody of the parent … or; (5) Child moved out of the home; or (6) Death of the child or both adoptive parents. 75. Use of the term “shall” demonstrates that the contract guarantees that assistance will continue until one of the specifically defined events occurs. Viewed in consideration of V.A and B and the overall purpose of the contract, Sec. V.B. provides the mechanism by which parents or the State would stop the receipt or payment of
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assistance following the occurrence of one of the events in V.A. Generalized terms in a contract are limited and restricted by the specific provisions. Surface v. Ranger Ins. Co., 526 S.W.2d 44, 48 (Mo. Ct. App. 1975). (2) Irreparable Harm to Plaintiffs 76. Absent the entry of a permanent injunction, the plaintiff children will suffer irreparable harm and the continuing threat of irreparable harm to the stability of their existing adoptive relationships and home settings. For children still in foster care, they will suffer irreparable harm to their prospects for finding a permanent home through adoption. It is undisputed that children will remain in government custody in foster care for longer periods of time as a direct result of the Senate Bill 539 adoption subsidy provisions. (Bullet Points Memo, Ex. 93.) 77. The Section 453.073.4 means test of Senate Bill 539, if permitted to take effect, will likely reduce the overall number of adoptions of special needs children in Missouri by reducing the pool of financially capable adoptive parents. This will cause irreparable harm to those foster children who, as a result, will not achieve permanency. (Trial testimony of Jeanette Wiedemeier Bower.) 78. The Section 453.073.4 means test of Senate Bill 539, if permitted to take effect, would substantially interfere with the financial ability of existing adoptive parents to care for and meet the unique needs of their adopted special needs children. This will cause harm to the adopted children in the form of either inadequate care or disrupted adoptions. (Trial testimony of Jeanette Wiedemeier Bower.) 79. For example, Named Plaintiff A.C., a 5 year-old boy, is an adopted special needs child with a congenital heart disorder. A.C. has already undergone 14 hospitalizations and requires additional heart surgeries for his serious medical condition. A.C.’s parent and Next Friend, Lana Capps, now earns an annual income of approximately $43,200, an amount that exceeds the Senate Bill 539 means test. Without the monthly
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$651 adoption subsidy provided by Missouri pursuant to the long-term adoption subsidy agreement executed at the time of A.C.’s adoption, however, Ms. Capps cannot sustain her household and financially meet the special needs of A.C. and his medical, psychiatric and educational care. 80. Similarly, Named Plaintiff J.A., another 5 year-old boy, is an adopted special needs child who suffers from severe anxiety, ADHD, oppositional defiant behavior disorder, depression and delayed learning. J.A. lived in some 23 different DSS foster homes from ages 8 through 10 and later resided in a group foster home following a failed suicide attempt. J.A’s special needs are quite substantial; and his parent and Next Friend, John Antonich, along with his spouse, Sharon, relies upon J.A.’s long-term $651 monthly adoption subsidy to provide special professional care. Mr. Antonich earns an annual income that also surpasses the Senate Bill 539 means test. (Testimony of John H. Antonich at the preliminary injunction hearing.) 81. On a prospective basis, the annual renewal provision of Senate Bill 539 will deter putative adoptive parents from choosing special needs children for adoption, as these otherwise interested parents will quite rationally worry about their long-term financial ability to support the adopted child. (Trial testimony of Jeanette Wiedemeier Bower.) 82. On a retroactive basis, the annual renewal provision threatens to negate the benefits now provided under the numerous existing adoption assistance agreements in Missouri. This basic threat to the viability of adoption assistance agreements creates an increased likelihood that numerous finalized adoptions will disrupt due to changed circumstances resulting in financial hardship within effected adoptive families and the risk that children’s special needs will go unaddressed. (Trial testimony of Jeanette Wiedemeier Bower.) 83. Affected special needs children, including the Named Plaintiffs, will suffer irreparable harm in the form of lost permanency, lost services to meet their special
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needs, and lost stability. (Declarations of Next Friends, John Fischer, Robert Strange, Michael Patterson, Lana Capps, John Antonich, Lavada Johnson and Tammy Smith.) 84. Moreover, Senate Bill 539 threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the courtsupervised consent decree entered in G.L. et al. v. Gary Stangler et al, No. 77-0242CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. (July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al., Ex. 56.) 85. In enacting Senate Bill 539, the state of Missouri and DSS were aware that the new eligibility scheme would undermine the essential purpose underlying the state’s adoption subsidy program: the achievement of timely permanency with adoptive families for special needs children. Thus, DSS staff prepared a memorandum entitled, “Bullet Points for Means Testing Adoption Subsidy,” (“Bullet Points Memo”) that provided as follows:
(a) “By implementing a means test on only the state only adoptions, children who are not IV-E eligible will be put at a disadvantage to being adopted versus children that are IV-E eligible.” (b) “By reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster
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Care as opposed to children [in] who are in Adoption Subsidy.” (c) “Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer.” (Bullet Points Memo, Ex. 93.) (3) Balancing the Equities 86. The irreparable harm to be suffered by plaintiffs absent injunctive relief substantially outweighs any threat of prejudice to defendant. 87. The only possible “harm” to the State is the loss of asserted “savings” to be generated by the new law; however, these purported savings are not only dwarfed by the undisputed harm to occur to the plaintiff children, they are false. 88. The state irrationally projected fiscal savings to flow from Senate Bill 539 based upon (1) the clearly erroneous assumption that 43% of all existing adoption subsidy beneficiaries in Missouri were non-IV-E eligible when, in actuality, only 18% were non-IV-E eligible, (2) the clearly erroneous assumption that the adoption subsidy population in Missouri would grow at the flat rate of 1300 per year when, in actuality, adoptions in Missouri had steadily declined from 1,515 in FY2002 to 1,123 in FY2005 according to readily available DSS adoption program data, (3) the demonstrably false assumption that children whose adoptive placements disrupt as a result of the means test will experience, on average, a six month additional stay in foster care, even though readily available state foster care performance data demonstrated that additional stays of 24 months or longer should be expected, (4) a complete failure to account for the significant administrative and caseworker costs required to serve the increased foster care population resulting from Senate Bill 539, even though these cost impacts were fully recognized and anticipated by DSS officials and (5) a failure to properly account for the legislature’s FY2006 adoption subsidy program appropriation at 250% of FPL, instead of 200% of FPL. (Morris Dep., Dec.
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12, 2005, at 27-31; Table 28, February 2006 Children’s Services Management Report, Ex. 120; Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1; Preliminary Injunction hearing, at 46-47; Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 89. The costs of disrupting the lives of special needs children, diminishing their opportunities for adoption, and maintaining them in state custody for longer periods of time – the likely results of the SB 539 provisions – far surpass the false, and, even if true, comparably insignificant, cost savings asserted by the state. (4) The Public Interest 90. The public interest will be served by the entry of permanent injunctive relief. Public policy strongly favors the efficient and expeditious provision of permanency for abused and neglected children taken into the temporary custody of the state and its child welfare agency. Moreover, the public has a strong interest in the sanctity and enforceability of contracts entered into between the state of Missouri and its citizens. Missouri Senate Bill 539, if allowed to take effect, will undermine these vital interests. 91. There is immense value to society and to individual foster children to have those children move from the foster care system into permanent, adoptive homes when reunification is not possible. (CWLA, Adoption Standards, Ex. 85, at 5; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 92. The Senate Bill 539 means test will cause emotional and developmental harm to those children who fail to achieve permanency through adoption. It is widely recognized that there is a higher incidence of poverty, emotional and mental disability, and criminal behavior among foster youth who have attained adulthood, particularly among those foster youth who aged out of the foster care system without ever
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knowing a permanent family. (Trial testimony of Wiedemeier Bower.) 93. The challenged provisions will serve to undermine the core purpose of the
federal/state adoption subsidy program: to promote permanent homes for special needs foster children. The public interest in furthering the purpose of the federal/state adoption subsidy program will thus be served by issuing a permanent injunction. Accordingly, the Court has signed an Order granting plaintiffs’ Motion for Permanent Injunction in this matter for the reasons stated in these Amended Findings of Fact and Conclusions of Law.

Date: 8/4/06

/s/Scott O. Wright SCOTT O. WRIGHT Senior United States District Judge

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 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI CENTRAL DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G.,

)

each a minor by Next Friend, Jill Katz; et al., )

)

Plaintiffs,

)

)

vs.

)

)

Matt Blunt, in his official capacity as

)

Governor of the State of Missouri; and

)

K. Gary Sherman, in his official capacity as )

Director of the Missouri Department of

)

Social Services,

)

)

Defendants. )

Case No. 05-0726-CV-C-SOW

AMENDED COMPLAINT 1. Adoption assistance subsidies are provided by the State of Missouri under federal and state law to help thousands of abused and neglected children, all of them currently or formerly in the custody of the Missouri foster care system, who have highly specialized medical, mental health or other special needs. Federal and state law provide subsidies for these children because, due to their special needs, they would likely not otherwise have a chance for a permanent family through adoption. Over 12,000 children are currently the beneficiaries of adoption assistance subsidies under contracts between the state of Missouri and the child’s adoptive parents. Of the over 11,000 abused and neglected children still in the Missouri foster care system, thousands more will be or hope to be the beneficiaries of adoption assistance subsidies that will address their special needs so they can be adopted out of state custody and into a permanent family.

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2. In his January 26, 2005 State of the State address, Missouri Governor Matt Blunt promised to “facilitate permanent placement for children who cannot return home” to their parents. However, in a shortsighted, ill-conceived, and illegal effort to restrain future spending, the Missouri Legislature passed and Governor Matt Blunt signed Missouri Senate Bill 539 into law, which will become effective on August 28, 2005. The provisions of Senate Bill 539 that amend Missouri’s adoption and foster care law will cause thousands of current and future foster children in state custody to lose opportunities for a permanent family, as the state unlawfully denies adoption assistance to address their special needs. Indeed, the new law will undermine and undo years of efforts to obtain permanent homes for abused and neglected foster children in Jackson County under the requirements of the existing Modified Consent Decree in G.L., An Infant, by and through his Next Friend, et al., v. Stangler, No. 77-0242-CV-W-1.1 Furthermore, thousands of adopted, former foster children who are currently the beneficiaries of adoption assistance contracts entitling them to benefits until they reach the age of eighteen will suddenly find their contractual benefits modified or cut off entirely, and many of these children will also lose Medicaid benefits because their initial qualification for Medicaid was linked to their receipt of adoption assistance. 3. These harms will all occur because Missouri Senate Bill 539 will retroactively and prospectively render all adoption assistance contracts valid for no more than one year, and will make all such agreements renewable at the discretion of the Director of the Missouri Department of Social Services (“DSS”). The statute further will deem all existing subsidy contracts, regardless of their current duration, to have expired one year after the agreement was first
1 This case has been filed a related matter to the G.L. action, in which the Modified Consent Decree applies to all children in the legal custody of the Missouri Division of Family Services, Jackson County, Missouri Office. Pursuant to Local Rule 83.9 of the United States District Court for the Western District of Missouri, “related cases, by mutual consent of the judges to whom the cases are assigned, shall be transferred to the judge with the lowest number case, without regard to whether the lowest number case is pending.”
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entered into for the child’s benefit. The new law violates the federal Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997 (collectively the “Adoption Assistance Act”), which prohibits states from unilaterally modifying or terminating adoption assistance contracts, and only allows individualized, periodic adjustments of subsidy amounts with the concurrence of the child’s adoptive parents. 4. Additionally, the adoption assistance provisions of Senate Bill 539 will arbitrarily create two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards, and will use a means test to deny the adoption assistance to one group of children and not the other. Specifically, the means test will only be imposed on the income of a child’s existing or prospective adoptive parents to deny or terminate a subsidy in cases where the income of the child’s biological parents (from whom they were removed and placed into foster care) failed to meet an income eligibility threshold for federal Title IV-E purposes. In so doing, the means test is not rationally related to the state’s interest in providing subsidies to the most needy children because the income of a current or former foster child’s biological parents bears no relationship whatsoever to the child’s need for an adoption assistance subsidy. The statute therefore violates the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution and cannot be enforced. Moreover, its retroactive nullification of legally enforceable contracts for adoption assistance and Medicaid coverage violates the Contracts Clause of the United States Constitution. 5. Plaintiffs, on behalf of themselves and all persons similarly situated, therefore seek an order declaring the adoption assistance provisions of Senate Bill 539 unconstitutional and in violation of and preempted by the federal Adoption Assistance Act; as well as enjoining the defendants from implementing its provisions.
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JURISDICTION AND VENUE 6. This is an action brought pursuant to 42 U.S.C. §1983, alleging violations of the United States Constitution and federal statutory law. This court has jurisdiction over the federal claims pursuant to 42 U.S.C. §§1331 and 1343. 7. Venue in this district is proper pursuant to 28 U.S.C. §1391(b) because the claims arise in this district.
PARTIES Plaintiffs 8. Named Plaintiff E.C., by her Next Friend Jill Katz, resides in the legal custody of the Division of Family Services in Jackson County, Missouri. E.C. is a member of the G.L. v. Stangler, et al. class. She has lived in numerous foster homes since entering foster care at the age of 7 and has tired of moving from one home to another. E.C. has formed a bond with her current foster mother and wishes to be adopted by her. She desperately wants to enjoy safety and stability in her life. E.C. is ineligible for Title IV-E adoption assistance and fears that her foster mother will not have the financial capacity to adopt her absent adoption assistance. See Declaration of “E.C.” attached as Exhibit A. 9. Named Plaintiff J.C., by his Next Friend Jill Katz, is a 16 year-old now living in the legal custody of the Division of Family Services in Jackson County, Missouri. J.C. is a member of the G.L. v. Stangler, et al. class. He has lived in foster care since 1997, following the death of his mother and a short stay with his legal guardian. Since 1997, J.C. has been placed into more foster homes than he can recall. He wishes to be adopted and has experienced several adoptive placements that disrupted before finalization. J.C. believes that a family would give him a better understanding of himself and a place to call home on Christmas. He can only remember
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Christmas holidays spent in temporary care in the company of temporary caretakers. J.C. fears that the absence of an adoption subsidy will prevent his dream of realizing an adoptive family. See Declaration of “J.C.” attached as Exhibit B. 10. Named Plaintiffs T.G., B.G. and A.G., by their Next Friend Jill Katz, are 9, 6 and 4 yearold biological siblings living with their potential adoptive parents, Elizabeth W. Fischer and John S. Fischer, in Jackson County, Missouri. They are members of the G.L. v. Stangler et al. class. T.G. is in the 4th Grade and is considered cognitively/developmentally delayed. B.G., who was subjected to abuse in her biological home, has long-term conditions, including bipolar and attachment disorders. All three children have been diagnosed with post-traumatic stress disorder and take prescription medication. The Fischers have initiated adoption proceedings with respect to the three siblings. The Fischers have received notice from the state that the three children may not qualify for Title IV-E adoption assistance and that the Senate Bill 539 means test will determine their eligibility for state funded adoption subsidies. The Fischer’s monthly income is approximately $7,800, and they fear that adoption assistance will not be offered. The state now pays the Fischers $1800 per month in foster care maintenance payments, with two of the children being paid at the behavioral rate. The three siblings all would have been eligible for Title IV-E assistance, but for errors in family court documents only detected by the state after the timeframe for perfecting Title IV-E eligibility had expired. See Affidavit of Elizabeth W. Fischer attached as Exhibit C. 11. Named Plaintiffs W.S., M.S., and D.S., by their parent and Next Friend Robert Brian Strange, are boys aged 10, 7 and 6, respectively, who were adopted from the Missouri foster care system in 2000 as a sibling group. The boys were all in the G.L. v. Stangler et al. class prior to their adoption. They now live with their adoptive parents, Robert and Jennifer, in Cass County,
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Missouri. The boys were initially removed from their biological home after M.S. sustained severe burns when held against a hot water heater by his mother. D.S. is developmentally disabled. The Stranges’ annual income is about $62,400. They currently receive three separate $275 adoption assistance payments each month under the adoption assistance agreements they executed with the state of Missouri on behalf of each of the boys. The Stranges cannot support the medical, educational, emotional and physical needs of the boys absent the adoption assistance. The state of Missouri has sent a notice letter to the Stranges stating that W.S.’s and M.S.’s adoption assistance payments will terminate if the family’s gross annual income exceeds the Senate Bill 539 means test. See Affidavit of Robert Brian Strange attached as Exhibit D. 12. Named Plaintiff M.P., by his parent and Next Friend Michael Patterson, is a16 year-old adopted child who currently resides with his father in Jackson County, Missouri. Named Plaintiff J.L., by his Next Friend Jill Katz, is a 16 year-old foster child who has been placed with Mr. Patterson by the Jackson County Office of the Children’s Division. J.L. is a member of the G.L. v. Stangler et al. class, as was M.P. before his adoption. Mr. Patterson currently receives a monthly $651 adoption subsidy under an adoption assistance agreement he executed with the state of Missouri on behalf of M.P. Mr. Patterson cannot afford M.P.’s physical, emotional, medical and educational needs absent the adoption subsidy. The state of Missouri has sent a notice letter to Mr. Patterson stating that M.P.’s adoption assistance payments will terminate if his gross annual income fails the Senate Bill 539 means test, which he expects to occur. J.L. has asked Mr. Patterson to adopt him; however, Mr. Patterson is unsure whether he can afford to raise J.L. without an adoption subsidy. Mr. Patterson is financially more able to care for J.L. as a foster parent, because J.L. receives monthly foster care maintenance payments from the
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Children’s Division in his current foster status. See Affidavit of Michael Patterson attached as Exhibit E, and Declaration of J.L. attached as Exhibit F. 13. Named Plaintiff A.C., by his parent and Next Friend Lana Capps, is a 5 year-old boy who was adopted from the Missouri foster care system in 2002. A.C. and Ms. Capps live in Boone County, Missouri. A.C. suffers from a congenital heart disorder that has necessitated 14 hospitalizations during his young life. He will require additional heart surgeries. Ms. Capps earns approximately $3,600 a month. She currently receives a monthly $651 adoption subsidy under an adoption assistance agreement she executed with the state of Missouri. Ms. Capps cannot afford A.C.’s necessary and regular medical care absent the adoption subsidy. The state of Missouri has sent a notice letter to Ms. Capps stating that A.C.’s adoption assistance payments will terminate if her gross annual income exceeds the Senate Bill 539 means test – that is, 200% of the federal poverty level for a family of two, or $25,660 under current federal guidelines. Ms. Capps earns approximately $43,200 a year and, therefore, will exceed the Senate Bill 539 means test and lose A.C.’s subsidy payments under the new law. See Declaration of Lana Capps attached as Exhibit G. 14. Named Plaintiff J.A., by his parent and Next Friend John Antonich, is a 15 year-old boy. He was adopted from the Missouri foster care system in 2004 after some 6 years in foster care. J.A. lives with his adoptive parents in Jefferson County, Missouri. While in foster care, J.A. lived in 23 different foster homes between the ages of 8 and 10. He later was placed into group care after a suicide attempt. J.A. suffers from severe anxiety, attention deficit hyperactive disorder (“ADHD”), oppositional defiant behavior, and depression. The depression condition has required hospitalization. J.A. also has required intensive tutoring to improve his challenged educational growth. Mr. earns approximately $4,580 a month. The family currently receives a
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monthly $651 adoption subsidy under an adoption assistance agreement they executed with the state of Missouri. This family cannot afford the considerable educational, psychiatric and behavioral care necessary to address J.A.’s special needs absent the adoption subsidy. The state of Missouri has sent a notice letter to the Mr. and Mrs. Antonich stating that their adoption assistance payments will be terminated if their annual income exceeds the Senate Bill 539 means test – 200% of the FPL for a family of 3 is $32,180 under current federal guidelines. Mr. Antonich earns approximately $54,960 per year, and his income will, therefore, surpass the Senate Bill 539 means test. See Declaration of John H. Antonich attached as Exhibit H. 15. Named Plaintiffs T.J. and A.J., by their parent and Next Friend Lavada Johnson, are 7 and 5 years old, respectively. They were adopted from the Missouri foster care system. Ms. Johnson, who is 60 years old, also supports two children in therapeutic foster care. T.J. suffers from severe asthma, sinus disease, ADHD and hypoglycemia and requires daily medication. A.J. suffers from chronic lung disease, chronic and persistent asthma and ADHD and also requires daily medication. Ms. Johnson earns approximately $1,160 a month. She currently receives monthly $651 adoption subsidy payments under the adoption assistance agreements she executed with the state of Missouri. Ms. Johnson cannot afford the considerable medical, psychiatric, educational and emotional care necessary to address T.J.’s and A.J.’s special needs absent the adoption subsidy. The state of Missouri has sent a notice letter to Ms. Johnson stating that the children are Title IV-E eligible, but that her adoption assistance agreements will automatically expire in 2006. See Declaration of Lavada Johnson attached as Exhibit I. 16. Named Plaintiff N.S., by his parent and Next Friend Tammy Smith, is a 3 year-old boy who was adopted from the Missouri foster care system in 2002 by Ms. Smith and her spouse, Harold Smith. N.S. lives with his adoptive parents in Boone County, Missouri. N.S. suffers
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from severe asthma and takes 4 different medications daily to control the condition. N.S. also requires two breathing treatments twice daily. The asthma condition occasionally results in asthmatic crises and has required as many as 11 visits to the hospital in one 13-month span. Because of N.S.’s condition and special needs, the Smiths have had to modify their home, including, but not limited to, the removal of carpeting and the installation of special flooring and bedding. The Smiths earn approximately $3,250 a month. They currently receive a monthly $651 adoption subsidy under an adoption assistance agreement they executed with the state of Missouri. The Smiths cannot afford N.S.’s necessary and regular medical care or his special educational requirements absent the adoption subsidy. The state of Missouri has sent a notice letter to the Smiths stating that N.S.’s adoption assistance payments, made under Title IV-E, will expire within one year and made renewable at the discretion of the DSS Director. The Smiths have obtained approval to adopt a second child, but have serious concerns that such a decision will cause a financial hardship absent an adoption subsidy. See Declaration of Tammy Smith attached as Exhibit J.
Defendants 17. Defendant Matt Blunt is the Governor of Missouri, and is sued in his official capacity. His business address is Office of the Governor, Room 216, State Capitol Building, Jefferson City, Missouri 65101. Pursuant to Article IV of the Missouri State Constitution, Governor Blunt is directly responsible for ensuring that all Missouri agencies, including DSS, comply with applicable federal and state laws. Governor Blunt signed Senate Bill 539, which will take effect on August 28, 2005. 18. Defendant Gary Sherman is the Director of the Missouri DSS and is sued in his official capacity. His business address is Office of the Director, Broadway State Office Building, P.O.
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Box 1527, Jefferson City, Missouri 65102. In his role as Director of DSS, Defendant Sherman is directly responsible for managing DSS and for supervising the adoption assistance programs in the state of Missouri as described by federal and Missouri law.
CLASS ACTION ALLEGATIONS 19. This action is properly maintained as a class action pursuant to Fed. R. Civ. P. 23(a) and (b)(2). 20. The class is defined as: “All future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a court-ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.” A Means Test Subclass is defined as: “All class members for whom Senate Bill 539 would impose a means test on the income of their current or prospective adoptive parent(s) to terminate or deny ongoing adoption assistance subsidy payments for the benefit of those Class members.” An Existing Contracts Subclass is defined as: “All Class members that are beneficiaries of existing adoption assistance agreements between their adoptive parents and the Missouri Department of Social Services that were executed on or before August 27, 2005.” 21. The plaintiff class and subclasses are sufficiently numerous. As of June 2005, there were approximately 11,196 foster children in the Missouri foster care system. On average, these children have been in the custody of the Children’s Division for over 26 months and, at the end of June 2005, there were 2,002 foster children awaiting adoption. Furthermore, in the Fiscal Note analyzing the budgetary impact of Senate Bill 539, the Department of Social Services estimated that without the bill it would have an average monthly caseload of 12,474 former foster children receiving adoption assistance subsidies. Therefore, the class as a whole is
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comprised of at least 14,000 current and former foster children who are either adopted or awaiting adoption and joinder of all class members is impracticable. 22. Furthermore, the same can be said for each of the subclasses. In the Fiscal Note for Senate Bill 539, the Department of Social Services reported that the bill would impose a means test on the adoptive parents of 43% (5,364) of its former foster children now receiving adoption assistance and that just over half, or 2,685, would fail the test and lose the assistance payment. The Means Test Subclass, therefore, is sufficiently numerous such that joinder would be impracticable. Moreover, more than 12,000 Class members are currently beneficiaries of adoption assistance agreements between their adoptive parents and the Department of Social Services, making the Existing Contracts Subclass sufficiently numerous to satisfy Rule 23(a). 23. The questions of law and fact raised by the Named Plaintiffs are common to and typical of those raised by the putative class. Each Named Plaintiff and each putative class member is subject to Defendants’ laws, practices and policies concerning adoption assistance subsidy contracts, and is subject to Senate Bill 539 and Defendants’ unlawful pattern and practice of implementation. 24. Common questions of law include:
a. whether Senate Bill 539 violates Plaintiffs’ rights under the Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. §§ 620-629(i) and 670-679(b), and relevant federal regulations;
b. whether Senate Bill 539 denies members of the Means Test Subclass equal protection under law as prohibited by the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution; and
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c. whether Senate Bill 539 impairs the rights and obligations of the contracts that benefit the members of the Existing Contracts Subclass as prohibited by the Contracts Clause, Article I, Section 10 of the United States Constitution.
25. Common questions of fact include: a. whether Defendants are retroactively and prospectively rendering all adoption assistance subsidy contracts for the benefit of class members valid for no more than one year; b. whether Defendants are retroactively and prospectively rendering all adoption assistance subsidy contracts for the benefit of class members annually renewable at the discretion of the DSS Director; c. whether Defendants are deeming all existing subsidy contracts for the benefit of class members, regardless of their current duration, to have expired one year after the agreement was first entered into; d. whether Defendants have created two groups of otherwise similarly situated abused and neglected, special needs children, all of them current or former wards of the Missouri foster care system, and will apply a means test to deny or terminate the subsidy benefit for one of these groups of children (whom the state previously deemed ineligible under Title IV-E) but not the other (whom the state previously deemed eligible under Title IV-E); and, e. whether Defendants are nullifying the primary terms of pre-existing, long-term adoption assistance agreements between the Missouri Department of Social Services and parents that adopted former wards of Missouri’s foster care system.
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26. The legal violations shared by the Named Plaintiffs are typical of those shared by each member of the putative class and sub-classes. The harms suffered by the Named Plaintiffs are typical of the harms suffered by all children in the putative class. 27. Each Named Plaintiff appears by a next friend pursuant to Fed. R. Civ. P. 17(c) and each next friend is sufficiently familiar with the facts of the child’s situation to fairly and adequately represent the child’s best interests in this litigation. 28. The Named Plaintiffs will fairly and adequately protect the interests of the members of the putative class. The Named Plaintiffs and the putative class are represented by John Amman and Amy Sanders of the Saint Louis University Legal Clinic, St. Louis, Missouri; James P. Meuhlberger, Lori Burns-Bucklew and Nicholas P. Mizell of Shook Hardy & Bacon, Kansas City, Missouri; Marcia Robinson Lowry, Ira P. Lustbader and Sara M. Bartosz of Children’s Rights, Inc, New York, New York; Thomas Kennedy and Deborah Greider of the Kennedy Law Office, Alton, Illinois; and James Wilson and Stephen Reynolds of Berg, Borgmann, Wilson & Wolk, LLP, St. Louis, Missouri. The above counsel for Plaintiffs collectively have extensive experience in complex child welfare class actions and are willing and able to vigorously prosecute this action. Counsel for Plaintiffs know of no conflicts among members of the putative class or subclass. 29. Defendants have acted or refused to act in a manner generally applicable to the putative class, making class-wide declaratory and injunctive relief appropriate and necessary.
SYSTEMIC ALLEGATIONS CONCERNING THE MISSOURI ADOPTION ASSISTANCE SUBSIDY PROGRAM
Defendants’ Unilateral Modification or Termination of All Subsidy Contracts 30. Congress enacted the Adoption Assistance Act to “establish a program of Federal support to encourage adoptions of children with special needs.” 1980 U.S. Code Cong. And Admin
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News at 1448, 1460. Children with special needs are those for whom the State has “determined that the child cannot be returned to the home of his parents” and that “there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance under this section or medical assistance under title XIX” and “except where it would be against the child’s best interests . . . a reasonable, but unsuccessful effort has been made to place the child with appropriate adoptive parents without providing adoption assistance under this section or medical assistance under title XIX.” 42 U.S.C. § 673(c). 31. The June 28, 2005 Child Welfare Policy Manual of the U.S. Department of Health and Human Services, Administration for Children Youth and Families, includes a Policy Announcement stating that:
The legislative history [of the adoption Assistance Act] indicates that Congress was concerned primarily with moving children in State foster care systems into permanent adoptive homes when appropriate. The Title IV-E adoption assistance program, therefore, was developed to provide permanency for children with special needs in public foster care by assisting States in providing ongoing financial and medical assistance on their behalf to the families who adopt them. ACYF-CB-PA-01-01 (1/23/01). 32. The Missouri Child Welfare Manual, Section 4 Chapter 30, subsection 30.1 similarly states: “adoption or legal guardianship is a desired outcome for children who cannot be reunified with their families.” The Missouri Child Welfare Manual states that “[a]doption subsidy is a service that may be used to assist in providing permanency for children who, because of special needs, might not otherwise be adopted, and for whom a family is not readily available.” Additionally, the same provision in the manual states that “[s]ignificant to the use of the
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adoption/legal guardianship subsidy, is the realization that without this resource the family would not otherwise have the resources to provide permanency to a special needs child.” 33. The subsidized federal adoption assistance program provides federal matching funds to states once a state determines that a child in foster care is eligible for such assistance. The federal funding structure under Title IV-E provides federal reimbursement rates for states that establish “qualifying plans” to provide adoption assistance. 34. The State of Missouri has a qualifying Title IV-E State Plan and receives federal funding for adoption assistance. The Missouri Department of Social Services is the state agency responsible for submitting the Missouri State Plan to the Secretary of Health and Human Services for approval. The Missouri State Plan requires the state’s foster care and adoption assistance programs to comply with federal law. Missouri state law, § 453.074 1.(1) and (6) R.S.Mo. (2005) states that “the division of family services shall have the following duties in the administration of the subsidy program: . . . Comply with all federal laws relating to adoption subsidies in order to maintain the eligibility of the state of Missouri for federal funds.” 35. The Missouri State Plan also provides that all children who are, or have been, in the custody of the Division of Family Services after 1999, are considered to have “special needs” for the purposes of adoption assistance subsidies. Similarly, Section 4 Chapter 30.2 and 30.4(C) of the Missouri Child Welfare Manual states that all abused and neglected children currently or formerly in the custody of the Division’s foster care program are considered special needs and thus are eligible for an adoption assistance subsidy. 36. The federal Adoption Assistance Act prohibits states from unilaterally modifying or terminating adoption assistance subsidy contracts. 42 U.S.C. § 673(a)(3) provides, in part:
The amount of the payments [adoption subsidies] to be made in any case under clauses (i) and (ii) of paragraph (1)(B) shall be determined though agreement between
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the adoptive parents and the State or local agency administering the program under this section, which shall take into consideration the circumstances of the adopting parents and the needs of the child to be adopted, and may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.
37. The June 28, 2005 Child Welfare Policy Manual of the U.S. Department of Health and
Human Services, Administration for Children Youth and Families, includes the following Policy
Announcement:
States may limit the duration of payments under an adoption assistance agreement for individual eligible children to a period which may end prior to the child’s eighteenth birthday, if the decision is made on a case-by-case basis, taking into consideration the provisions of [672(a)(2)]. States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.
ACYF-CB-PA-01-01 (1/23/01) (emphasis added).
38. Missouri state law, 453.073.1 R.S.Mo. (2005), unchanged by Senate Bill 539, states:
“Determination of the amount of monetary need is to be made by the division at the time of the
placement, if practicable, and in reference to the needs of the child, including consideration of
the physical and mental condition, and age of the child in each case[.]”
39. Senate Bill 539, when it becomes effective on August 28, 2005, will amend the language
of Missouri state law, 453.073 R.S.Mo. (2005), and specifically 453.073.3(4), to state: “The time
period for which the subsidy is granted shall not exceed one year. The agreement can be
renewed for subsequent years at the discretion of the Director. All existing agreements will have
deemed to have expired one year after they were initially entered into.”
40. On its face, Senate Bill 539 unlawfully imposes a blanket policy that renders all current
and prospective adoption assistance subsidy contracts of one-year duration, renders all such
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contracts annually renewable at the discretion of the DSS Director and without the concurrence of the adoptive parents, and thus violates the Adoption Assistance Act. 41. Senate Bill 539, if allowed to take effect, threatens to irreparably harm thousands of future, current and former foster children by unlawfully deeming all subsidy agreements, current and prospective, to expire in one year. 42. Moreover, Senate Bill 539 threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the court-supervised consent decree entered in G.L. et al. v. Gary Stangler et al, No. 77-0242-CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. See July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al. The instability and uncertainty that Senate Bill 539 will introduce into the adoptive arena threatens to undermine these important gains for Missouri’s vulnerable children in Jackson County.
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Defendants’ Arbitrary Creation of Two Groups of Similarly Situated Children for Granting or Denying Adoption Assistance Subsidies
43. Senate Bill 539 also modifies Missouri state law 453.073(4) R.S.Mo. (2005), by adding a new subsection (6) which states: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” 44. Senate Bill 539 creates two groups of otherwise similarly situated abused and neglected special needs children, all of them current or former wards of the Missouri foster care system. For one group of children, at the time of the initial adoptive placement (which for most children occurred while the child was still in foster care), the child did not meet the Title IV-E eligibility requirements. For these children, the State will apply a means test to their current or prospective adoptive parents. If the child’s adoptive parents’ income is more than two hundred percent of the federal poverty level (currently $32,180 annually for a family of three), a subsidy will be denied, or, if the subsidy was ongoing, the subsidy will be terminated. 45. For another group of children, at the time of the initial adoptive placement, the child did meet the Title IV-E eligibility requirements. For these children, the State will not apply a means test to their current or prospective adoptive parents. 46. Federal law creates four distinct Title IV-E eligibility categories for adoptive children qualified to receive Title IV-E adoption assistance benefits by virtue of their special needs status. These four eligibility categories are as follows: (1) the special needs child was eligible for AFDC benefits (as defined in 1996) during the month in which court proceedings for adoption were initiated or was eligible for said benefits within 6 months prior to that time, or (2) the special needs child was eligible for Supplemental Security Income (“SSI”) programs under the Social Security Act before adoption, or (3) the special needs child’s parent was in foster care and
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receiving Title IV-E funds that covered both the parent and the child when the adoption was initiated, or (4) the special needs child previously received adoption assistance, and his or her adoptive parent died or the adoption was dissolved. The special needs child need only meet one of the above four eligibility prongs to claim a right to Title IV-E adoption assistance. 47. In a May 13, 2005 press release, Governor Blunt publicly stated that the changes made by Senate Bill 539 are “to ensure that taxpayer funded assistance is getting to the most needy.” However, the means test and the categorizing of children to whom it will be applied bear no rational relationship to the governmental purpose of using state funded subsidies for the “most needy.” Children who were previously deemed by the state to be eligible under Title IV-E are no more or less needy than the children who were previously deemed ineligible under Title IV-E. Similarly, the adoptive parents of children who were previously found IV-E eligible are not more or less in need of an adoption assistance subsidy than the adoptive parents of children who were previously found to be IV-E ineligible. This is because the requirements determining eligibility for Title IV-E at the time of the adoptive placement bear no relationship to the child’s individual need for a subsidy or the individual circumstances of the child’s current or prospective adoptive parent. 48. For example, if a IV-E eligible foster child was adopted five years ago and a subsidy has been provided for the child’s benefit, the means test of Senate Bill 539 would not apply, and the adoption assistance would continue regardless of whether the current income of the child’s adoptive parents is more than 200% of the FPL. However, if a IV-E ineligible child with severe and profound special needs was adopted five years ago and a subsidy has been provided for the child’s benefit, a means test will be now applied to the family’s income, and the adoption
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assistance would not continue if the current income of the child’s adoptive parents is more than 200% of the FPL. 49. The only way to equally apply a means test would be to means test every current or prospective adoptive parent. However, the federal Adoption Assistance Act prohibits means testing. The HHS Child Welfare Policy Manual provides in Section 8.2A.2, “the use of a means test is prohibited in the process of selecting a suitable adoptive family ….” Child Welfare Policy Manual, Section 8.2A.2. 50. The means test in Senate Bill 539 is arbitrary and bears no rational relationship to the state’s interest in limiting state tax dollars to the most needy children. Senate Bill 539, if allowed to take effect, threatens to irreparably harm children in the means test subclass. Defendants’ Unilateral Termination of Medicaid Health Benefits to Beneficiaries of State-
Funded Adoption Subsidies 51. Prior to and until the effective date of Senate Bill No. 539, the State of Missouri has furnished and will continue to furnish state-funded adoption assistance benefits to special needs children pursuant to the provisions of Missouri Revised Statutes, Chapter 453, Section 453.073, Subparts 1 through 3(1)-(6). Section 453.073, Subparts 1 through 3(1)-(6) make no provision for family income means testing in determining either the eligibility of a particular child for adoption assistance or the amount of that assistance. 52. Pursuant to the provisions of the Adoption and Safe Families Act of 1997 (“ASFA”), all children receiving either Title IV-E funded or non-Title IV-E, state-funded adoption assistance benefits must also be made eligible for and receive Medicaid health care coverage under the State’s Medicaid Plan, as duly approved by the Department of Health and Human Services. 42 U.S.C. 675 et. seq. Prior to and until the effective date of Senate Bill No. 539, all children receiving either Title IV-E or state-funded adoption assistance benefits in Missouri were and will
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continue to be provided with Medicaid health care coverage, regardless of the gross income of their respective adoptive families. 53. Senate Bill No. 539 amends Missouri Revised Statutes, Chapter 453, Section 453.073 to include a Subpart 4 that provides: “[t]he subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” Subpart 4 thereby subjects state-funded adoption assistance benefits to blanket means testing. 54. As a direct result of Senate Bill No. 539, and specifically the inclusion of the Subpart 4 means test provision, many special needs children who under preexisting Missouri law were eligible for and received Medicaid health care coverage by virtue of their status as recipients of state-funded adoption assistance benefits no longer will receive adoption assistance or Medicaid health care coverage. These effected children will fall into two categories: (a) non-IV-E special needs children placed into adoptive homes where the earner(s) have a gross income exceeding 300% of the FPL (the income threshold for Medicaid coverage under Missouri’s 1115 SCHIP Demonstration Waiver) and (b) non-IV-E special needs children placed into adoptive homes where the earner(s) have a gross income above 200% and below 300% of the FPL and possess the resources to secure “affordable health care coverage” – defined, by Senate Bill No. 539, Section 208.640(2), as private health care coverage with a premium amount equaling 133% or less than the average premium required in the state’s consolidated health care plan. See Title XXI of the Social Security Act, 42 U.S.C. 1397 et. seq. Senate Bill No. 539 contains no grandfather clause preserving state-funded adoption assistance and Medicaid rights bestowed prior to the effective date of the new law, and the above categories of children will include both those special needs children who already have qualified for and received adoption assistance under prior law
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in Missouri and those special needs children whose prospective adoptive placements will be within families with gross incomes exceeding 200% of the FPL, under the new means test. 55. As applied to the Means Test Subclass, Senate Bill No. 539 violates the clear intent and requirement of the Adoption Assistance Act to assure government-funded health insurance coverage for all special needs adopted children to meet their unique physical and emotional needs. The means test introduced by Senate Bill No. 539 will deprive numerous special needs children in Missouri of health care coverage previously guaranteed under the Adoption Assistance Act, and further violates the Equal Protection rights of these children. Any means test that will deny Medicaid or other health insurance coverage to the Means Test Subclass bears no rational relationship to providing state-funded subsidies to the most needy children. 56. The denial of Medicaid or other health benefits to the Means Test Subclass threatens to irreparably harm these children by denying them critical health care coverage. Defendants’ Unilateral Impairment of Existing Adoption Assistance Agreements Entered
into by the State of Missouri for the Benefit of its Special Needs Children 57. Senate Bill 539, on its face, will substantially impair existing adoption assistance agreements in Missouri. The Adoption Assistance Act requires that a binding agreement be executed between the state and the adoption assistance recipient. Likewise, RSMO 453.073 provides: “a written agreement shall be entered into by the division and the parents. The agreement shall set forth the following terms and conditions: (1) The type of allotment ;(2) The amount of assistance payments;(3) The services to be provided; (4) The time period for which the subsidy is granted.” 58. The state-authored, standard form Adoption Assistance Agreement customarily and routinely entered into between the state of Missouri and adoptive parents, as parties and signators, provides for the continuation of benefits until (1) the 18th birthday of the adopted child,
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or (2) termination of the parents’ rights to the child, or (3) the parent is no longer financially responsible for the child, or (4) the child is no longer in the legal custody of the parents, or (5) the child has moved out of the home or (6) the child or both adoptive parents have died. In contravention of this essential contractual understanding, Senate Bill 539 explicitly provides that “all existing agreements will have deemed to have expired one year after they were entered into ….” Section 453.073.1(4). 59. Senate Bill 539 further provides that “[t]he agreement can be renewed for subsequent years at the discretion of the director.” Section 453.073.1(4). Also, children in the Means Test subclass will have their contractual benefits denied or terminated. The new law thereby interferes with and frustrates the clear and reasonable expectation of adoptive parents when they act to adopt a special needs foster child and enter into an adoption assistance agreement that government-paid subsidies will continue until the adoptive child attains the age of majority. This continuous benefits stream forms the very essence of the adoption assistance agreement from the perspective of both contracting parties – the parents, who accept legal responsibility for a special needs child, and the state, which secures permanency for the foster child in a stable family setting and frees itself of legal custody. 60. The impairment of existing contractual rights to be caused by Senate Bill 539 serves no legitimate governmental purpose, and certainly not the best interests of the state’s most needy – its vulnerable, special needs children adopted out of foster care. Instead, the new law completely interferes with and undermines the essential contractual promises and valuable consideration exchanged by the state in order to secure adoptive parents for special needs children. This retroactive nullification of the state’s covenants and commitments violates the Contacts Clause
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of the United States Constitution, as it constitutes a substantial impairment of pre-existing contractual rights.
CAUSES OF ACTION PURSUANT TO 42 U.S.C. § 1983 FIRST CAUSE OF ACTION: ADOPTION ASSISTANCE ACT
(Asserted on behalf of All Class Members) 61. Each and every allegation of the Complaint is incorporated as if fully set forth herein. 62. Senate Bill 539 on its face violates the Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. 620-627, 670-679a (collectively the “Adoption Assistance Act”), and by virtue of their foregoing actions and inactions, Defendants are engaging in a policy, pattern, and practice of depriving Plaintiffs of rights individually conferred upon them by the Adoption Assistance Act and the regulations promulgated thereunder (45 C.F.R. Parts 1355-1357). These rights include, but are not limited to: the right to have adoption assistance subsidy payments for their benefit individually determined by mutual agreement with the State or local agency administering the subsidy program that takes into consideration on a case by case basis the needs of the child and the circumstances of the adopting parents; the right not to have adoption assistance subsidy payments readjusted, modified or terminated without the concurrence of the adoptive parents and based on the individualized needs of the child; the right not to be subject to a blanket policy that automatically limits the duration of adoption subsidy agreements; the right to health insurance coverage for any child who has been determined to have special needs for whom there is in effect an adoption assistance agreement funded solely by State funds; the right to be accurately determined for eligibility for adoption assistance; and the right to the State’s compliance with the terms of the Title IV-E State Plan concerning adoption assistance. See 42 U.S.C. § 671(a)(3);
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671(a)(12); 671(a)(21); 673(a)(1); 673(a)(2); 673(a)(3); 673(c); 675(3); and 45 C.F.R. Parts 1355-1357. SECOND CAUSE OF ACTION: EQUAL PROTECTION UNDER THE FOURTEENTH
AMENDMENT TO THE UNITED STATES CONSTITUTION (Asserted on behalf of the Means Test Subclass)
63. Each and every allegation of the Complaint is incorporated as if fully set forth herein. 64. The foregoing actions and inactions of the Defendants are inconsistent with the exercise of reasonable professional judgment and also amount to a pattern, practice and custom of deliberate indifference to the constitutional rights of children in the Means Test Subclass. 65. Missouri Senate Bill 539 and Defendants’ foregoing actions and omissions intentionally and arbitrarily create two groups of otherwise similarly situated abused and neglected, special needs children, all of them current or former wards of the Missouri foster care system, and will deny or terminate adoption assistance subsidy benefits, Medicaid and other services to the Means Test Subclass but not other similarly situated children, through the use of a means test on the income of their current or prospective adoptive parents. Defendants’ implementation of the means test and denial or termination of adoption assistance subsidies, Medicaid and other services for the benefit of the Means Test Subclass bears no rational relation to a legitimate state interest and violates their Equal Protection rights.
THIRD CAUSE OF ACTION: CONTRACTS CLAUSE OF THE UNITED STATES CONSTITUTION
(Asserted on behalf of the Existing Contracts Subclass) 66. Each and every allegation of the Complaint is incorporated as if fully set forth herein. 67. As a result of Defendants’ foregoing actions and inactions, the essential rights and obligations in the long-term, pre-existing contracts of which members of the Existing Contracts Subclass are intended third-party beneficiaries will be substantially impaired without serving a
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legitimate governmental purpose. This substantial impairment of contractual rights through the

retroactive application of a newly enacted statute violates the Contract Clause, Article I., Section

10 of the United States Constitution.

PRAYER FOR RELIEF

68. WHEREFORE, the Plaintiff children respectfully request that this Court:

a.

Assert jurisdiction over this action;

b.

Order that all Plaintiffs may maintain this action as a class action pursuant

to Rule 23(b)(2) of the Federal Rules of Civil Procedure;

c.

Declare pursuant to Rule 57 of the Federal Rules of Civil Procedure: (1)

that the portion of Senate Bill 539 replacing Missouri state law Section 453.073

conflicts with, violates and is preempted by the federal Adoption Assistance and

Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of

1997, and regulations promulgated thereunder; (2) that the portion of Senate Bill 539

replacing Missouri state law Section 453.073 is unconstitutional on its face under the

Equal Protection Clause of the Fourteenth Amendment to the United States

Constitution; (3) that the portion of Senate Bill 539 replacing Missouri state law

Section 453.073 violates Plaintiffs’ rights under the Contracts Clause, Article I,

Section 10 of the United States Constitution;

d.

Permanently enjoin defendants from enacting or implementing the portion

of Senate Bill 539 replacing Missouri state law Section 453.073 and otherwise

prevent these provisions from taking effect;

e.

Order appropriate remedies to ensure Defendants’ future compliance with

federal law concerning adoption assistance subsidies;

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f.

Award Plaintiffs their reasonable attorneys fees and costs pursuant to 42

U.S.C. § 1988 and 1920 and Federal Rule of Civil Procedure 23(e) and (h); and

g.

Grant such other and further equitable relief as the Court deems just,

necessary and proper to protect Plaintiffs from further harm by Defendants.

DATED: September 14, 2005

Respectfully Submitted,

SHOOK, HARDY & BACON L.L.P.

By /s/ Loretta Burns-Bucklew James P. Muehlberger, #51346 Loretta Burns-Bucklew, #32053 Nicholas P. Mizell, #51716 Pamela Macer, #55033 Kathleen A. Jeanetta, #48384
2555 Grand Blvd. Kansas City, Missouri 64108-2613 Phone: (816) 474.6550 FAX: (816) 421-5547

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CHILDREN’S RIGHTS, INC.
Marcia Robinson Lowry, Esq. Ira P. Lustbader, Esq. Sara Bartosz, Esq. 404 Park Avenue South, 11th Floor New York, New York 10016 Tel: (212) 683-2210 Fax: (212) 683-4015
SAINT LOUIS UNIVERSITY LEGAL CLINIC
John J. Ammann, Director Amy Sanders, Asst. Prof. 321 North Spring St. Louis, Missouri 63108 Tel: (314) 977-2778 Fax: (314) 977-3334
LAW OFFICES OF THOMAS E. KENNEDY, III, L.C.
Thomas E. Kennedy, III, Esq. Deborah Greider, Esq. 2745 E. Broadway, Ste. 101 Alton, Illinois 62002 Tel: (618) 474-5326 Fax: (618) 474-5331
BERG BORGMANN WILSON & WOLK, L.L.P.
James Wilson, Esq. Stephen Reynolds, Esq. Windsor Building, Suite 850 7711 Bonhomme Avenue St. Louis, Missouri 63105 Tel: (314) 725-5955 Fax: (314) 725-0559
ATTORNEYS FOR PLAINTIFFS
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that this 14th day of September, 2005, a true and correct copy of the foregoing was served by using the CM/ECF system; by first class mail, postage prepaid, and addressed to; by fax transmission to; by overnight delivery to; or by personally delivering to or leaving with a person in charge of the office as indicated below:

Attorney General’s Office Attn Gary Gardner Supreme Court Bldg. PO Box 899 Jefferson City MO 65101

[x] CM/ECF [ ] U.S. Mail [ ] FAX [ ] Overnight Delivery [ ] Hand Delivery [ ] electronic Mail

/s/ Loretta Burns-Bucklew_____

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 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI CENTRAL DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G., each a minor by Next Friend, Jill Katz; et al.,
Plaintiffs,
vs.
Matt Blunt, in his official capacity as Governor of the State of Missouri; et al.,
Defendants.

) ) ) ) ) ) Case No. 05-0726-CV-C-SOW ) ) ) ) )

ORDER GRANTING PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION Before the Court are plaintiffs’ Motion for Class Certification (Doc. #3), defendants’
Suggestions in Opposition, and plaintiffs’ Reply. Having considered the pleadings and the evidence offered by the parties, the Court finds that plaintiffs’ proposed Class and Subclasses meet the requisite elements of subparts (a) and (b)(2) of Rule 23 of the Federal Rules of Civil Procedure.
In particular, the Court finds that the Class and its Subclasses are so numerous that joinder of all members is impracticable, that there are significant questions of law and fact common to the Class and its Subclasses, that the unnamed members of the Class and its Subclasses have the same or similar claims as the named plaintiffs, that the named plaintiffs will fairly and adequately protect the interests of the members of the putative class, and that plaintiffs’ counsel have the experience and means to vigorously prosecute this action on behalf of the class. Therefore, the Class and its Subclasses meet the requirements of Rule 23(a).
The Court further finds that defendants have acted on grounds generally applicable to the plaintiff Class and its Subclasses and that plaintiffs seek injunctive or declaratory relief. Accordingly, certification under Rule 23(b)(2) is appropriate in this matter.
For these reasons, it is hereby

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ORDERED that plaintiffs’ Motion for Class Certification (Doc. #3) is granted. It is further
ORDERED that 1. The certified Class is defined as follows:
“All future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a courtordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.” 2. Two Subclasses are certified and defined as follows: The Means Test Subclass: “All Class members for whom Senate Bill 539 would impose a means test on the income of their current or prospective adoptive parent(s) to terminate or deny ongoing adoption assistance subsidy payments for the benefit of those Class members.” The Existing Contracts Subclass: “All Class members who are beneficiaries of existing adoption assistance agreements between their adoptive parents and the Missouri Department of Social Services that were executed on or before August 27, 2005.” 3. The class claims are as follows: a. Violation of Adoption Assistance Act (asserted on behalf of the entire Class): Missouri Senate Bill 539 on its face violates the Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. 620627, 670-679a (collectively the “Adoption Assistance Act”), and by virtue of their actions and inactions, Defendants are engaging in a policy, pattern, and practice of depriving Plaintiffs of rights
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individually conferred upon them by the Adoption Assistance Act and the regulations promulgated thereunder (45 C.F.R. Parts 13551357). b. Equal Protection (asserted on behalf of the Means Test Subclass): Missouri Senate Bill 539 and Defendants’ actions and omissions intentionally and arbitrarily create two groups of otherwise similarly situated abused and neglected, special needs children, all of them current or former wards of the Missouri foster care system, and will deny or terminate adoption assistance subsidy benefits, Medicaid and other services to the Means Test Subclass but not other similarly situated children, through the use of a means test on the income of their current or prospective adoptive parents. Defendants’ implementation of the means test and denial or termination of adoption assistance subsidies, Medicaid and other services for the benefit of the Means Test Subclass bears no rational relation to a legitimate state interest and violates their Equal Protection rights. c. Impairment of Contract (asserted on behalf of the Existing Contracts Subclass): Missouri Senate Bill 539 and Defendants’ actions and inactions substantially impair the essential rights and obligations in the long-term, pre-existing contracts of which members of the Existing Contracts Subclass are intended thirdparty beneficiaries without serving a legitimate governmental purpose. This substantial impairment of contractual rights through the retroactive application of a newly enacted statute violates the Contract Clause, Article I., Section 10 of the United States Constitution.
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4. The Class Representatives shall be the Named Plaintiffs, i.e., E.C., J.L., J.C., T.G., B.G., and A.G., each a minor by Next Friend, Jill Katz; W.S., M.S., and D.S., each a minor by Next Friend, Robert Strange; M.P., a minor by Next Friend, Michael Patterson; A.C., a minor by Next Friend, Lana Capps; J.A., a minor by Next Friend, John Antonich; T.J. and A.J., each a minor by Next Friend, Lavada Johnson; and N.S., a minor by Next Friend, Tammy Smith.
5. The following are appointed as Class Counsel pursuant to Federal Rule of Civil Procedure 23(g): John Amman and Amy Sanders of the Saint Louis University Legal Clinic, St. Louis, Missouri; James P. Muehlberger, Loretta Burns-Bucklew, Nicholas P. Mizell, Pamela Macer, and Kathleen A. Jeanetta of Shook, Hardy & Bacon, Kansas City, Missouri; Marcia Robinson Lowry, Ira P. Lustbader and Sara M. Bartosz of Children’s Rights, Inc, New York, New York; Thomas Kennedy and Deborah Greider of the Kennedy Law Office, Alton, Illinois; and James Wilson and Stephen Reynolds of Berg, Borgmann, Wilson & Wolk, LLP, St. Louis, Missouri.

Dated: 9-29-05

/s/Scott O. Wright SCOTT O. WRIGHT Senior United States District Judge

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 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION

E.C., J.L.,J.C.,T.G.,B.G., and A.G. by

)

Next Friend, Jill Katz, et al.,

)

)

Plaintiffs,

)

)

v.

)

)

MATT BLUNT, in his official capacity )

as Governor of the State of Missouri, et al., )

)

Defendants.

)

No. 05-0726-CV-W-SOW

ORDER

Before the Court are defendants’ Motion to Stay or Suspend the Preliminary Injunction

Pending Appeal (Doc. #45) and plaintiffs’ Suggestions in Opposition. Defendants did not file a

Reply brief.

Defendants ask the Court to stay or suspend the preliminary injunction pending appeal

and order that no bond be required. Plaintiffs oppose defendants’ motion.

Federal Rule of Civil Procedure 62( c) allows this Court “in its discretion [to] suspend,

modify, restore, or grant an injunction during the pendency of the appeal upon such terms as to

bond or otherwise as it considers proper for the security of the rights of the adverse party.” In

seeking a stay of an injunction pending appeal, the applicant has the burden of establishing (1) a

strong showing that it is likely to succeed on the merits of the appeal; (2) a showing that, unless a

stay is granted, it will suffer irreparable injury; (3) a showing that no substantial harm will come

to other interested parties; and (4) a showing that a stay will do no harm to the public interest.

Reserve Mining Co. v. United States, 498 F.2d 1073, 1076-77 (8th Cir. 1974). Defendants have

failed to make such a showing in this case.

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Defendants have not shown that they are likely to succeed on the merits of their appeal or that they will suffer irreparable injury in the absence of a stay. Furthermore, this Court has already found that substantial harm will come to the plaintiffs if Senate Bill 539 goes into effect.
Accordingly, it is hereby ORDERED that defendants’ Motion to Stay or Suspend the Preliminary Injunction Pending Appeal (Doc. #45) is denied.

Dated: 11-9-05

/s/Scott O. Wright SCOTT O. WRIGHT Senior United States District Judge

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 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION

E.C., et al., Plaintiffs, v.
Matt Blunt, et al., Defendants.

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No. 05-0726-CV-W-SOW

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PROPOSED FINDINGS OF FACT, CONCLUSIONS OF LAW, ORDER , AND JUDGMENT DENYING PERMANENT INJUNCTION

BACKGROUND

Earlier Proceedings

Plaintiffs brought this action for declaratory and preliminary and permanent injunctive

relief under 42 U.S.C. § 1983 to declare unlawful and to enjoin implementation of the provisions

of Senate Bill 539 that amend Mo.Rev.Stat. § 453.073. Plaintiffs claim that the amended statute

violates Title IV–E of the Social Security Act, the Adoption Assistance and Child Welfare Act of

1980, 42 U.S.C. §§ 620–629(i), as amended by the Adoption and Safe Families Act of 1997, 42

U.S.C. §§ 670–679(b), and the Equal Protection Clause of the Fourteenth Amendment. Plaintiffs

also claim that the amended statute impairs the obligation of their adoption assistance contracts.

On August 18, 2005, this court entered a temporary restraining order, enjoining

implementation of those provisions of Senate Bill 539 and any implementing regulation,

continuing pre–existing adoption assistance agreements in full force and effect, and ordering

defendants to offer new adoption assistance agreements consistent with their practices prior to

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the enactment of the bill. On September 8, 2005, this court entered a preliminary injunction identical to its temporary restraining order.
On September 29, 2005, this court certified this action as a class action, defining the class as all future, current and former foster children in the Missouri foster care system, for whom adoption was, is, or will be a court ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.
On October 7, 2005, defendants appealed both the preliminary injunction and the class certification. Briefing is completed; oral argument is set for May 15, 2006.
On January 9, 2006, this court granted defendant Blunt’s motion for judgment on the pleadings and dismissed him from the case. The Federal–State Adoption Assistance Program
The Adoption Assistance Program, 42 U.S.C. § 673, is a cooperatively run federal–state program through which the federal government provides participating states with funding to advance the adoption of special needs children. See 42 U.S.C. §§ 670, 671(a)(1), 674; Glanowski v. New York Dep’t of Family Assistance, 225 F.Supp.2d 292, 296 (W.D. N.Y. 2002); C.B. v. Pennsylvania Dep’t of Public Welfare, 5786 A.2d 176, 181 (Pa. 2001). Special needs children are those children the state has determined 1) cannot or should not be returned to the parental home and 2) because of ethnic background, age, or membership in a minority or sibling group or because of medical condition or physical, mental, or emotional handicap cannot be adopted
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without providing adoption assistance payments or medical assistance. See 42 U.S.C. § 673(c)(1), (c)(2)(A).1
Special needs children are eligible for federal–state adoption assistance payments if they were first in state foster care. See Glanowski, 225 F.Supp.2d at 301–302; C.B., 786 A.2d at 183. In addition, special needs children are eligible if at the time they were removed from the parental home or home of a specified relative and at the time adoption proceedings were initiated, they were Aid to Families with Dependent Children (AFDC) eligible. See 42 U.S.C. § 673(a)(2)(A)(i); § 672(a). Finally, special needs children are eligible if at the time of their removal from their home, a judicial determination was made that continuation in the home would be contrary to the welfare of the child and the state made reasonable efforts to prevent or eliminate the need for removing the child from the home. See 42 U.S.C. § 672(a)(1); § 671(a)(15)(B)(i); Harvey v. Shalala, 19 F.3d 1252, 1252–53 (8th Cir. 1994).2
States participating in the Adoption Assistance Program must enter into adoption assistance agreements with the adoptive parents of children with special needs. See 42 U.S.C. § 673(a)(1)(A). Adoption assistance agreements are written agreements, binding upon the state and the adoptive parents, that specify the “nature and amount of any payments, services, and assistance” to be provided. 42 U.S.C. § 675(3). Under such agreements, the states must make
1There is an additional requirement that reasonable efforts have been extended to place the child with adoptive parents without providing adoption assistance payments or medical assistance. See 42 U.S.C. § 673(c)(2)(B).
2Other special needs children are eligible for adoption assistance payments if they are eligible for Supplemental Security Income (SSI) benefits, are children of minor parents who are special needs children, or received adoption assistance payments previously. See 42 U.S.C. § 673(a)(2)(A)(ii), (iii); § 673(a)(2)(C).
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nonrecurring adoption expense payments (not at issue in this case) and adoption assistance payments to adoptive parents. 42 U.S.C. § 673(a)(1)(B).
The amount of adoption assistance payments must be determined through agreement between the adoptive parents and the state, and can be adjusted periodically with the concurrence of the adoptive parents depending upon changed circumstances, but that amount is capped at the maximum of the foster care maintenance payment that the adopted child would have received if she remained in foster care. See 42 U.S.C. § 673(a)(3).3 The duration of adoption assistance payments is capped at the child’s eighteenth birthday. See 42 U.S.C. § 673(a)(4).
In addition to receiving adoption assistance payments, special needs children are statutorily eligible for medical assistance. See 42 U.S.C. § 673(b)(1), § 1396a(10)(A)(i)(I) (they are treated as children who receive AFDC payments, who are eligible for medical assistance). And special needs children for whom an adoption assistance agreement is in effect that is not a federal–state agreement are also statutorily eligible for medical assistance. See 42 U.S.C. § 671(a)(21). The Missouri Adoption Assistance Program
Missouri participates in the federal–state Adoption Assistance Program. See Mo.Rev.Stat. § 453.065–453.075; 13 CSR 40–38.010, 40–38.020. Missouri participates through the Children’s Division of the Department of Social Services. See Mo.Rev.Stat. § 453.074.1(6). Like federal law, Missouri extends adoption assistance payments to special needs children who have been in state foster care. See Mo.Rev.Stat. §§ 453.073.2.
3Foster care maintenance payments cover the cost of providing children’s food, clothing, shelter, daily supervision, school supplies, and other personal incidentals. See 42 U.S.C. § 672(a), 675(4)(A).
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But unlike federal law, Missouri extends adoption assistance payments to special needs children who have been in state foster care, but who do not meet the additional federal eligibility requirements. State law does not require that removal must be from the parental home or home of a specified relative, AFDC eligibility at the time of removal and at the time of the adoption proceeding must exist, or contrary to welfare and reasonable efforts judicial determinations be made. And also unlike federal law, Missouri pays for “special services” for special needs children who are in need of “medical, dental, educational, mental health or other related services and treatment, including treatment for physical handicap, intellectual impairment, developmental disability, mental or emotional disturbance, [or] social maladjustment.” Mo.Rev.Stat. § 453.065(5). Missouri extends these assistance payments and payments for special services solely with state funds.
FINDINGS OF FACT Children’s Division Policy
1. Children’s Division policy is to review annually and to renew adoption subsidy agreements before the end of the state fiscal year (June 30). See Child Welfare Manual, § 4, Ch. 30.4.G.
2. Children’s Division policy is also to automatically renew adoption assistance agreements unless changes are agreed to as a result of the annual review or are requested by the adoptive parents. See Child Welfare Manual, § 4, Ch. 30.4.G. Senate Bill 539, Implementing Regulation, and Implementing Policy Memorandum
3. The Missouri General Assembly passed and the governor signed Senate Bill 539 that amended, effective August 28, 2005, Missouri’s adoption assistance program.
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4. Senate Bill 539 added a new subsection 4 to Mo.Rev.Stat. § 453.073 that states: “The subsidy shall be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV–E adoption assistance.”
5. The Fiscal Note to Senate Bill 539 states: “The federal government does not allow means testing on children that are eligible for reimbursement of federal funds (IV–E). Therefore the CD [Children’s Division] assumes that the means test will only be applied to children who receive state only maintenance payments.”
6. Senate Bill 539 also amended subsection 3(4) of Mo.Rev.Stat. § 453.073 to state: “The time period for which the subsidy is granted shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.”
7. To implement these provisions of Senate Bill 539, the Children’s Division promulgated an Emergency Regulation, 13 CSR 35–38.020, effective August 28, 2005.
8. The regulation distinguishes between a “Title IV–E adoption subsidy” (defined as a subsidy that qualifies for federal funding under 42 U.S.C. § 670 et seq. and implementing regulations), a “state only adoption subsidy” (defined as a subsidy paid on behalf of a qualified child under Missouri law), and “services or special services” (defined as allotments for medical, dental, educational, mental health or other related health services and treatment that may be paid directly to service providers). See 13 CSR 35–38.020 (2)(C), (D), (E).
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9. Adoption subsidy agreements may consist of a maintenance payment (defined as a monthly cash payment provided by either a Title IV–E adoption subsidy or a state only adoption subsidy), a provision for services, or both. See 13 CSR 35–38.020(2)(B), (7).
10. The regulation notes that the Missouri General Assembly appropriated sufficient funds to permit application of the means test at 250% of the federal poverty level.
11. On May 27, 2005, the Director of the Children’s Division issued a memorandum to Children’s Division personnel to introduce them to the policy changes in Missouri’s adoption assistance program brought about by Senate Bill 539.
12. The memorandum states that the means test established by Senate Bill 539 applies only to the subsidy or maintenance portion of state funded adoption subsidies. To apply the means test to existing contracts, current agreements for state funded adoption subsidies are extended until August 31, 2005. The means test will be applied each year to determine eligibility for state funded subsidies.
13. The memorandum states that Title IV–E adoption subsidy agreements are extended until June 30, 2006.
14. Any agreements negotiated for Title IV–E subsidies or state funded subsidies and services after September 1, 2005, are to be dated for a maximum of one year. Implementation Process
15. Before May 25, 2005, the Children’s Division identified 3,797 adopted children receiving state funded adoption subsidies.
16. By May 25, 2005, the Children’s Division had identified approximately 1,100 of those children as Title IV–E eligible; review of those children’s Title IV–E eligibility continues.
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17. On May 25, 2005, the Children’s Division sent to the 6,350 parents with IV–E eligible adopted children who were receiving Title IV–E adoption subsidies, a letter notifying them that they would not be required to be means tested to renew their agreements for the next year and that their agreements were being extended through June 30, 2006.
18. On May 25, 2005, the Children’s Division also notified the 2,498 parents whose adopted children are not IV–E eligible and who were receiving state funded adoption subsidies that they must be means tested and that their agreements were being extended through August 31, 2005.
19. On June 6, 2005, the Children’s Division sent to those parents receiving state funded adoption subsidies, a letter notifying them that they must be means tested to receive a subsidy or maintenance payment, but that Medicaid and special services are not affected by the means test.
20. The letter included an Application for State Only Adoption Subsidy and/or Services that asked the families to choose by August 31, 2005, one of three options: 1) consideration for a subsidy by submitting their most recent federal tax return, 2) refusal of consideration for a subsidy, but consideration for Medicaid and special services, or 3) refusal of consideration for any subsidy or services.
21. The Children’s Division sent a second such letter and application again on August 1, 2005.
22. After applying the means test, the Children’s Division sent letters notifying parents whether they were eligible or ineligible for the state funded adoption subsidy, in which event Medicaid and special services would continue, whether they chose to receive Medicaid and
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special services only, or whether they chose to opt out of the state adoption assistance program entirely. Duration of Assistance Agreements and Maintenance Payments
23. Adoption assistance agreements, whether for Title IV–E eligible or ineligible children, do not extend to a date certain.
24. To ensure that the adoptive family is receiving the services necessary to preserve the adoptive placement, adoption assistance agreements are reviewed annually before the end of the state’s fiscal year (June 30) and renewed automatically unless changes are agreed upon or requested by the adoptive parents.
25. Adoption assistance maintenance payments, whether for Title IV–E eligible or ineligible children, do no always extend to the child’s eighteenth birthday. Termination of Assistance Agreements
25. Adoption assistance agreements provide that either party at any time upon 30 days written notice terminate the agreement without showing good cause.
26. Adoption assistance agreements provide that the Children’s Division does not intend to terminate them unless legal, fiscal, or other circumstances necessitate adjustment in adoption expenditures or procedures.
27. Missouri did not terminate the adoption assistance agreements of Title IV–E eligible children. Special Needs Children
28. Adoption assistance maintenance payments are paid monthly to adoptive parents on behalf of special needs children.
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29. In Missouri, a special needs child is any child who has been in foster care in the custody of the state regardless of whether he or she has a handicapping mental, physical, or emotional condition, belongs to a racial or ethnic minority, has a guarded prognosis, or is a member of a sibling group. Purpose of Means Test
30. The means test has a two–fold purpose: to save Missouri money and to direct Missouri’s limited financial resources to the most needy families.
CONCLUSIONS OF LAW Permanent injunctive relief is warranted when plaintiffs can demonstrate 1) actual success on the merits, 2) a threat of irreparable harm, 3) the balance between that harm and the harm that an injunction would cause to the other parties tips in their favor, and 4) and the public interest. See Randolph v. Rodgers, 170 F.3d 850, 857 (8th Cir. 1999) Plaintiffs Cannot Succeed on the Merits Child Welfare Act Claim
New Subsection 4: The Means Test The provision of Senate Bill 539 that adds a new subsection 4 to Mo.Rev.Stat. § 453.073 on it face does not apply a means test to determine eligibility for federal–state funded adoption assistance payments. “The subsidy shall be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV–E adoption assistance.” Rather, on its face, the new subsection 4 applies the means test to determine eligibility for state funded adoption assistance payments. “The subsidy shall be granted to children who reside
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in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV–E adoption assistance.”
Though a federal regulation prohibits the application of a means test to determine eligibility for adoption assistance payments, see 45 C.F.R. § 1356.40(c), the Adoption Assistance Act is silent and does not apply to state funded adoption assistance programs except to require that the state extend medical assistance to children receiving state funded subsidies. See 42 U.S.C. § 671(a)(21).
As applied, the fiscal note to the senate bill, the implementing regulation, the implementing policy memorandum, and the implementing letters all state that the means test will not apply to federal–state funded adoption assistance payments, but will apply to state funded adoption assistance payments.
Amended Subsection 3(4): One–Year Length and Renewable at Director’s Discretion The provision of Senate Bill 539 that amends subsection 3(4) of Mo.Rev.Stat. § 453.073 reads as follows: “The time period for which the subsidy is granted shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” Amended subsection 3(4) does not on its face violate the Adoption Assistance Act because though a federal statute caps the duration of adoption assistance payments at the child’s eighteenth birthday, see 42 U.S.C. § 673(a)(4), neither the Adoption Assistance Act nor any regulation implementing the Act otherwise specifies the duration of adoption assistance payments.
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Neither does amended subsection 3(4) as applied violate the Adoption Assistance Act. With respect to federal–state funded adoption subsidies, the Children’s Division intends to implement amended subsection 3(4) in accordance with 42 U.S.C. § 673(a)(3), which requires parental concurrence to any adjustments in the amount of the subsidy, and in accordance with its policy of reviewing annually and renewing automatically adoption subsidy agreements before the end of the state fiscal year (unless changes are agreed to or requested by adoptive parents).
As applied to state funded adoption assistance agreements, the Director intends to exercise his discretion by application of the means test on an annual basis. The Adoption Assistance Act is silent and does not apply to state funded adoption assistance programs except to require that the state extend medical assistance to children receiving state funded subsidies. See 42 U.S.C. § 671(a)(21).
Medical Assistance Senate Bill 539 on its face does not affect medical assistance for special needs adopted children. And as applied, the implementing letters state that medical assistance is not affected. Equal Protection Claim4 Review of the classification made by the Missouri legislature is “deferential.” Bowen v. Gilliard, 483 U.S. 587, 598 (1987). This “strong presumption of constitutionality to legislation conferring monetary benefits” exists because the legislature has “discretion in deciding how to expend necessarily limited resources.” Schweiker v. Wilson, 450 U.S. 221, 238 (1981) (internal
4Equal protection “is essentially a direction that all persons similarly situated should be treated alike.” See City of Cleburne, Texas v. Cleburne Living Center, 473 U.S. 432, 439 (1985). Children who are not eligible for federal–state funded adoption subsidies are not similarly situated to those who are; federally ineligible children may not receive any maintenance payment, and any maintenance payment they do receive cannot be financed with federal funds.
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quotation marks and citations omitted). Legislation conferring monetary benefits “inevitably involves the kind of line–drawing that will leave some comparably needy person outside the favored circle.” Id. The legislature has “plenary power to define the scope and the duration of the entitlement to ... benefits, and to increase, to decrease, or to terminate those benefits based on its appraisal of the relative importance of the recipients’ needs and the resources available to fund the program.” Gilliard, 483 U.S. at 598 (internal quotations and citations omitted).
Therefore, legislation conferring monetary benefits is unequal in the constitutional sense only when the legislative classification is “clearly wrong, a display of arbitrary power, not an exercise of judgment.” Gilliard, 483 U.S. at 598.
The classification Missouri made is not between 1) special needs children who are Title IV–E eligible and thus qualify for federal–state funded adoption assistance maintenance payments and 2) special needs children who are Title IV–E ineligible and thus do not qualify for federal–state funded subsidies and whose eligibility for state funded subsidies is determined by application of a means test to their adoptive parents’ income. Congress, not Missouri, made the classification between Title IV–E eligible and ineligible children. See 42 U.S.C. § 673(a)(2).
The classification Missouri made is solely within the second group of special needs children — those children who are Title IV–E ineligible and thus ineligible to receive federal–state funded adoption assistance maintenance payments. Within that class, those children whose adoptive families’ income falls above 200% of the federal poverty level for their family size will not receive subsidies that are solely state funded.
“[I]t is rational to distribute public benefits on the basis of income and resources available to potential recipients.” Schweiker v. Hogan, 457 U.S. 569, 590 (1982). And the validity of
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legislative classification is “not properly judged” by focusing solely on the “disfavored class” — those that do not receive the benefit. Hogan, 457 U.S. at 589. Not only is it rational to conclude that those children adopted by families of modest means are likely to be less needy than those adopted by well–off families, it is irrational to suggest otherwise.
A legislative classification is not invalid even if some members of the disfavored class actually have greater need than those receiving the benefit. There is no constitutional rule that every statutory line must be precisely tailored to accommodate every individual application. Indeed, the Supreme Court has held precisely the contrary:
A decision to allocate scarce assistance benefits on the basis of an assumption that persons with greater incomes generally are better able to prepare for future medical needs is not inconsistent with constitutional principles of equal treatment. In other words, it is rational to define need on the basis of income, even though some persons with greater income ... may actually be in greater need of assistance than those with less gross income. Hogan, 457 U.S. at 591. Indeed, because the Missouri legislature could deny state funded subsidies entirely to federally ineligible children, it is not irrational to extend subsidies to only some of those children, using their families’ incomes as a rough indicator of financial wherewithal. See Hogan, 457 U.S. at 592 Obligation of Contracts Claim The extent to which the parties’ reasonable contract expectations have been disrupted and the foreseeability of that disruption relate to an obligation of contracts claim. See Equipment Mfrs. Inst. v. Janklow, 300 F.3d 842, 853–54, 857 (8th Cir. 2002).5 Adoptive parents could have
5No impairment of contract issue exists with respect to adoption assistance agreements containing federal–state funded subsidies. The new Missouri legislation does apply the means test as a condition of eligibility for federal–state funded subsidies.
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reasonably foreseen that their adoption assistance agreements could be terminated in a limited circumstance. The termination clause is not overexpansive on Missouri’s part; Missouri cannot terminate for any reason or for no reason, as parents can. Missouri cannot terminate, and adoption assistance agreements state that Missouri does not intend to terminate, “unless legal, fiscal, or other circumstances necessitate some adjustment in the Missouri Adoption Subsidy Program expenditures or procedures.” That is what happened in this case — a change in Missouri adoption subsidy law brought about by budgetary constraints.
That change in Missouri law has a significant and legitimate public purpose that justifies any substantial impairment of adoption assistance agreements. Annual application of a means test to determine eligibility for state funded subsidies promotes Missouri’s interest in allocating its limited financial resources. Annual application of a means test also promotes Missouri’s interest in directing its limited resources to more needy families. These are “broad societal interests” that indicate a public purpose behind the legislation; adopted children, as recipients of a monetary benefit, represent the “narrow class” interest here. See Equipment Mfrs. Inst., 300 F.3d at 859. No Threat of Irreparable Harm
No threat of irreparable harm exists to plaintiffs who are receiving federal–state funded adoption subsidies or to plaintiffs who are receiving state funded subsidies.
Senate Bill 539 does not apply to federal–state funded adoption subsidies except for limiting their length to one year. That limitation is in accordance with the Adoption Assistance Act’s requirement of parental consent to adjust the amount of assistance payments, see 42 U.S.C. § 673(a)(3), with the Act’s silence upon the duration of assistance agreements, see 42 U.S.C.
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§ 673(a)(4), and with the Children’s Division policy of reviewing annually and renewing automatically adoption subsidy agreements before the end of the state fiscal year (unless changes are agreed to or requested by adoptive parents).
Though the application of Senate Bill 539 means test to state funded adoption subsidies will result in the disqualification of some children from receiving subsidies, that disqualification is not prohibited by the Adoption Assistance Act or the Equal Protection Clause or § 10 of Article I of the U.S. Constitution.
ORDER AND JUDGMENT Therefore, for good cause shown, it is hereby ORDERED, ADJUDGED AND DECREED that plaintiffs’ complaint for a permanent injunction is denied. It is further ORDERED, ADJUDGED AND DECREED that the preliminary injunction and class certification orders are dissolved.

Dated: ____________________

_________________________ SCOTT O. WRIGHT Senior U.S. District Court Judge

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 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G., by Next Friend, Jill Katz, et al.,
Plaintiffs,
vs.
K. GARY SHERMAN, in his official capacity as Director of the Missouri Department of Social Services, et al.,
Defendants.

) ) ) ) ) ) ) Case No. 05-0726-CV-W-SOW ) ) ) ) )

PLAINTIFFS’ PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW
Plaintiffs, by their undersigned counsel, respectfully submit their proposed findings of fact and conclusions of law pursuant to the Court’s scheduling order of November 9, 2005 for purposes of the April 27, 2006 trial on the merits on Plaintiffs’ Complaint for Permanent Declaratory, Injunctive and Other Relief. I. PLAINTIFFS’ PROPOSED FINDINGS OF FACT:
Adoption Assistance Subsidies: Promotion of Permanency for Special Needs Foster Children 1. The state of Missouri, through the Department of Social Services (“DSS”), Children’s Division, acts to remove children who are subject to abuse and/or neglect at home into the temporary custody of the state and to provide care and services to those vulnerable children until a permanent placement can be secured, either through reunification with their biological parent(s) or through adoption by

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a new family when reunification is not in the child’s best interests. Such services are referred to as “permanency” services. (DSS Child Welfare Manual, Sec. 1, Ch. 1, Ex. 77, at 1.1, 1.2.) 2. DSS has statutory responsibility and authority for accepting and investigating all reports of child abuse or neglect within the state under RSMo Ch. 210 and for serving the needs of Missouri’s abused and neglected children through temporary foster care and permanency services under RSMo Ch. 207 and 211. (See DSS Child Welfare Manual, Philosophical Base of Child Welfare Practice, Ex. 76.) 3. Defendant, K. Gary Sherman, is the Director of DSS and, in that capacity, oversees the administration and management of the Children’s Division and the implementation of its child welfare programs and services, including adoption services. (RSMo Section 660.010.1; Sherman Dep., Jan 26, 2006, at 4-5.) 4. The DSS Children’s Division serves the citizens of Missouri and is charged with advancing the public’s interest in the safety and well being of Missouri’s children, including all special needs foster children residing in state custody. (DSS Child Welfare Manual, Sec. 1, Ch. 1, Ex. 77, at 1.2.) 5. As of December 31, 2005, there were 10,772 foster children in the custody of DSS’s Children Division. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 1.) 6. For all children adopted from DSS custody in FY2003 and FY2004, the average length of stay in foster care was 33 and 31.7 months, respectively, which is significantly longer than the national standard of 24 months promulgated by the
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U.S. Department of Health and Human Services. (Report No. 2005-79, October

2005, Office of the State Auditor of Missouri, Ex. 96, at 1.)

7. As of December 31, 2005, a total of 1891 foster children in DSS custody had been

assigned a permanency plan or goal of adoption. (Defendants’ Response to

Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 1.) As of January

31, 2006, a total of 1919 foster children in DSS custody had been assigned a

permanency plan or goal of adoption.

(Caseload Counter,

http://www.dss.mo.gov/mis/clcounter/history.htm., Ex. 53.)

8. As of December 31, 2005, the total number of foster children who were adopted

and receiving adoption assistance maintenance subsidies was 11,450.

(Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex.

100, at 2.)

9. As of December 31, 2005, 8,845 of 11,450 former foster children who were

adopted and receiving adoption assistance maintenance subsidies, received

subsidies funded by a combination of federal and state funds, also known as Title

IV-E subsidies. (Id. at 2.)

10. For those children receiving adoption assistance maintenance subsidies paid with

a combination of federal and state funds, the allocation is 62% federal funding

and 38% state funding. (FMAP Rate Description, DSS, Feb. 3, 2005, Ex. 118.)

11. As of December 31, 2005, 2,605 of 11,450 former foster children who were

adopted and receiving adoption assistance maintenance subsidies received

subsidies funded by solely state funds. (FMAP Rate Description, DSS, Feb. 3,

2005, Ex. 118, at 2.)

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12. Governor Matt Blunt stated in his January 26, 2005 State of the State Address,

“We have a responsibility to provide safe settings for at-risk children and [to]

facilitate permanent placement for children who cannot return home.” (State of

the State Address, January 26, 2005, Ex. 81.)

13. In the area of child welfare generally, and adoption subsidies in particular, there is

a body of knowledge in terms of what comprises good and accepted practice and

policy, including: federal statutes, federal regulations, the federal Child Welfare

Policy Manual, published national standards such as the Child Welfare League of

America (CWLA) standards for foster care and adoption, published research and

papers in the field, and shared experiences at conferences held throughout the

U.S. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 7; anticipated trial

testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette

Wiedemeier Bower.)

14. Available to the public on-line since September of 2001, the federal Child

Welfare Policy Manual provides official issuances of the U.S. Department of

Health and Human Services (HHS) on the interpretation of federal law and federal

regulations in the area of child welfare, including adoption subsidies. (Federal

Child

Welfare

Policy

Manual,

Ex.

113;

http://www.acf.hhs.gov/j2ee/programs/cb/laws_policies/laws/cwpm/index.jsp;

Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice

expert, Jeanette Wiedemeier Bower.)

15. In addition to providing official HHS issuances on the interpretation of federal

law and federal regulations, the federal Child Welfare Policy Manual, specifically

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in the area of adoption subsidy policy and practice, also establishes generally accepted good adoption subsidy policy and practice. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 7-8; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 16. Pursuant to accepted professional standards, “The primary purpose of family foster care is to provide children with protection, care, and nurturing away from their parents and in the homes of agency-approved foster families for a limited period of time. . . . Family foster care should primarily be a temporary arrangement . . .” (See CWLA FC 1.11, Ex. 114; Anticipated testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeannette Weidemeier Bower.) 17. Children enter state foster care systems because they are abused and/or neglected, and for some reason their biological parent(s) could not keep them safe. The goal of the foster care system is to attempt reunification with biological parent(s) and to create a plan to help parents make the necessary changes in their lives or living conditions so that their child or children can be returned to their care. Foster care is intended to be a short-term, temporary stay for children. (CWLA, Family Foster Care Standards, Ex. 114, at 0.13; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 18. Nationally, approximately 55 percent of children are returned to their biological homes. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3, citing to
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AFCARS data, 2005, Ex. 82; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 19. In some cases, however, children cannot be safely returned to their birth parents, their permanent case plan will be identified as adoption, and social workers working on behalf of these children will begin to look for permanent adoptive homes for them. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3-4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 20. A majority of children in foster care who need permanent adoptive homes require additional services to meet their special needs, often due to the circumstances of their abuse or neglect. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3-4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) The array of services they need to address their special needs is both extensive and varied, and can include, without limitation, specialized medical care, dental care, mental health care, physical therapy, occupational therapy, play or talk therapy, or educational tutoring. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115 at 4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 21. Missouri state policy, as stated in the DSS Child Welfare Manual, provides, “[i]n keeping with the philosophical base that every child is entitled to a safe, secure and permanent home, the Children’s Division is obligated to make a diligent search for appropriate adoptive placements for those children for whom adoption
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has become the permanent plan.” (DSS Child Welfare Manual, Sec. 4, Ch. 27, Ex. 78, at 27.1.) 22. Congress enacted the Title IV-E Adoption Assistance Act to “establish a program of federal support to encourage adoptions of children with special needs.” (1980 U.S. Code Cong. and Admin. News, Ex. 36, at 1448, 1460.) 23. The State of Missouri has a qualifying “State Plan for Title IV-E of the Social Security Act Foster Care, Independent Living and Adoption Assistance” (“Missouri State Plan”) and receives federal funding for adoption assistance. Missouri DSS is the state agency responsible for submitting the Missouri State Plan to the Secretary of Health and Human Services for approval and for administering the plan. (Missouri Title IV-E State Plan, Ex. 45.) 24. The Missouri Title IV-E State Plan states “As a condition of the receipt of Federal funds under title IV-E of the Social Security Act … the [state agency] … hereby agrees to administer the program in accordance with the provisions of this State plan, title IV-E of the Act, and all applicable Federal regulations and other official issuances of the Department.” ( Missouri Title IV-E State Plan, Ex. 45, at 2.) (emphasis added) 25. The state of Missouri, through DSS, is to provide basic shelter, food and care to all foster children in its legal custody. To meets this obligation, DSS remits foster care maintenance payments to all foster families, group homes and child-placing agencies licensed by the state to provide day-to-day care to the foster child population. (DSS Child Welfare Manual, Sec. 4, Ch. 11, Atmt. A, Ex. 101; Missouri State Plan, Ex. 45, at Sec. 2.) The obligation of the state to remit these
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foster care maintenance payments continues until a child exits from state legal custody by virtue of reunification, adoption or attainment of adulthood. (See generally, HHS Child Welfare Policy Manual, Section 8.3 (foster care maintenance payment programs.)) (DSS Child Welfare Manual, Sec. 4, Ch. 11, at 11.12, Ex. 123; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 26. The Federal Child Welfare Policy Manual of the United States Department of Health and Human Services (“HHS”), Administration for Children and Families, states: … “the legislative history [of the Adoption Assistance Act] indicates that Congress was concerned primarily with moving children in State foster care systems into permanent adoptive homes when appropriate. The Title IV-E adoption assistance program, therefore, was developed to provide permanency for children with special needs in public foster care by assisting States in providing ongoing financial and medical assistance on their behalf to the families who adopt them.” (Federal Child Welfare Policy Manual, ACYF-CB-PA-01-01, Jan. 23, 2001, Ex. 40; expert report of Jeanette Wiedemeier Bower, Ex. 115, at 3, 4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 27. Missouri State DSS policy defines a special needs child as “any child in the custody of the Children’s Division, Division of Youth Services, Department of Mental Health or a Missouri licensed child-placing agency and who meets one of the following conditions: minority parentage; handicapping condition – mental, physical or emotional; member of a sibling group …; guarded prognosis …; is
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over five years of age, without any of the above characteristics. Children who meet the criteria for special needs may qualify for adoption subsidy.” (DSS Child Welfare Manual, Sec. 4, Ch. 27, Ex. 47, at 27.4.2.) 28. Missouri State DSS policy states: “[c]hildren placed in the custody of the Division with a history of abuse and/or neglect may be defined as children having special needs and are, therefore, eligible for subsidy.” All current or former foster children are designated as “special needs” for purposes of an adoption assistance subsidy in Missouri. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.C; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 5; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 29. Adoptive children meeting the definition of “special needs” in Missouri receive adoption assistance subsidies funded by either a combination of federal and state dollars or solely by state dollars. Children with adoption subsidies funded by a combination of federal and state dollars are also referred to as Title IV-E eligible children. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) Children with adoption subsidies funded by state dollars only are also referred to as non-Title IV-E eligible children. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1; anticipated testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeannette Weidemeier Bower.) 30. There is significant value to society and to an individual foster child to have that specific child move from the foster care system into a permanent, adoptive home
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when reunification is not possible. (CWLA, Adoption Standards, Ex. 85, at 5; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 31. While a child remains in foster care without a permanent home, a move from one placement to another may come at any time, which creates anxiety for the child and causes emotional harm. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4, citing Triseliotis, 2002, Ex. 86; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 32. It is widely accepted in the adoption field that parenting children with special needs, including foster children, requires more attention and time than parenting children without special needs – including more extensive parenting skills and more intensive supportive services. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 33. CWLA standards state that “. . . subsidies may make possible the adoption of children who have special medical needs or are a part of a special population for whom these benefits are intended.” (CWLA, Family Foster Care Standards, Ex. 114, at 2.100; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
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34. The federal adoption assistance program has been credited with significantly decreasing the number of children languishing in foster care by finding them permanent adoptive families. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4, citing Bussiere, in Segal, 1985, Ex. 87; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) With adoption subsidies, more children find permanent loving homes and fewer graduate or “age out” of the foster care system. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
35. A widely accepted policy reason behind the provision of adoption subsidies for children is that it eliminates financial barriers to adoption for parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6-7; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
36. According to a January 2005 report from HHS, “Adoption subsidies are perhaps the single-most powerful tool by which the child welfare system can encourage and support adoptive families” and “Subsidies have become an essential tool in moving children to permanent homes and supporting adoptive families.” (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 7, citing to “Understanding Adoption Subsidies: An Analysis of AFCARS Data”, Ex. 88, at 1, 4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
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37. The Missouri Child Welfare Manual states: “[s]ignificant to the use of an adoption/legal guardianship subsidy, is the realization that without this resource a family would not otherwise have the resources to provide permanency to a special needs child.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1.)
38. The federal Child Welfare Policy Manual states that the intended beneficiaries of adoption assistance payments are the special needs children themselves, not their adoptive parents. (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.4.) ("Unlike other public assistance programs in the Social Security Act, the IV-E adoption assistance program is intended to encourage an action that will be a lifelong social benefit to certain children and not to meet short term monetary needs during a crisis. Further, the adoptive parents'income is not relevant to the child's eligiblity for the program.") (Expert report of Jeanette Wiedemeier Bower, Ex. 115, at 4-5; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
39. The Internal Revenue Service of the United States Department of the Treasury instructs adoptive parents in IRS Publication 17, “do not include in your income payments from a state agency to help you care for your adopted child.” (Publication 17, 1986, Ex. 43, at 67.) In Publication 17, 1990, the IRS explicitly stated, “… Title IV-E payments are income exempt for purposes of taxation.” Federal and State Adoption Assistance Subsidies
40. Special needs children qualify for adoption subsidies funded with a combination of state dollars and federal dollars (using federal Title IV-E funds) by meeting one
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of the following eligibility categories: (1) the special needs child was eligible for Aid for Families With Dependent Children program (AFDC) benefits (as defined in 1996) during the month in which court proceedings for adoption were initiated, or was eligible for said benefits within 6 months prior to that time; or (2) the special needs child was eligible for Supplemental Security Income (“SSI”) programs under the Social Security Act before adoption; or (3) the special needs child’s parent was in foster care and receiving Title IV-E funds that covered both the parent and the child when the adoption was initiated; or (4) the special needs child previously received adoption assistance, and his or her adoptive parent died or the adoption was dissolved. The special needs child need only meet one of the above four eligibility prongs to claim a right to Title IV-E adoption assistance. (See 42 U.S.C. Sec. 673; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 5-6; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower 41. The primary qualification for Title IV-E eligibility for adoption assistance subsidies is through AFDC eligibility. The other categories involve a relatively small group of children. The SSI eligible children are generally medically fragile or medically-oriented; the minor-child-of-a-foster-child eligibility allows infants in foster care to receive IV-E eligibility if the parent in custody is IV-E eligible and the minor-parent and minor-child live together; and the death/dissolution eligibility assumes that the child’s adoption is finalized and the child is coming back into the care of the department after the adoptive parents’ death or the legal dissolution of the adoption. (See 42 U.S.C. Sec. 673; Expert Report of Jeanette
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Wiedemeier Bower, Ex. 115, at 6; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 42. In general, an AFDC child is a child who is removed from a low-income birth family where only one parent is in the home such that there is a deprivation of parental support. To receive Title IV-E adoption assistance, the child must be removed from their biological home either through a voluntary placement agreement or as a result of a judicial determination that continuation in the home would be contrary to the welfare of the child. If the AFDC child is special needs and meets either of these removal qualifications, the child will receive a federalstate funded adoption assistance subsidy upon adoptive placement. (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2B.13; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 43. Eligibility for a federally subsidized adoption assistance agreement under IV-E is based upon 1996 AFDC income thresholds, which have not been adjusted for inflation. See 42 U.S.C. 673(a)(3). What was defined as “poor” ten years ago remains the standard today under the Title IV-E adoption assistance program. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 44. The 1996 AFDC income threshold in Missouri for a family of three is $3,505. (Medicaid State Report, Missouri FY1996, Ex. 122, at 1.)
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45. Special needs children not meeting one of the four Title IV-E eligibility prongs receive adoption assistance payments under the terms of the state-funded adoption subsidy program in Missouri. As stated in the Missouri Department of Social Services (“DSS”) Child Welfare Manual, “[a]n adoption subsidy is a service that may be used to assist in providing permanency for children who, because of special needs, might not otherwise be adopted, and for whom a family is not readily available.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1.)
46. Since adoption assistance rates under federal law must be less than foster care maintenance payments, many states have parity between foster care and adoption assistance payments or pay $1 less in adoption assistance rates. The basic adoption assistance rates in Missouri are $225 for children ages 5 and under, $275 for children ages 6 through 12, and $304 for children ages 13 and older. Missouri’s adoption assistance rates remain the second lowest in the United States. (NACAC Adoption Subsidy Profiles, 2004, Ex. 90; Expert Report of Jeanette Wiedemeier Bower, Ex. 115 at 16; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
47. Missouri has provided a single system for adoption assistance maintenance subsidies to both IV-E eligible and non IV-E eligible children continuously for over 25 years. (Simmens, Preliminary Injunction hearing, at 38-41.)
48. The DSS Child Welfare Manual states that an adoption subsidy agreement must be approved by the Division Director and executed on a Form CS-SA-2 contract
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document. “The CS-SA-2 … is a legally binding agreement.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.2.) The CS-SA-2 Adoption Subsidy Agreement is a pre-printed form contract prepared by DSS and presented to adoptive parents for signature on behalf of their special needs adopted child. (Form CS-SA-2, Ex. 99) 49. The Form CS-SA-2 Adoption Subsidy Agreement states the contractual obligations of the State to the adoptive parent and the adopted children. The State agrees to subsidize adoptive parents for “maintenance,” “recurring expenses for special services” and other “nonrecurring expenses.” (Form CS-SA-2, Ex. 99, at 2.) 50. Form CS-SA-2 Adoption Subsidy Agreement states the contractual obligation of the State “to provide the necessary authorization for participation [of the adopted child] in the Missouri Medicaid Plan….” (Form CS-SA-2, Ex. 99, at 2.) 51. The DSS Child Welfare Manual states: “[s]ubsidy agreements … are considered a contract, which must be reviewed annually and renewed prior to the end of the Missouri fiscal year (i.e., June 30, 2XXX). Contracts are automatically renewed unless changes are agreed to as a result of the annual review or requested by the adoptive parent(s) or legal guardian(s).” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.G.) 52. In FY2006, which runs from July 1, 2005 through June 30, 2006, approximately 11,400 children formerly in the Missouri foster care system will be beneficiaries of adoption assistance subsidy contracts between Missouri and the children’s
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adoptive parent(s). (Defendant’s Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, at 2, Ex. 100.) 53. All adoption subsidy agreements executed by the state of Missouri utilize state funds to meet the government’s monthly payment obligations. Title IV-E adoption subsidy agreements are funded 62% by federal matching dollars and 38% by state dollars. State-only adoption subsidy agreements are funded 100% by state dollars. (FMAP Rate Description, DSS, Feb. 3, 2005, Ex. 118.) The Governmental Purpose Underlying Senate Bill 539 54. Missouri Governor Matt Blunt signed Senate Bill 539 into law on April 26, 2005. By its terms, Senate Bill 539 has an effective date of August 28, 2005. (Current Bill Summary, published at: www.senate.mo.gov, Ex. 34). 55. Governor Blunt and the Missouri legislature enacted Senate Bill 539 with the stated intent to “reform Missouri’s social welfare system to ensure that taxpayer funded assistance is getting to the most needy ….” (Press Release from the Office of Governor Matt Blunt, May 13, 2005, Ex. 54, at 1.) As stated in the accompanying emergency rule, the law was necessary “to achieve a balanced state budget for SFY 2006.” (Emergency Rule 13 CSR 35-38.020, Ex. 50.) Emergency Rule 13 CSR 35-38.020 became effective on August 28, 2005, and expired on February 23, 2006. 56. The State of Missouri and the Department of Social Services (“DSS”), through duly authorized and responsible state officials, have identified a single governmental purpose to be advanced by the means test provision of Senate Bill 539: achieving cost savings in the state’s adoption subsidy program by reducing
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the amount of state funds appropriated for the program and directing those funds to the state’s most needy families. (Renne Dep., Jan. 26, 2006, at 31-32; Boies Dep., Jan. 18, 2006, at 103; Kinkade Dep., Jan. 18, 2006, at 64; Martin Dep., Dec. 13, 2005, at 37; Martin, Preliminary Injunction hearing, at 164.) 57. William Boies, a Budget Analyst 2 in the Budget and Planning Division of the state Office of Administration (“OA”), testified at his deposition regarding the origin and development of the adoption subsidy means test provision during the FY2006 budget process in Missouri. Boies testified that following the November 2004 gubernatorial election, in which now Governor Matt Blunt prevailed over incumbent Governor Holden, the FY2006 budget process (for the FY beginning July 1, 2005) was turned over to Governor-Elect Blunt’s transition team. Michael Keathley, who was later named Commissioner of OA by Governor Blunt, headed the transition team within OA. (Boies Dep., Jan. 18, 2006, at 2, 20-25.) 58. William Boies testified in his deposition that Keathley, upon joining OA in November or December 2004, took note of the historic rate of growth in the costs of the adoption subsidy program in Missouri when reviewing the FY2006 departmental budget submitted by DSS and inquired about the program. Mr. Keathley specifically inquired about methods that could be used to control further growth in the program and suggested means testing recipient adoptive families to reduce cost. (Boies Dep., Jan. 18, 2006, at 32-39.) 59. Thereafter, OA and DSS staff developed a means test scheme with the intended purpose of reducing costs within the Missouri adoption subsidy program by directing a decreased subsidy appropriation to low income adoptive families only,
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regardless of the needs of the adoptive child. The only governmental purpose to be served by the means test was cost reduction. (Boies Dep., Jan. 18, 2006, at 103.) 60. William Boies testified at his deposition that he never heard discussion of any other governmental purpose or justification for the new eligibility scheme. (Boies Dep., Jan. 18, 2006, at 103.) 61. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, testified at her deposition that the only policy justification she heard discussed for the Senate Bill 539 means test was “cost savings.” (Martin Dep., Dec. 13, 2005, at 37.) 62. Amy Martin also testified at her deposition that she was not able to identify any way in which the Senate Bill 539 provisions regarding adoption subsidies would serve to benefit children, whether they were in adoptive or foster care. (Id. at 38.) 63. Steve Renne, Acting Director of DSS through April 1, 2005, now Deputy Director of DSS, also testified to his understanding that the Senate Bill 539 means test was designed simply to achieve cost reductions in the state’s adoption subsidy program. (Renne Dep., Jan. 26, 2006, at 31-32.) 64. Defendant K. Gary Sherman, the current Director of DSS, testified at his deposition that he played no role in the development of Senate Bill 539 and its adoption subsidy provisions due to the timing of his nomination for DSS Director by Governor Blunt and subsequent Senate confirmation, which occurred less than
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one month before the enactment of Senate Bill 539. (Sherman Dep., Jan. 26, 2006, at 5, 10, 11, 23.) 65. Boies participated in a final FY2006 DSS budget presentation to Governor Blunt in January 2005, conducted by means of a telephone conference that occurred shortly before the January “State of the State” address. During this conference, the means test and cost reduction scheme, later made law through Senate Bill 539, were presented to and discussed with Governor Blunt. Neither the Governor nor his staff identified additional policy bases for the means test. (Boies Dep., Jan. 18, 2006, 98-102.) 66. On Jan 26, 2005, Governor Blunt submitted a budget that called for reductions in the adoption subsidy program consistent with a means test set at 200% of the federal poverty level (“FPL”.) (Initial Summary of Missouri Governor’s Budget Proposal, Feb. 11, 2005, Ex. 51.) 67. The federal poverty guidelines, which include the FPL, are published annually by HHS for administrative purposes, including for use in determining financial eligibility for certain federal programs. (HHS Poverty Guidelines, 2005 Ex. 42.) 68. DSS staff, specifically Patrick Luebbering, Assistant Deputy Director of the Family Support and Children’s Division, prepared a memorandum in the course of researching the fiscal impact of the proposed changes in the adoption subsidy program, entitled, “Bullet Points for Means Testing Adoption Subsidy,” (“Bullet Points Memo”) that stated among other things:
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(a) “By implementing a means test on only the state only adoptions, children who are not IV-E eligible will be put at a disadvantage to being adopted versus children that are IV-E eligible.” (b) “By reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy.” (c) “Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer.” (d) “Projecting an accurate amount for the savings is difficult.” (Bullet Points Memo, Ex. 93; Luebbering Dep., Dec. 13, 2005, at 50.) The Bullet Points Memo was distributed from DSS to OA, and from OA to the Office of the Governor in revised form. (Boies Dep., Jan. 18, 2006, at 84-87) Senate Bill 539, Section 453.073.3(4): Blanket Annual Renewal and Automatic Expiration Provision 69. Senate Bill 539 amends Section 453.073.3(4) of RSMo to provide: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) 1 The text of Section 453.073.3(4), as amended by Senate Bill

1

Plaintiffs present this legal citation here solely for the Court’s convenience.

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539, makes no distinction between and applies to both federal/state funded and state-only funded adoption assistance agreements. 70. The HHS Child Welfare Policy Manual, Section 8.2D.2, states: “States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.” (HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.2) 71. Good and accepted adoption subsidy practice also prohibits blanket duration or termination policies. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 810; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 72. Senate Bill 539 violates federal policy and good and accepted subsidy practice, which prohibit the blanket limitation on duration or termination of all adoption assistance agreements. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 8-10; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 73. The HHS Child Welfare Policy Manual, Section 8.2D.5, provides: “Once an adoption assistance agreement is signed and in effect, it can be terminated under three circumstances only: (1) the child has attained the age of 18 (or 21 if the state has determined that the child has a mental or physical disability which would warrant the continuation of assistance); (2) the State determines that the adoptive parents are no longer legally responsible for the support of the child; or (3) the
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State determines that the adoptive parents are no longer providing any support to the child.” ( HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.5.) 74. HHS Child Welfare Policy Manual, Sec. 8.2B.9 similarly states: “Once a child has been determined eligible and is receiving adoption assistance, a State may terminate the assistance only under the circumstances specified at section 473(a)(4) of the Social Security Act.” (HHS Child Welfare Manual, Ex. 59, at Sec. 8.2B.9.) 75. The DSS Child Welfare Manual states that the Division may close an adoption subsidy upon one of the following events, “(a) The child reaches age 18 or age 21 (if child’s condition is extraordinary); or … (b) At the request of the family; or … (c) Upon determination that the child is no longer receiving any financial support from the adoptive family; or … (d) Upon determination that the adoptive parent(s) are no longer legally responsible for the support of the child (TPR has occurred); or … (e) In the event of death of the subsidized child; or … (f) In the event of the death of both adoptive parents or the death of a single adoptive parent if the subsidy was granted to a single adoptive parent ….” (See DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.11.) 76. Fred Simmens, the DSS Director from August 2003 to October 2005, testified that he agreed that, apart from the exceptions set forth by the federal statutes, any changes to the subsidy contracts would have to be agreed to by the parents. (Preliminary Injunction hearing, at 57-58.) 77. Senate Bill 539 violates federal policy, DSS policy, and good and accepted subsidy practice, which prohibit the termination of adoption subsidy agreements
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in cases other than the categories proscribed, and allows only periodic readjustments of subsidies on a case by case basis, with the concurrence of the adoptive parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 8-10; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 78. It is generally recognized that many states’ use of an annual review process was originally intended to determine whether a child was still being cared for by adoptive parents, and whether the financial and medical benefits were adequate for the child’s needs. This is typically an administrative task undertaken for accounting purposes. No state has proposed, as has Missouri, to impose a review policy under which adoptive assistance agreements would automatically expire annually. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 10; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 79. Good and accepted practice prohibits the automatic termination of subsidy agreement because to do so undermines the certainty and reliability in the receipt of subsidies that are used to help provide for an adoptive child’s special needs. For these children, it is recognized that adoption is unlikely without the subsidy; and parents, who agree to adopt them, accept the commitment to care for the child at least through the child’s age of majority. The automatic termination and need to renegotiate, without the consent of the adoptive parents, undermines the core purposes behind adoption subsidies. (Expert Report of Jeanette Wiedemeier
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Bower, Ex. 115, at 10; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 80. An August 29, 2005 letter from Linda K. Lewis, Regional Administrator of the United States Department of Health and Human Services, to DSS Director K. Gary Sherman states, “The Administration for Children and Families has determined that Missouri is out of compliance with title IV-E requirements because SB 539 states that the period for which all subsidies will be granted will not exceed one year and the director has the discretion as to whether the agreement can be renewed for subsequent years.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 386.) 81. The August 29, 2005 HHS letter further states, “Federal requirements state that once a child is determined eligible for title IV-E adoption assistance, he or she remains eligible and the subsidy continues for reasons specified in the Federal policy [Child Welfare Policy Manual, Section 8.2B.9 and Social Security Act – Section 473]. The Federal policy further states that States may not have a blanket policy which limits the duration of adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents … [Child Welfare Policy Manual, Section 8.2D.2 and Social Security Act – section 473]. The Missouri legislation, however, states that the period for which all subsidies will be granted will not exceed one year.”
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(Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) 82. The August 29, 2005 letter also states, “Federal policy [Child Welfare Policy Manual Section 8.2D.5 and Social Security Act – section 473; and 45 CFR 1356.40(b)] provides that once a child is determined eligible for adoption assistance under IV-E, he or she remains eligible and the subsidy continues unabated. Once an adoption assistance agreement is signed and in effect, it can only be terminated if 1) the child has reached the age of 18 (or the age of 21 if the State has determined that the child has a mental or physical disability which would warrant continuation of assistance), 2) the State determines that the adoptive parents are no longer legally responsible for the support of the child, or 3) the State determines that the adoptive parents are no longer providing any support to the child. Missouri’s legislation, however, states that the agreement can be renewed for subsequent years “at the discretion of the director” and therefore violates Federal policy.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) Senate Bill 539, Section 453.073.4: Means Test 83. Senate Bill 539 amends Section 453.073.4 of RSMo to provide: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.4.)2

2

Plaintiffs present this legal citation here solely for the convenience of the Court.

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84. The use of an income standard for adoptive parents to determine a child’s eligibility for adoption assistance subsidies is commonly referred to as a “means test.”
85. The means test established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards of the foster care system. The means test will be applied to deny adoption subsidy benefits to one group of children and not the other. Specifically, for one group in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the AFDC eligibility standard for Title IV-E purposes, the means test will be imposed on the income of the children’s existing or prospective adoptive parents to deny or terminate their adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes, no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
86. HHS policy, reflected in Federal Policy Announcement, PIQ-90-02, October 2, 1990, states, “Congress at first considered the inclusion of a ‘means test’ as a requirement under the Title IV-E adoption assistance program … the restriction was later dropped after the Committee noted ‘we should not design a program to foster adoptions only in those families with the least financial capacity to care for
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these special needs children.’” (Federal Policy Announcement, PIQ-90-02, October 2, 1990, Ex. 41, at 1, citing Congressional Record – Senate – S11704, Aug. 3, 1979.) 87. The HHS Child Welfare Policy Manual, Section 8.2A.2, states: “The use of a means test is prohibited in the process of selecting a suitable adoptive family, or in negotiating an adoption assistance agreement, including the amount of the adoption assistance payment.” (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2A.2.) 88. Good and accepted adoption subsidy practice also prohibits the use of means testing to determine eligibility of adoption subsidies. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115 at 11-12; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 89. Means testing a select group of children for purposes of determining a child’s eligibility for an adoption subsidy violates good and accepted subsidy practice and is harmful to children because it significantly decreases the pool of prospective adoptive resources for children with special needs. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 90. Means testing a select group of children for purposes of determining a child’s eligibility for an adoption subsidy violates good and accepted subsidy practice and is harmful to children because it will result in more children remaining in foster care for longer periods of time. (Expert Report of Jeanette Wiedemeier
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Bower, Ex. 115, at 11; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower; Bullet Points Memo, Ex 93.) 91. Means testing a select group of children for purposes of determining a child’s eligibility for an adoption subsidy violates good and accepted subsidy practice because it creates a disincentive to adoption and a “disadvantage” for a certain group of children (non IV-E eligible children) solely on the basis of the income of their biological parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower; Bullet Points Memo, Ex. 93.) 92. Means testing a select group of children for purposes of determining a child’s eligibility for an adoption subsidy violates good and accepted subsidy practice because it fails to recognize that the subsidy is attached to and follows the child, rather than being made available to supplement the income of the adoptive parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 93. Fred Simmens, the DSS Director from August 2003 to September 2005, testified that in his 26 years with the agency, he had never suggested a means test for people who adopt special needs children. (Preliminary Injunction hearing, at 38.) Mr. Simmens testified that he had concerns about the adoption subsidy revisions in Senate Bill 539 because they were changing longstanding policy in the state to treat all children the same, whether or not they were receiving federal funds
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through Title IV-E. (Id. at 39-40.) Mr. Simmens testified that this longstanding policy was a very fair system. (Id. at 41.) Mr. Simmens further testified that the adoption subsidy program was an important one, and was a factor that encouraged parents to adopt children with special needs. (Id. at 44, 41.) 94. Steve Renne, the Acting Director of DSS at all relevant times until April 1, 2005, and now Deputy Director of DSS, testified that in the 20-plus years he had worked for Missouri’s Department of Social Services, a means test had never before been proposed and that he had never before personally advocated such a test. (Renne Dep., Jan. 26, 2006, at 16.) He testified that a non-IV-E eligible child could have more significant needs than a IV-E eligible child, (id. at 52-53), and that the means test does not ensure that the most needy children receive subsidies due to the fact that the subsidy is based on the adoptive family’s income. (Id. at 52.) Renne testified that, as a “bureaucrat,” he would not recommend different treatment among the two groups of adoptive children that Senate Bill 539 creates. (Id. at 50-51.) 95. The means test under Senate Bill 539 creates two distinct groups of children based solely on the fact one group of children (those who will not have subsidies denied or terminated) came from a poorer biological family, while the other (whose subsidies will be denied or terminated) did not. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 12; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 96. The practice of means testing violates good and accepted subsidy practice and harms non IV-E eligible children just as it would IV-E eligible children. Children
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who receive state only funded adoption assistance subsidies are, by definition, no less needy than children who receive subsidies funded with both state and federal funds – factually, they are all special needs children. See Mo. Rev. Stat. § 453.073.2. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 97. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, also agreed that from a policy standpoint, the natural birth parents’ income had “no relevance” in determining whether a child should get an adoption subsidy. (Martin Dep., Dec. 13, 2005, at 85.) 98. As a factual matter, an adoptive child’s special needs are in no way correlated with his or her birth family’s income. For example, if two brothers who suffered from fetal alcohol syndrome as well as other behavioral disabilities were removed separately from their biological mother’s home at times when her income differed, one boy might receive a subsidy jointly funded by state and federal dollars, and the other a purely state-funded subsidy. Adoptive parents would be faced with the situation of being financially able to adopt one brother and not the other, or face the prospect of not being able to meet both boys’ needs. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11-12; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
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99. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division, also testified that there could be families who had adopted more than one child, where one child might be Title IV-E eligible and the other not. Under the SB 539 scheme, the same family could possibly lose the adoption subsidy for one child, but keep it for the other. When asked if that made sense to her, she testified, “It’s difficult for me to get my head around.” (Preliminary Injunction hearing, at 188.)
100. If a family were moving ahead with the adoption of a IV-E eligible child, the state would never inquire of the income of the adoptive parents no matter how high the income. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
101. DSS cannot state the number of class member children currently receiving adoption assistance subsidies funded by state and federal funds and whose adoptive parents earn more than 200% of the federal poverty level. (Defendants’ First Supplemental Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 102, at 2-3.)
102. The Senate Bill 539 means test is an irrational mechanism for directing funds to the “most needy” because it uses the gross income of putative or existing adoptive families as an eligibility threshold and fails to account for actual family expenses and other pertinent circumstances that clearly impinge upon a family’s ability to adopt and provide for a special needs child. (Emergency Rule 13 CSR 35-38.020, Ex. 50, at (12)(C); Preliminary Injunction hearing, at 162-163.) The Challenged Provisions of Senate Bill 539, if Implemented, Will Serve to Increase the Cost of Child Welfare to the State of Missouri
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103. The State of Missouri and the Department of Social Services (“DSS”), through duly authorized and responsible state officials, have identified a single governmental purpose to be advanced by the means test provision of Senate Bill 539: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the state’s most needy families. (Renne Dep., Jan. 26, 2006, at 31-32; Boies Dep., Jan. 18, 2006, at 103; Kinkade Dep., Jan. 18, 2006, at 64; Martin, Preliminary Injunction hearing, at 164.)
104. Prior to enactment of the Senate Bill 539 mean test provision, DSS prepared a fiscal impact analysis in order to project the cost savings to be generated by the new eligibility scheme in relation to state-only adoption subsidy agreements. Specifically, Patrick Luebbering, an Assistant Deputy Director within DSS, performed a fiscal impact analysis of the proposed means test at the request of the state’s Office of Administration, the agency charged with compiling the annual statewide budget for the Office of the Governor. This fiscal impact analysis concluded that the Senate Bill 539 means test provision would yield a projected annual cost savings of $9,716,863 in the state’s adoption subsidy program, assuming that the income threshold was set at 200% of FPL. (Luebbering Dep., Dec. 13, 2005, at 29-32; Fiscal Impact Analysis, Ex. 103, at Bates 1 PRP 28-7.)
105. The fiscal impact analysis prepared by Mr. Luebbering served as the sole basis for the later April 25, 2005 Fiscal Note authored by the Missouri legislature’s Committee on Legislative Research, Oversight Division for purposes of informing elected legislative members and the general public regarding, among other things,
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the anticipated fiscal implications of the Senate Bill 539 means test. (Luebbering Dep., Dec. 13, 2005, at 81-82; 134-136; Summary of Fiscal Impact, Ex. 104; Fiscal Note, Ex. 35; Kinkade Dep., Jan. 18, 2006, at 73-78.) 106. The April 25, 2005 Fiscal Note published by the Committee on Legislative Research includes and adopts the fiscal analysis prepared by Mr. Luebbering. (Fiscal Note, Ex. 35.) 107. The fiscal analysis prepared by Mr. Luebbering erroneously and irrationally projected that cost savings would flow from the Senate Bill 539 means test. The means test, if implemented, actually will increase the overall cost to the state to finance its child welfare program. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Weidemeier Bower.) 108. First, the projected $9,716,863 reduction in adoption subsidy costs is overstated due to the subsequent decision by the Missouri legislature to fund the state’s adoption subsidy program in FY2006 at 250% of FPL, as opposed to 200% of FPL, as provided in Senate Bill 539. This legislative action, alone, served to reduce the annual cost savings to be generated by the means test from $9,716,863 to $5,886,654 (the savings figures derived by Mr. Luebbering’s fiscal impact analysis performed at 200% and 250% of FPL, respectively). (Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 109. Second, the fiscal impact analysis substantially over-counted the number of existing state-only adoption subsidy recipients to be effected by the Senate Bill 539 means test. The fiscal impact analysis assumed that 43% of all existing adoption subsidy recipients in Missouri received state-only funded benefits, as
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opposed to Title IV-E federally subsidized benefits. (Luebbering Dep., Dec. 13, 2005, at 62-68, 72, 78; Fiscal Impact Analysis, Ex. 103, at Bates 1 PRP 28-7.) 110. This assumption was erroneous for two reasons. First, DSS audited all existing state-only funded adoption subsidy files in the Spring of 2005 to confirm whether Title IV-E eligibility had been properly denied in the first instance. As a result of the audit process, DSS determined that over 1,000 existing state-only adoption subsidy agreements were actually eligible for Title IV-E federal funding and, therefore, retroactively re-designated those cases to Title IV-E status. (Morris Dep., Dec. 12, 2005, at 50-53; State-Only Adoption Subsidy Case Review, Ex. 107, at 1PRP 27-2.) Second, the state of Missouri reported a Title IV-E adoption subsidy penetration rate of 82% as of the summer of 2005, meaning that only 18% of adoption subsidy recipients in the state were then receiving state-only funded subsidy payments. Mr. Morris testified that the state of Missouri never has reported a Title IV-E adoption subsidy penetration rate below 70% to his knowledge. (Morris Dep., Dec. 12, 2005, at 27-31.) 111. The $5,886,654 in projected cost savings, as calculated by Mr. Luebbering at 250% of FPL, reflects the patently erroneous and irrational assumption that 43% of all adoption subsidy recipients in Missouri are state-only funded. This projected cost savings figure, when recalculated to reflect the fact that only 18% of all adoption subsidy recipients in Missouri are state-only funded, falls to $2,452,772. Put another way, Mr. Luebbering overstated the size of the relevant non-Title IV-E population by a factor of 2.4 (43% versus 18%), resulting in a projected cost savings figure that was also overstated by a factor of 2.4.
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112. Moreover, the fiscal impact analysis substantially over-counted the number of prospective state-only adoption recipients to be effected by the Senate Bill 539 means test. The fiscal impact analysis simply carried forward to the population of prospective adoption subsidy recipients the assumption that 43% of the program’s recipients in Missouri receive state-only funded benefits. (Luebbering Dep., Dec. 13, 2005, at 76, 78.)
113. This assumption was erroneous for two reasons. First, as reflected above, the accurate figure for the current percentage of state-only adoption subsidy recipients within the overall adoption subsidy population in Missouri is 18%. Second, the fiscal impact analysis projected a total FY2006 adoption subsidy population in Missouri of 12,474, an estimate that assumed growth in the subject population of 1300 new adoptive children per year. In reality, the state of Missouri experienced a steady decline in the annual number of finalized adoptions from FY2002 through the present as follows: 1,515 in FY2002, 1,429 in FY2003, 1,356 in FY2004, 1,123 in FY2005, and 1,008 projected for FY2006 based upon the actual number of finalized adoptions through the first three quarters of the year. (Table 28, February 2006 Children’s Services Management Report, Ex. 120.)
114. The fiscal impact analysis overstated the prospective effect of the means test by assuming too large a prospective recipient population to be means tested. (Renne Dep., Jan. 26, 2006, at 20-23; Martin Dep., Dec. 13, 2005, at 35-36.) Indeed, as of December 31, 2005, the total number of foster children who were adopted and receiving adoption assistance maintenance subsidies in Missouri was 11,450, fully
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1,000 children lower than assumed by Mr. Luebbering. (Defendant’s Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, at 2.) 115. Additionally, as demonstrated below, the $2,452,772 adjusted figure must further be reduced to account for significant, additional governmental costs to flow from implementation of the mean test that were not adequately addressed, if at all, in Mr. Luebbering’s fiscal analysis. 116. First, the fiscal impact analysis adopted by the state of Missouri underestimated the cost implications of the Senate Bill 539 means test provision in terms of the additional expenses it would impose by causing disruption to existing and putative adoptions. The major component of this increased governmental cost relates to the continuing obligation of DSS to pay monthly foster care maintenance payments to that group of otherwise adoptable children who remain in temporary foster care longer because the means test prevented finalization of their adoptions. (Fiscal Impact Analysis, Ex. 103, at 1 PRP 28-4.) 117. As stated in the “Bullet Points” memorandum prepared by Mr. Leubbering, “[b]y reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy … Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer … Projecting an accurate amount for savings is difficult.” (Bullet Points Memo, Ex. 93.)
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118. Though the fiscal impact analysis properly assumed that the eligibility means test would serve to prevent or disrupt a number of adoptions due to the financial constraints it would impose on adoptive families, it arbitrarily and unreasonably assumed that these disruptions would result in additional foster care stays for displaced children of only six months duration on average. (Luebbering Dep., Dec. 13, 2005, at 98-99; Fiscal Impact Analysis, Ex. 103, at 1 PRP 28-4.) No state witness has provided an empirical or any other rational basis for this sixmonth figure. (Luebbering Dep., Dec. 13, 2005, at 98-99; Kinkade Dep., Jan. 18, 2006, at 96; Boies Dep., Jan. 18, 2006, at 80-83.)
119. The assumption of an average six-month additional stay in state foster care is arbitrary and demonstrably erroneous based upon DSS adoption policy and Missouri law. Specifically, Section 29.4 of the DSS Child Welfare Manual sets forth agency policy, consistent with RSMo. §453.077.1, that any adoption of a child from temporary state care may not be finalized by a court until the child has lived in the putative adoptive placement for a period of no less than six months. (DSS Child Welfare Manual, Sec. 4, Ch. 29.4, Ex. 80.) The pre-finalization period also must include vital pre-placement activities such as the completion of an adoptive home study, a thorough assessment of the child’s readiness and suitability for the adoptive placement facilitated by a series of supervised preplacement visits between the child and adoptive family, and a determination of the child’s eligibility for adoption subsidy assistance. (Id.)
120. As a matter of fact, prolonged stays in foster care of six months for children whose adoptive placements are disrupted due to implementation of the Senate Bill
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539 means test, even assuming immediately available new adoptive homes for all such children, is impossible. 121. Existing, and readily available, DSS data supports the conclusion that adoptive disruptions will cause children to experience additional foster care stays of 24 months or longer as the state seeks to identify and qualify new adoptive parents. The state of Missouri has reported the following percentages of children exiting foster care into finalized adoptions within 24 months of removal from home: 33.10% in FFY2003, 33.70% in FFY 2004, and 38.6% in FFY2005. (DSS Adoption/Guardianship Subsidy Fact Sheet, February 2, 2006, Ex. 95, at 1.) Based upon these reported statistics by DSS, some 61.4% to 66.9% of the children in state legal custody who attain finalized adoptions only to do so after residing in temporary care for a period in excess of 24 months. 122. An October 2005 Yellow Sheet published by the Missouri State Auditor reported that the average length of stay in foster care for children exiting to adoption was 33 months in FY2003 and 31.7 months in FY2004. (Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1.) 123. The number of children awaiting adoption in Missouri whose biological parents already have lost their parental rights through court ordered termination has been increasing. This subgroup of children in temporary care has risen from 1,527 on September 30, 2000 to 1,660 on September 30, 2002 to 1,919 as of January 2006. (HHS AFCARS Performance Data, Missouri Context Data, Ex. 83, at VI-202; Caseload Counter, http://www.dss.mo.gov/mis/clcounter/history.htm., Ex. 53.)
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124. Based upon the above readily available DSS adoption data, the state of Missouri should reasonably anticipate additional foster care stays of 24 months, or even longer, for difficult-to-place, special needs children whose adoptive placements disrupt as a result of the means test. Mr. Luebbering’s cost figure of $427,635, which assumes 6 month additional stays for children experiencing disrupted adoptions (with a means test at 250% of FPL), is understated by a factor of at least 3, or by some $1.5 million. (Savings from Means Test, Ex. 106, at Bates 1 PRP 28-35.)
125. The fiscal impact analysis likewise failed to account for the increased administrative and caseworker costs directly attributable to adoptive disruptions occasioned by the Senate Bill 539 means test. As noted in the April 25, 2005 Fiscal Note published by the Committee on Legislative Research, Oversight Division, “additionally, there may be some additional cost in staff time due to children staying in care longer. However the impact is unknown.” (Fiscal Note, Ex. 35, at 9.) Though unknown in terms of its precise amount, this increased overhead is not inconsequential. Fred Simmens testified that he agreed that there were expenses to foster care outside the maintenance payment to foster parents, such as administrative costs for caseworkers, deputy juvenile officers, and court time (Preliminary Injunction hearing, at 46-47), and that this comment in the Fiscal Note essentially meant that “this fiscal note did not calculate what the added expense was going to be by kids being in foster care longer.” (Id. at 47, 6971.)
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126. Finally, the fiscal impact analysis, which only looked out over a three year horizon, failed to account for the long-term governmental and societal costs to be imposed by the Senate Bill 539 means test as a result of the emotional and developmental harm it would inflict on those children who fail to achieve permanency through adoption. Numerous empirical studies have demonstrated the higher incidence of poverty, emotional and mental disability, and criminal behavior among foster youth who have attained adulthood, particularly among those foster youth who aged out of the foster care system without ever knowing a permanent family. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Wiedemeier Bower.)
127. These well-recognized, negative consequences of childhood instability and displacement generate substantial governmental costs in the form of TANF supplemental income payments, increased Medicaid expenses, and the costs of maintaining a more robust criminal justice system, including a larger prison network. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Wiedemeier Bower.) The state’s fiscal impact analysis makes no reference to these significant long-term economic harms to be caused by Senate Bill 539 and its negative impact on permanency through adoption.
128. The inverse relationship between adoption subsidy funding and the overall governmental costs of operating a child welfare program has been recognized among budget analysts and policy experts. “The rise in adoption spending has not meant an overall increase in child welfare spending because at the same time adoptions have risen, there has been a steep decline in the number of children
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being cared for through foster care contracts with the city … The decline in the foster care population coupled with the increase in adoptions has meant a $42.5 million drop in city-funded costs from 2000 to 2005.” (New York IBO Fiscal Brief, Ex. 91.) 129. In a recent peer review publication of the University of Chicago, University of North Carolina Professor Richard Barth stated “the burgeoning numbers of children receiving adoption subsidies have led some states to be concerned about or even to curtail adoption subsidy levels … This study uses longitudinal adoption subsidy and foster care placement data to estimate the relative costs of foster care and adoption …” and concluded, “[o]n balance, adoption achieves substantial governmental savings.” (“A Comparison of the Governmental Costs of LongTerm Foster Care and Adoption,” Richard P. Barth, Chung Kwon Lee, Judith Wildfire, and Shenyang Guo, University of Chicago Social Service Review, March 2006, Ex. 105, at 1; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Wiedemeier Bower.) Senate Bill 539 Means Test: Elimination of a Threshold into Medicaid for Special Needs Children 130. The DSS Child Welfare Manual expressly recognizes that the “Adoption and Safe Families Act of 1997 requires that Medicaid is provided for children who have a state funded adoption assistance agreement.” (DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.3.) 131. The state of Missouri provides Medicaid coverage to children under a variety of programs including: (1) “MC+ for Children” which covers children under the age of one whose family income is at or less than 185% of the FPL, children between
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the ages of one and six whose family income is at or less than 133% of the FPL,

and children from ages six to eighteen whose family income is at or less than

100% of the FPL; (2) “MC+ for Kids,” Missouri’s State Children’s Health

Insurance Program (SCHIP), 1115 Demonstration Waiver which covers children

whose family income is at or less than 300% of the FPL and who do not otherwise

benefit from employer-subsidized health care insurance or other health care

coverage; and (3) “Children’s Division Adoption Subsidy” which provides

coverage to all children receiving state-funded adoption assistance payments.

(DSS

Missouri

Medicaid

Description,

published

at

http://www.dss.mo.gov/dms/global/pages/about.htm, Ex. 55)

132. Prior to the implementation of the Senate Bill 539 means test, special needs

children adopted by families with an income above 300% of the FPL remain

eligible for Medicaid coverage under the “Children’s Division Adoption Subsidy”

program because they receive adoption subsidies, though they are not qualified

for Medicaid coverage under the means tests employed in Missouri’s alternative

Medicaid programs. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48,

at 30.3)

133. Section 208.640.2 of Senate Bill 539 amends RSMo to provide that “[p]arents and

guardians of uninsured children with incomes between one hundred fifty-one and

three hundred percent of the federal poverty level who do not have access to

affordable employer-sponsored health care insurance or other affordable health

care coverage may obtain coverage pursuant to this section.”

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134. Upon implementation of the Senate Bill 539 means test, special needs children adopted by families earning more than 300% of the FPL will lose their adoption subsidy eligibility and, therefore, their access into the state’s Medicaid program through the Children’s Division Adoption Subsidy program. (Senate Bill 539, Ex. 34, at 208.640.2, 453.073.)
135. Upon implementation of the Senate Bill 539 means test, special needs children adopted by families earning above 200% of the FPL and carrying available employer-sponsored health care coverage will be entitled to Medicaid coverage only if the family purchases such coverage under Section 208.640.2. Prior to the implementation of the Senate Bill 539 means test, these same special needs children qualify for Medicaid under the Children’s Division Adoption Subsidy program at no additional cost to the adoptive family.
136. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, testified that SB 539 includes “vague” language about the ability of families to keep Medicaid if they are means-tested out. She testified that the view she and the Children’s Division have taken, however, is that children whose subsidies are denied or terminated under the implementation of SB 539 will continue to keep their Medicaid. She further characterized Medicaid as an “essential” benefit under adoption agreements. (Martin Dep., Dec. 13, 2005, at 18-19.)
137. Counsel for Defendant stipulated on the record that all children adopted from DSS temporary care must be and will be provided with Medicaid coverage, regardless
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of the income of their adoptive parent. Counsel for Defendant further stipulated that the state intended to implement Senate Bill 539 consistent with this obligation. (Preliminary Injunction hearing, at 6-9.) Senate Bill 539: Threat of Irreparable Harm to Current Foster Children and Adopted Foster Children in Missouri 138. As of August 17, 2005, the Children’s Division projected that at least 1274 special needs children currently receiving an adoption subsidy under an existing contract with DSS will lose their benefit as a result of the Senate Bill 539 amendments. (Adoption Subsidy and Legal Guardianship, Ex. 121, at Bates 1 PRP 41-17.) 139. It is undisputed that the direct result of the adoption subsidy provisions of Senate Bill 539, if implemented, will be longer stays by special needs children in government foster care. (Bullet Points Memo, Ex. 93.) 140. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539, if implemented, also will create uncertainty in relation to the financial capacity of existing adoptive families and putative adoptive parents to meet the serious, and oftentimes expensive, medical, educational and emotional needs of the special needs children they adopt or wish to adopt. The essential bargain underlying an adoption assistance agreement is the promise by the adoptive parent(s) to accept legal custody, and the concurrent responsibilities and duties, of a special needs child until he or she reaches the age of majority in exchange for the state’s commitment to provide monthly assistance payments to make the adoption financially possible without causing undue economic burden on the adoptive family. Senate Bill 539 threatens to undermine or completely withdraw the state’s end of this vital bargain. The
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resulting uncertainty will cause a reduction in the number of adoptions and will prolong the stays of special needs children in temporary foster care placements much to their emotional detriment. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Wiedemeier Bower.) 141. Fred Simmens, the DSS Director from August 2003 to October 2005, testified that he agreed that the means test in SB 539 could have a negative impact on the level of confidence that foster parents and prospective adoptive parents have in some portions of the child welfare system in Missouri, based on the “reasonable assumption” that parents might feel that the state broke its promise to them in the subsidy contracts. (Preliminary Injunction hearing, at 78.) 142. Steve Renne, Acting Director of DSS at all relevant times until April 1, 2005, now Deputy Director of DSS, agreed that Missouri’s adoption subsidy program helped to move children from foster care to adoptive families more quickly than if there were not a subsidy program. (Renne Dep., Jan. 26, 2006, at 9.) He also testified that an adoption subsidy can make the difference between adopting and not adopting for some families. (Id. at 39.) He testified that SB 539’s scheme regarding adoption subsidies provided no direct benefits to children. (Id. at 32.) 143. Martin testified that her department recognized that 1) some children may remain in foster care for longer periods of time under SB 539; 2) some children may come back into foster care due to the inability of families to support their needs; and 3) the bill was “unfair” to those children who are not eligible for IV-E federal funds. (Martin Dep., Dec. 13, 2005, at 14-17; DSS Bill Review, Ex. 97, at Bates 1 PRP 40-123.) Martin testified that if adoptive families were means tested out,
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but kept their child, the loss of the adoption subsidy could present a hardship to the family. (Martin Dep., Dec. 13, 2005, at 39.) 144. Martin testified that DSS had a fact sheet observing that children are less likely to be abused if they are adopted, as opposed to remaining in foster care. (Id. at 5254; DSS Fact Sheet, Ex. 98, at Bates 1 PRP 40-145.) Martin further testified that she was aware of and accepted studies that found it is harmful for children to stay in foster care longer, and that it is preferable to be in an adoptive family as opposed to staying in foster care longer. (Martin Dep., Dec. 13, 2005, at 29.) 145. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 will also deter foster parents from adopting special needs children placed into their temporary physical custody. These foster parents currently receive for the duration of the child’s foster care episode a dependable stream of foster care maintenance payments from the state to assist in the care of the child. If Senate Bill 539 takes effect, foster parents will become less inclined to adopt a special needs foster child and thereby exchange the certain stream of foster care maintenance payments for the, oftentimes, reduced flow of adoption assistance payments, particularly when the stream of adoption assistance benefits is rendered uncertain in duration and amount. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Weidemeier Bower.) 146. As children spend more time in foster care, they are likely to be subjected to multiple moves in custody, which is harmful. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 14; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Weidemeier Bower.)
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147. Senate Bill 539 also threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the courtsupervised consent decree entered in G.L., An Infant, by and through his Next Friend, et al. v. Gary Stangler et al, No. 77-0242-CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. (July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al., Ex. 56.)
Harm to Named Plaintiffs: Impact of Senate Bill 539 on Adoption Assistance Agreements E.C.
148. Named Plaintiff E.C., by her Next Friend Jill Katz, resides in the legal custody of the Children’s Division of the Missouri Department of Social Services in Jackson County, Missouri. E.C. is a member of the class of foster children privy to the consent decree entered in G.L., An Infant, by and through his Next Friend, et al. v. Stangler, et al., No. 77-0242-CV-W-1 (United States District Court for the Western District of Missouri). (Anticipated testimony of E.C.; Preliminary Injunction hearing, at 22.)
149. E.C. has lived in numerous foster homes since entering foster care at the age of seven and has tired of moving from one home to another. E.C. has lived in her
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current foster home for two years, has formed a bond with her current foster mother, and wishes to be adopted by her. She desperately wants to enjoy safety and stability in her life. (Anticipated testimony of E.C.; Preliminary Injunction hearing, at 23-26. 150. The Children’s Division had previously determined that E.C. was ineligible for Title IV-E adoption assistance, but in February 2006, the Children’s Division found that it had determined E.C.’s Title IV-E eligibility status in error, and that E.C. is in fact entitled to federally funded adoption assistance, if she is adopted. (Anticipated trial testimony of Jill Katz and Niann Hines.) This also means that a family who wishes to adopt E.C. will not be subjected to a means test as provided for in Missouri Revised Statute section 453.073.4, as amended by Senate Bill 539, nor will such a family risk losing adoption assistance in the future because their income has surpassed the level permitted by the amended statute. 151. E.C.'s foster mother, Niann Hines received monthly foster care maintenance payments from DSS to care for E.C.. Though she wished to adopt E.C., Ms. Hines feared that loss of the foster care maintenance payments, coupled with E.C.’s nonIV-E adoption subsidy status, would impose an economic hardship and prevent her from fully providing for E.C.’s special needs. Upon learning that E.C. is actually eligible for a Title IV-E adoption subsidy, Ms. Hines shortly thereafter instituted proceedings to adopt E.C. (Anticipated testimony of Niann Hines.) A.C. 152. Named Plaintiff A.C., by his parent and Next Friend Lana Capps, is a six-year-old boy who was adopted from the Missouri foster care system in 2002. A.C. and
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Ms. Capps live in Boone County, Missouri. (Anticipated testimony of Lana Capps; Declaration of Lana Capps, Ex. 7.) 153. A.C. suffers from a congenital heart disorder that has necessitated 14 hospitalizations and two open-heart surgeries during his young life. He will require additional heart surgeries. (Anticipated testimony of Lana Capps; Declaration of Lana Capps, Ex. 7.) 154. Ms. Capps earns approximately $3,600 a month. She currently receives a monthly adoption subsidy of $651 under an adoption assistance agreement she executed with the State of Missouri. The adoption subsidy is a significant portion of Ms. Capps’ monthly income, and without it Ms. Capps ability to meet A.C.’s necessary and regular medical, emotional, psychological, and educational needs will be severely and negatively affected. (Anticipated testimony of Lana Capps; Declaration of Lana Capps, Ex. 7..) 155. The Children’s Division determined that A.C. is not eligible for federally funded adoption assistance under Title IV-E because A.C.’s natural mother had income that exceeded Title IV-E guidelines at the time A.C. was removed from the home and placed into foster care. (Anticipated testimony of Lana Capps; Declaration of Lana Capps, Ex. 7; Letter to L. Capps from L. Cole, July 29, 2005, Ex. 119, PR 14-285.) 156. Because A.C. is ineligible for Title IV-E adoption assistance, the State of Missouri has subjected Ms. Capps’ income to a means test and has determined that her income exceeds the amount permitted by Missouri Revised Statute section 473.053.4, as amended by Senate Bill 539. If Senate Bill 539 is permitted
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to take effect, the state-funded monthly maintenance adoption subsidy of $651 that Ms. Capps has received since she adopted A.C. will terminate. (Anticipated testimony of Lana Capps; Declaration of Lana Capps, Ex. 7.) J.C. 157. Named Plaintiff J.C., by his Next Friend Jill Katz, is a 16-year-old now living in the legal custody of the Children’s Division, Missouri Department of Social Services, in Jackson County, Missouri. J.C. is a member of the G.L. v. Stangler, et al. class. (Anticipated testimony of J.C.; Preliminary Injunction hearing, at 3132.) 158. J.C. has lived in foster care since 1997, following the death of his mother and a short stay with his legal guardian. J.C.’s father’s parental rights have been terminated. Since 1997, J.C. has been placed into more foster homes and group homes than he can recall, and he presently resides in a group home. (Anticipated testimony of J.C.; Preliminary Injunction hearing, at 32-33.) 159. J.C. wishes to be adopted and has experienced several adoptive placements that disrupted before finalization. After J.C.’s mother died and his legal guardian had relinquished custody, it was discovered that J.C. had been the victim of severe abuse while in his mother’s care. These experiences left J.C. physically and emotionally traumatized and have necessitated ongoing therapy and treatment. J.C.’s condition and prognosis have improved, but he continues to require therapy and medication. (Child Profile, January 28, 2000, Ex. 108, at Bates RP 3 – 20002007)
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160. J.C. would like to have a family that he can count on and trust, and J.C. believes he could have a better life if he were adopted. In foster care, J.C. has not been able to do some of the things that other 16-year-olds do, such as go with friends to the mall or get a driver’s license, and J.C. has not been able to spend the Christmas holidays with a family since he has been in foster care. J.C. fears that the absence of an adoption subsidy will prevent his dream of having an adoptive family. (Anticipated testimony of J.C.; Preliminary Injunction hearing, at 32-34; Katz Dep., February 23, 2006, at 5-6.)
T.F., B.F. and A.F. 161. Named Plaintiffs T.F., B.F. and A.F., (formerly known as T.G., B.G., and A.G.), by their Next Friend Jill Katz are biological siblings, ages ten, seven, and five, living with their adoptive parents, Elizabeth W. Fischer and John S. Fischer, in Jackson County, Missouri. Prior to their adoption of T.F., B.F., and A.F., Mr. and Mrs. Fischer were foster parents to the three children through the Missouri foster care system. (Anticipated testimony of Elizabeth W. Fischer; Affidavit of Elizabeth W. Fischer, Ex. 3; see also Plaintiffs’ Ex. 126, 127, 128.) 162. T.F., B.F, and A.F. were severely neglected by their biological parents with farreaching consequences for the children. T.F. is diagnosed with ADHD and has required residential treatment in the past. T.F. continues to be evaluated for other possible disorders. B.F., who was also subjected to abuse in her biological home, has long-term conditions, including bipolar and attachment disorders. B.F. has also required hospitalization for her disorders, including after the finalization of her adoption by Mr. and Mrs. Fischer. A.F. has been diagnosed with post-
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traumatic stress disorder for which she receives therapy and takes prescription medication. (Anticipated testimony of Elizabeth Fischer; Affidavit of Elizabeth W. Fischer, Ex. 3.) 163. As foster parents for T.F., B.F., and A.F., Mr. and Mrs. Fischer received approximately $1,800 per month in foster care maintenance and subsidies, which included the behavioral rate for T.F. and B.F. Federal law prohibits the payment of Title IV-E adoption assistance benefits in amounts in excess of the pre-existing foster care maintenance payments. See 42 U.S.C. 673(a)(3). (Missouri Title IV-E State Plan, Ex. 45, at Sec. 4, Requirement 3(c).) Because of the preliminary injunction granted by the Court in this cause, the state now pays the Fischer’s approximately $1,500 per month in adoption assistance maintenance payments. T.F. and B.F. continue to be paid at the behavioral rate. (Anticipated testimony of Elizabeth Fischer; Affidavit of Elizabeth W. Fischer, Ex. 3.) 164. All three siblings would have been eligible for federally-funded assistance under Title IV-E but for errors in family court documents only detected by the state after the timeframe for perfecting Title IV-E eligibility had expired. (Anticipated testimony of Elizabeth Fischer; Affidavit of Elizabeth W. Fischer, Ex. 3.) 165. Because the three children do not qualify for Title IV-E adoption assistance, if the means test in Senate Bill 539 is enforced, the Fischer’s eligibility for state-funded adoption subsidies will depend upon their income. The Fischer’s monthly income is approximately $7,800 – well above the level permitted by Senate Bill 539. Thus, the Fischer’s will lose the adoption assistance they now receive for their three adopted children, which constitutes approximately 15% of their present
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family income. (Anticipated testimony of Elizabeth Fischer; Affidavit of Elizabeth W. Fischer, Ex. 3.) W.S., M.S. and D.S. 166. Named Plaintiffs W.S., M.S., and D.S., by their parent and Next Friend Robert Brian Strange, are boys aged 10, 7 and 6, respectively, who were adopted from the Missouri foster care system in 2000 as a sibling group. The boys were all in the G.L. v. Stangler et al. class prior to their adoption. (Anticipated testimony of Robert Strange; Affidavit of Robert Brian Strange, Ex. 4.) 167. W.S., M.S. and D.S. now live with their adoptive parents, Robert and Jennifer Strange, in Cass County, Missouri. The boys were initially removed from their biological home after M.S. sustained severe burns when held against a hot water heater by his mother. D.S. is developmentally disabled. (Anticipated testimony of Robert Strange; Affidavit of Robert Brian Strange, Ex. 4.) 168. The Strange’s annual income is about $62,400. They currently receive three separate $275 adoption assistance payments each month under the adoption assistance agreements they executed with the state of Missouri on behalf of each of the boys. The Strange’s cannot support the medical, educational, emotional and physical needs of the boys absent the adoption assistance. (Anticipated testimony of Robert Strange; Affidavit of Robert Brian Strange, Ex. 4.) 169. The state of Missouri sent a notice letter to the Strange’s stating that W.S.’s and M.S.’s adoption subsidies will terminate permanently if the family’s gross annual income exceeds the Senate Bill 539 means test. The letter further gave notice that should the family’s gross income meet the means test, all three boys’ adoption
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assistance agreements will, by operation of Senate Bill 539, permanently expire within the year. (Anticipated testimony of Robert Strange; Affidavit of Robert Brian Strange, Ex. 4; see also Plaintiffs’ Ex. 124 and 125.) M.P. 170. Named Plaintiff M.P., by adoptive parent and Next Friend Michael Patterson, is a 16-year-old adopted child who currently reside with his father in Jackson County, Missouri. M.P. was a member of the G.L. v. Stangler et al. class prior to his adoption. (Anticipated testimony of Michael Patterson; Affidavit of Michael Patterson, Ex. 5.) 171. M..P. was placed in Michael Patterson’s home as a foster child. Mr. Patterson has been a foster parent to over 20 children in the past eight years. In addition to M.P., Mr. Patterson has adopted four other children from foster care, three of whom are now adults and living on their own. Mr. Patterson is proud that all of his three grown children graduated from high school, and the youngest was offered a college scholarship. (Anticipated testimony of Michael Patterson; Affidavit of Michael Patterson, Ex. 5.) 172. M.P. was removed from his home and placed in foster care in 1992 because of neglect and his mother’s drug abuse. He was placed in Mr. Patterson’s foster home in December 2002 after having lived in over 15 foster homes and children’s shelters. Mr. Patterson received the behavioral rate for M.P.’s foster care because of problems that M.P. was experiencing both at home and at school. Mr. Patterson has adopted M.P. and continues to receive the behavioral rate as maintenance under an adoption subsidy agreement executed with DSS.
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(Anticipated testimony of Michael Patterson; Affidavit of Michael Patterson, Ex. 5; Psychological Evaluation, July 15, 2003, Ex. 109, at Bates PR12 / 43-47.) 173. Mr. Patterson has been informed that M.P. is not eligible for federal adoption assistance under Title IV-E, and that therefore, under Senate Bill 539, M.P.’s adoption assistance for maintenance will terminate permanently if Mr. Patterson’s gross annual income fails the bill’s means test. Mr. Patterson expects that his income will exceed the level permitted by Senate Bill 539. Mr. Patterson has been further informed that even if his gross income passes the means test, M.P.’s adoption assistance agreement will, by operation of Senate Bill 539, permanently expire at the end of one year. (Anticipated testimony of Michael Patterson; Affidavit of Michael Patterson, Ex. 5; Letter to M. Patterson from F. Simmens of DSS, May 25, 2005, Ex. 63; Letter to M. Patterson from F. Simmens of DSS, July 25, 2005, Ex. 64, at 1.) J.A. 174. Named Plaintiff J.A., by his parent and Next Friend John Antonich, is a 15 yearold boy. He was adopted from the Missouri foster care system in 2004 after some 6 years in foster care. J.A. lives with his adoptive parents in Jefferson County, Missouri. (Anticipated testimony of John Antonich; Preliminary Injunction hearing, at 134-136.) 175. While in foster care, J.A. lived in 23 different foster homes between the ages of 8 and 10. He later was placed into group care after a suicide attempt. J.A. suffers from severe anxiety, attention deficit hyperactive disorder (“ADHD”), oppositional defiant behavior, and depression. The depression condition has
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required hospitalization. J.A. also has required intensive tutoring to improve his challenged educational growth. (Anticipated testimony of John Antonich; Preliminary Injunction hearing, at 136-139.) 176. Mr. Antonich earns approximately $4,580 a month. The Antonich’s currently receive a monthly $651 adoption subsidy under an adoption assistance agreement they executed with the state of Missouri. The Antonich’s cannot afford the considerable educational, psychiatric and behavioral care necessary to address J.A.’s special needs absent the adoption subsidy. (Anticipated testimony of John Antonich; Preliminary Injunction hearing, at 140-142.) 177. The state of Missouri has sent a notice letter to the Antonich’s stating that their adoption subsidies will be terminated permanently if their annual income exceeds the Senate Bill 539 means test – 200% of the FPL for a family of 3 is $32,180 under current federal guidelines. Mr. Antonich earns approximately $54,960 per year, and his income will, therefore, surpass the Senate Bill 539 means test. The letter further gave notice that should the family’s gross income meet the means test, J.A.’s adoption assistance agreement will, by operation of Senate Bill 539, permanently expire within the year. (Anticipated testimony of John Antonich; Preliminary Injunction hearing, at 140-142; see also Ex. 27, 28, 29, 30.) T.J. and A.J. 178. Named Plaintiffs T.J. and A.J., by their parent and Next Friend Lavada Johnson, are 7 and 5 years old, respectively. They were adopted from the Missouri foster care system. Ms. Johnson, who is 60 years old, also supports two children in
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therapeutic foster care. (Anticipated testimony of Lavada Johnson; Declaration of Lavada Johnson, Ex. 9.) 179. T.J. suffers from severe asthma, sinus disease, ADHD and hypoglycemia and requires daily medication. A.J. suffers from chronic lung disease, chronic and persistent asthma and ADHD and also requires daily medication. (Anticipated testimony of Lavada Johnson; Declaration of Lavada Johnson, Ex. 9.) 180. Ms. Johnson earns approximately $1,160 a month. She currently receives monthly $651 adoption subsidy payments under the adoption assistance agreements she executed with the state of Missouri. Ms. Johnson cannot afford the considerable medical, psychiatric, educational and emotional care necessary to address T.J.’s and A.J.’s special needs absent the adoption subsidy. (Anticipated testimony of Lavada Johnson; Declaration of Lavada Johnson, Ex. 9.) 181. The state of Missouri has sent a notice letter to Ms. Johnson stating that the children are Title IV-E eligible, but that her adoption assistance agreements will automatically expire in 2006. (Anticipated testimony of Lavada Johnson; Declaration of Lavada Johnson, Ex. 9.) N.S. 182. Named Plaintiff N.S., by his parent and Next Friend Tammy Smith, is a fouryear-old boy who was adopted from the Missouri foster care system in 2002 by Mrs. Smith and her husband, Harold Smith. N.S. lives with his adoptive parents in St. Charles County, Missouri. (Anticipated testimony of Tammy Smith; Declaration of Tammy Smith, Ex. 10.)
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183. N.S.’s natural mother consented to the termination of her parental rights shortly after N.S. was born. The parental rights of N.S.’s natural father were terminated by default. (Order, Judgment and Decree of Court, St. Louis County, June 12, 2002, Ex. 111, at Bates PR 20 / 9-11.)
184. At the time of N.S.’s adoption, Mr. and Mrs. Smith executed an adoption subsidy agreement with the Division of Family Services (now Children’s Division) that provides a monthly adoption assistance maintenance payment at the standard rate until the year 2020 when N.S. will be eighteen years old. (Anticipated testimony of Tammy Smith; Declaration of Tammy Smith, Ex. 10.)
185. N.S. suffers from severe asthma and takes four different medications daily to control the condition. N.S. also requires two breathing treatments twice daily. The asthma condition occasionally results in asthmatic crises and has required as many as 11 visits to the hospital in one 13-month span. (Anticipated testimony of Tammy Smith; Declaration of Tammy Smith, Ex. 10.)
186. Because of N.S.’s severe asthma and allergies, Mr. and Mrs. Smith requested that N.S.’s adoption assistance maintenance payment be increased to the medical rate of $651 per month, and that request was granted by the Division of Family Services in 2004. Mr. and Mrs. Smith use the additional money to pay for daycare services not provided by the state, co-pays for N.S.’s medical care, and N.S.’s medications not covered by insurance. Because of N.S.’s condition and special needs, the Smith’s have had to modify their home, including, but not limited to, the removal of carpeting and the installation of special flooring and bedding, and the increased payment helps to cover that expense. Utility costs are
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higher for the Smith’s because windows in the home must be kept closed. Finally, N.S.’s frequent illnesses have required Mrs. Smith to be absent from her job, so much that she uses her allowable time off as quickly as she earns it, and thus the maintenance payment helps to make up for income lost when Mrs. Smith is forced to take unpaid leave in order to care for N.S. (Anticipated testimony of Tammy Smith; Declaration of Tammy Smith, Ex. 10.) 187. N.S. is eligible for federally funded adoption assistance under Title IV-E. The state, however, has informed Mr. and Mrs. Smith that their subsidy agreement will expire within one year and have to be renegotiated. (Anticipated testimony of Tammy Smith; Declaration of Tammy Smith, Ex. 10.) 188. The Smith’s have obtained approval to adopt a second child, but they are concerned that the changes in the adoption subsidy program will make adoption a financial hardship, and they have lost confidence that the state will adhere to its agreements in these matters. (Anticipated testimony of Tammy Smith; Declaration of Tammy Smith, Ex. 10.) II. PROPOSED CONCLUSIONS OF LAW: Elements of Proof for Permanent Injunctive Relief 1. Entry of an injunction is proper where (1) there is a threat of irreparable harm to the movant, (2) the threatened irreparable harm outweighs the injury that granting the injunction will inflict on other litigants, (3) the movant has a probability or likelihood of success on the merits, and (4) the public interest will be served by granting an injunction. Dataphase Systems v C L Systems, Inc., 640 F.2d 109, 114 (8th Cir. 1980) (en banc). The standard for granting a permanent injunction is
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essentially the same as for a preliminary injunction, except that to obtain a permanent injunction the movant must attain success on the merits. Bank One v. Guttau, 190 F.3d 844, 847 (8th Cir. 1999) (citing Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n.12 (1987)). The grant of a permanent injunction lies within the discretion of the trial court and is subject to review for abuse of that discretion. Randolph v. Rogers, 170 F.3d 850, 856 (8th Cir. 1999). 2. This Court entered a preliminary injunction on September 9, 2005. By order dated September 29, 2005, this Court certified a plaintiff class in this action comprised of “all future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a court-ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.” Federal and State Statutory and Regulatory Scheme for Missouri Adoption Subsidy Program 3. Defendant, K. Gary Sherman, is the Director of DSS and, in that capacity, oversees and is legally responsible for the administration and management of the Children’s Division and the implementation of its child welfare programs and services, including adoption services. (RSMo Section 660.010.1; Sherman Dep., Jan. 26, 2006, at 4, 19-21.) 4. The federal Title IV-E adoption assistance program provides federal matching funds to states that establish HHS-approved “qualifying plans” to provide adoption assistance for children with special needs. 42 U.S.C. §671. 5. The state of Missouri has a qualifying “State Plan for Title IV-E of the Social Security Act Foster Care, Independent Living and Adoption Assistance”
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(“Missouri State Plan”) and receives federal funding for adoption assistance purposes. (Missouri Title IV-E State Plan, Ex. 45.) 6. Missouri state law, § 453.074.1, states that “the division of family services shall have the following duties in the administration of the subsidy program: . . . Comply with all federal laws relating to adoption subsidies in order to maintain the eligibility of the state of Missouri for federal funds.” § 453.074.1 RSMo. As a matter of law, DSS is required to operate its entire adoption subsidy program in compliance with federal law. 7. Additionally, the Missouri State Plan requires that “[a]s a condition of the receipt of Federal funds under title IV-E of the Social Security Act … the [state agency] … hereby agrees to administer the program in accordance with the provisions of this State plan, title IV-E of the Act, and all applicable Federal regulations and other official issuances of the Department.” (Missouri Title IV-E State Plan, Ex. 45, at 2.) As a matter of law, DSS is required to operate its entire adoption subsidy program in compliance with federal law. 8. As held by the Eighth Circuit Court of Appeals, “The state of Missouri has availed itself of the funds offered by Congress through the [Adoption Assistance Act]. Although Congress may not require a state to participate in a program created pursuant to the Spending Clause, once a state agrees to take the funds offered through such programs the state is bound to comply with federally imposed conditions . . . . The [Adoption Assistance Act] requires Missouri to submit to the Secretary of Health and Human Services (HHS) a state plan for providing foster care and adoption assistance that meets the standards enacted by
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Congress. 42 U.S.C. § 671. In Missouri, the Department of Social Services,

through its Division of Family Services, has been designated to administer the

state plan and assure compliance with the [federal] Act. Mo. Rev. Stat. §§

207.010, 207.060, 660.010 (2000).” Missouri Child Care Ass’n v. Cross, 294

F.3d 1034, 1036 (8th Cir. 2002) (internal quotation marks and citation omitted).

9. As a matter of law, the state of Missouri has agreed through its State Plan to

comply with federal regulations and official HHS issuances in administering its

entire adoption subsidy program to Title IV-E eligible and state-only recipients.

(Missouri Title IV-E State Plan, Ex. 45.)

10. Available to the public on-line since September of 2001, the federal Child

Welfare Policy Manual provides official issuances of the U.S. Department of

Health and Human Services (HHS) on the interpretation of federal law and federal

regulations in the area of child welfare, including adoption subsidies. (Federal

Child

Welfare

Policy

Manual,

Ex.

113;

http://www.acf.hhs.gov/j2ee/programs/cb/laws_policies/laws/cwpm/index.jsp;

Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice

expert, Jeanette Wiedemeier Bower.)

11. Children with “special needs” are those whom the State has “determined . . .

cannot be returned to the home of his parents” and for whom “there exists with

respect to the child a specific factor or condition (such as his ethnic background,

age, or membership in a minority or sibling group, or the presence of factors such

as medical conditions or physical, mental, or emotional handicaps) because of

which it is reasonable to conclude that such child cannot be placed with adoptive

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parents without providing adoption assistance under this section or medical assistance under title XIX.” See 42 U.S.C. § 673(c). 12. Missouri law and Missouri DSS policy include all foster children in the custody of the Children’s Division of DSS as “special needs” children for purposes of adoption assistance subsidies. See Mo. Rev. Stat. § 453.073.2. 13. As a matter of law, all class members are thus “special needs” children under federal and state law. 14. The federal Adoption Assistance Act, Section 673(a)(3), requires, in part: “[t]he amount of the payments [adoption subsidies] to be made in any case under clauses (i) and (ii) of paragraph (1)(B) shall be determined though agreement between the adoptive parents and the State or local agency administering the program under this section, which shall take into consideration the circumstances of the adopting parents and the needs of the child to be adopted, and may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.” 15. Section 673(a)(21) of the Adoption Assistance Act requires that a state’s Title IVE plan must: “provide for health insurance coverage … for any child who has been determined to be a child with special needs, for whom there is in effect an adoption assistance agreement (other than an agreement under this part [42 USCS §§670 et seq.] between the state and an adoptive parent or parents, and who the state has determined cannot be placed with an adoptive parent or parents without medical assistance ….”
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16. As a matter of law, all current or former DSS foster children are entitled to full medical benefits upon adoption regardless of the income of their adoptive parents. See Section 673(a)(21).
17. Federal law prohibits the payment of Title IV-E adoption assistance benefits in amounts in excess of the pre-existing foster care maintenance payments. (Missouri Title IV-E State Plan, Ex. 45, at Sec. 4, Requirement 3(c).) See 42 U.S.C. 673(a)(3).
18. The federal Adoption Assistance Act, Section 675(3), requires that “[t]he term “adoption assistance agreement” means a written agreement, binding on the parties to the agreement, between the State agency, other relevant agencies, and the prospective adoptive parents of a minor child which at a minimum (A) specifies the nature and amount of any payments, services, and assistance to be provided under such agreement, and (B) stipulates that the agreement shall remain in effect regardless of the State of which the adoptive parents are residents at any given time.” See 42 U.S.C. §675(3).
19. Section 453.073 RSMo requires: “a written agreement shall be entered into by the division and the parents. The agreement shall set forth the following terms and conditions: (1) The type of allotment; (2) The amount of assistance payments; (3) The services to be provided; (4) The time period for which the subsidy is granted.”
20. Senate Bill 539 amends Section 453.073.3(4) of RSMo to require: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at
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the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) Section 453.073.3(4) of Senate Bill 539, on its face, applies to both Title IV-E eligible (federal/state funded) and non-Title IV-E eligible (stateonly funded) adoption assistance agreements. 21. Senate Bill 539 amends Section 453.073.4 of RSMo to require: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) Section 453.073.4, on its face, applies to non-Title IV-E eligible adoption assistance agreements. 22. HHS regulations require that “there must be no income eligibility requirement (means test) for the prospective adoptive parent(s) in determining eligibility for adoption assistance payments.” 45 CFR 1356.40(c). (1) Plaintiffs’ Success on the Merits 23. Plaintiffs have succeeded on the merits of the statutory and constitutional causes averred in Counts I, II and III of their complaint.
COUNT I: Violation of Adoption Assistance Act 24. Under 42 U.S.C. § 1983, a federal cause of action exists against anyone acting
pursuant to state authority that violates any “rights, privileges or immunities secured by the Constitution and laws of the United States.” Pediatric Specialty Care, Inc. v. Arkansas Dep’t of Human Services, 293 F.3d 472, 477 (8th Cir. 2002) (quoting 42 U.S.C. § 1983). Section 1983 provides a federal claim for
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violations of both federal constitutional and statutory law. Id. (citing Maine v. Thiboutot, 448 U.S. 1, 4 (1980). 25. The Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. §§ 620-629(i) and 670679(b), constitutes controlling federal statutory law under the Supremacy Clause of the United States Constitution. See Blum v. Bacon, 457 U.S. 132, 145-56 (1986)(holding that, under the Supremacy Clause, federal Spending Clause legislation, such as the Adoption Assistance Act, supercedes conflicting state statutes and regulations). See also Missouri Child Care Association v. Cross, 294 F.3d 1034 (8th Cir. 2002)(the Adoption Assistance Act constitutes the supreme law of the land). 26. Moreover, Section 673(a)(3) of the Adoption Assistance Act is privately enforceable. See Pediatric Specialty Care, supra,, 293 F.3d 472, 477-78 (8th Cir. 2002) (setting forth private right of action standard); ASW v. Oregon, 424 F.3d 970, 975-78 (9th Cir. 2005) (§ 673(a)(3) creates private right of action); Missouri Child Care Ass’n v. Martin, 241 F. Supp. 2d 1032, 1041-42 (W.D. Mo. 2003) (on remand) (§§ 672 and 675 confer enforceable private rights of action). 27. Three factors determine whether a particular statute creates a private right of action: (1) whether the provision in question was “intend[ed] to benefit the putative plaintiff”; (2) whether the interest the plaintiff asserts is not so “vague and amorphous” that it is beyond the competence of the judiciary to enforce; and (3) whether the provision in question creates a binding obligation on the
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governmental unit. Pediatric Specialty, 293 F.3d 472, 477 (8th Cir. 2002)(citing Blessing v. Freestone, 520 U.S. 329, 340 (1997)). 28. Section 673(a)(3) meets the first prong of the private right of action test, as Plaintiffs are the clearly intended recipients and beneficiaries of the adoption assistance benefits conferred under the federal statute. Missouri Child Care, 241 F. Supp. 2d 1032, 1041 (W.D.Mo. 2003)(the beneficiaries of Section 672 foster care maintenance payments are the foster children though their benefits may be paid indirectly through licensed providers); ASW, 424 F.3d 970, 975-78 (9th Cir. 2005). Section 673(a)(3) contains “rights creating language” that demonstrates a statutory intent to confer a private right of action. See Gonzaga University v. Doe, 536 U.S. 273 (2002)(where the Court clarified the three-pronged standard in Blessing. Id at 283); see also Masterman v. Goodno, 2004 U.S. Dist. LEXIS 354 at *20-24 (D.Minn. Jan. 8, 2004). 29. Section 673(a)(3) additionally satisfies the second prong of the private right of action test requiring that plaintiff assert an interest that is not so “vague and amorphous” as to be beyond the competence of the judiciary to enforce. Pediatric Specialty Care, 293 F.3d at 477 (citing Blessing, 520 U.S. at 340). See also Missouri Child Care, 241 F. Supp. 2d 1032, 1041 (W.D.Mo. 2003); ASW, 424 F.3d 970, 975-78 (9th Cir. 2005) Section 673(a)(3) explicitly provides that the amount of any adoption assistance payments may be adjusted only with the “concurrence” of the adopting parents, and in consideration of specific factors, including the “the needs of the child being adopted.” 42 U.S.C § 673. As a matter of law, this statutory provision is well suited to court enforcement.
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30. The final prong of the test, “whether the provision in question creates a binding obligation on the governmental unit,” is also satisfied by § 673(a)(3). Pediatric Specialty Care, 293 F.3d at 477 (citing Blessing, 520 U.S. at 340)(the statutory provision to be enforced must be couched in mandatory rather than precatory terms.”). Section 673(a)(3) states that the adoption subsidy “shall be determined through agreement between the adoptive parents and the state or local agency” and that the only circumstance where the subsidy may be “adjusted periodically” is “with the concurrence of the adopting parents.” See also ASW, 424 F.3d 970, 975-78 (9th Cir. 2005) (concluding § 673(a)(3) creates a private right of action).
31. Section 453.073.3(4) places within the discretion of the DSS Director the unilateral authority to renew adoption subsidy agreements executed by the state of Missouri for both IV-E eligible and non-IV-E eligible subsidies. On its face, this provision conflicts with, violates, and is preempted by the express language of 42 U.S.C. 673(a)(3) which states that adoption subsidy agreements “may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.” (emphasis added.)
32. Section 453.073.3(4) further imposes a blanket one-year limitation upon the duration of all adoption subsidy agreements and causes all existing adoption subsidy agreements to expire automatically upon their one-year anniversary. On its face, this provision likewise conflicts with, violates, and is preempted by the express language of 42 U.S.C. 673(a)(3) which states that adoption subsidy
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agreements “may be readjusted periodically with the concurrence of the adopting parents …” 33. In evaluating an alleged statutory violation or conflict, courts first look to the plain meaning of the subject statutory provisions. Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984); See also Camacho v. Texas Workforce Comm’n, 408 F.3d 229, 236-37 (5th Cir. 2005). Additionally, official policy issuances of HHS, the federal agency charged with implementing the Title IV-E program, are to be given deference. See id. at 844 (“a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of any agency”). 34. Here, the plain language of Section 673(a)(3) is dispositive. However, even if the Court were to look beyond this plain statutory language, Section 453.073.3(4), in imposing a blanket limitation on duration and automatic expiration, conflicts with and is preempted by the controlling official HHS issuance in the HHS Child Welfare Policy Manual, Section 8.2D.2, which states: “States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.” 35. Moreover, the blanket limitation on duration provision also conflicts with and is preempted by the controlling official HHS issuance in the HHS Child Welfare Policy Manual, Section 8.2D.5, requiring that adoption assistance payments must continue until (1) the child has attained the age of 18 (or 21 if the state has
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determined that the child has a mental or physical disability which would warrant the continuation of assistance); (2) the State determines that the adoptive parents are no longer legally responsible for the support of the child; or (3) the State determines that the adoptive parents are no longer providing any support to the child. ( HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.5.) 36. Finally, the Court has received into the evidentiary record an August 29, 2005 letter from Linda K. Lewis, Regional Administrator of the United States Department of Health and Human Services to DSS Director K. Gary Sherman. This letter sets forth the following official position of HHS: “[t]he Administration for Children and Families has determined that Missouri is out of compliance with title IV-E requirements because SB 539 states that the period for which all subsidies will be granted will not exceed one year and the director has the discretion as to whether the agreement can be renewed for subsequent years.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 37. The August 29, 2005 HHS letter further states, “Federal requirements state that once a child is determined eligible for title IV-E adoption assistance, he or she remains eligible and the subsidy continues for reasons specified in the Federal policy [Child Welfare Policy Manual, Section 8.2B.9 and Social Security Act – Section 473]. The Federal policy further states that States may not have a blanket policy which limits the duration of adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents … [Child
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Welfare Policy Manual, Section 8.2D.2 and Social Security Act – section 473]. The Missouri legislation, however, states that the period for which all subsidies will be granted will not exceed one year.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 38. The August 29, 2005 letter also states, “Federal policy [Child Welfare Policy Manual Section 8.2D.5 and Social Security Act – section 473; and 45 CFR 1356.40(b)] provides that once a child is determined eligible for adoption assistance under IV-E, he or she remains eligible and the subsidy continues unabated. Once an adoption assistance agreement is signed and in effect, it can only be terminated if 1) the child has reached the age of 18 (or the age of 21 if the State has determined that the child has a mental or physical disability which would warrant continuation of assistance), 2) the State determines that the adoptive parents are no longer legally responsible for the support of the child, or 3) the State determines that the adoptive parents are no longer providing any support to the child. Missouri’s legislation, however, states that the agreement can be renewed for subsequent years “at the discretion of the director” and therefore violates Federal policy.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 39. The Court gives due deference to this letter as well as official HHS policy issuances in construing of 42 U.S.C. Section 673(a)(3). Section 453.073.3(4) conflicts with and is preempted by the plain meaning of 673(a)(3) of the Adoption Assistance Act, the reasonable official HHS issuances under that Act, and as
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specifically construed and applied by HHS in the Lewis letter in administering the Title IV-E federal program.
COUNT II: Equal Protection 40. Missouri Senate Bill 539 amends the state’s adoption subsidy law to include a
new Mo. Rev. Stat. § 453.073.4. The “means test” established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards of the Missouri foster care system. The means test will be applied both retroactively and prospectively to initially deny or terminate existing adoption subsidy benefits to one group of children and not the other. 41. Specifically, for one group, in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the 1996 Aid for Families With Dependent Children (AFDC) eligibility standard for Title IV-E purposes (also referred to as “non IV-E eligible” children), the new means test will be imposed on the income of the children’s existing or prospective adoptive parents to initially deny or terminate their existing adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes (“IV-E eligible” children), no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. Mo. Rev. Stat. § 453.073.4 creates an unlawful discriminatory classification under the Equal Protection Clause. 42. A single governmental purpose has been advanced for § 453.073.4 and its means test: achieving cost savings in the state’s adoption subsidy program by reducing
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the amount of state funds appropriated for the program and directing those funds to the most needy. 43. First, this classification infringes on the fundamental right of foster children -their liberty interest in avoiding unnecessary government confinement -- and cannot survive strict scrutiny review. A discriminatory classification implicating a suspect class or a fundamental right triggers strict scrutiny. Plyler v. Doe, 457 U.S. 202, 216-218 (1982); Lubin v. Panish, 415 U.S. 709, 721-22 (1974). Under strict scrutiny, a statute’s classification must be narrowly tailored to achieve a compelling state purpose. Plyler v. Doe, 457 U.S. at 216-218. 44. “Liberty from bodily restraint always has been recognized as the core of the liberty protected by the Due Process Clause from arbitrary governmental action.” Youngberg v. Romeo, 457 U.S. 307, 316 (1982) (citing Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1, 18 (1979) (Powell, J., concurring in part and dissenting in part). See also DeShaney v. Winnebago, 489 U.S. 189, 200 (1989); Ingraham v. Wright, 430 U.S. 651, 673-674 (1977); Collins v. Bellinghausen, 153 F.3d 591, 596 (8th Cir. 1998). 45. Unnecessarily prolonged confinement in government foster care invokes the substantive due process liberty interests of foster children. See DeShaney, 489 U.S. at 201 n.9; Taylor v. Ledbetter, 818 F.2d 791, 796-97 (11th Cir. 1987) (recognizing due process liberty interest of foster child in state custody in a damages action under § 1983); Kenny A. v. Perdue, 356 F.Supp.2d 1353, 1360-61 (N.D.Ga., 2005) (finding that “the evidence shows that foster children in state custody are subject to placement in a wide array of different types of foster care
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placements, including institutional facilities where their physical liberty is greatly restricted”). See also Norfleet ex rel. Norfleet v. Arkansas Dep’t of Human Servs., 989 F.2d 289, 293 (8th Cir. 1993) (foster children have constitutional right to “adequate medical care, protection and supervision”). See also Foucha v. Louisiana, 504 U.S. 71, 85-86 (1992) (plurality opinion) (four justices acknowledged that restraint on liberty is a fundamental right and violative of equal protection where the State had not provided a “particularly convincing reason.”) The asserted purpose of cost savings here fails to meet this articulation of heightened scrutiny. 46. Defendant in this case concedes that Mo. Rev. Stat. § 453.073.4 will result in foster children staying in foster care for at least six months longer. This impingement of foster children’s substantive due process rights constitutes a violation of their fundamental rights, triggering strict scrutiny review. Section 453.073.4 must be enjoined because it is not narrowly tailored to serve a compelling state interest. The state’s asserted government purpose, cost savings, is not sufficient to withstanding this rigorous standard of review. See Shapiro v. Thompson, 394 U.S. 618, 632 (1969). The means test is not narrowly tailored, as it selectively tests some adoptive parents’ gross income without consideration of actual expenditures or even the child’s needs. 47. Second, even assuming arguendo that rational basis review applies, the means test in RsMo 453.073.4 is not rationally related to a legitimate government interest. 48. The means test established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs
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children, all current or former state wards. The means test will be applied to deny adoption subsidy benefits to one group of children and not the other. Specifically, for one group in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the AFDC eligibility standard for Title IV-E purposes, the means test will be imposed on the income of the children’s existing or prospective adoptive parents to deny or abrogate their adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes, no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. In the area of economics and social welfare, equal protection analysis requires that the state establish that the challenged classification is rationally related to some legitimate governmental purpose. Ranschburg, 709 F.2d 1207, 1209 (8th Cir. 1983) (citing United States Dep’t of Agric. v. Moreno, 413 U.S. 528, 533 (1973); Dandridge v. Williams, 397 U.S. 471, 485 (1970); Medora v. Colautti, 602 F.2d 1149, 1152 (3d Cir. 1979); Alcala v. Burns, 545 F.2d 1101, 1104 (8th Cir. 1976)). 49. A virtually identical social welfare classification in Missouri failed to withstand Equal Protection scrutiny in Ranschburg, 709 F.2d 1207 (8th Cir. 1983). In Ranschburg, Plaintiffs challenged on Equal Protection grounds a utility subsidy program in Missouri that granted financial assistance to multiple classifications of disabled citizens, whose eligibility for a statutory utility program under state law was determined solely by their additional participation in other statutorily enumerated public assistance programs. Id. at 1208-09. Plaintiffs, deemed
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“disabled” under the purview of the Missouri Medical Assistance Program, were nonetheless denied utility subsidy benefits because they did not participate in any of the public assistance programs specifically enumerated in the challenged statute. Id. 50. Plaintiffs contended that because they were equally situated in terms of need and disability with those receiving the utility subsidy, the state had acted unconstitutionally in excluding them from the program benefits. See Id. at 120911. The state of Missouri defended its statutory scheme in the District Court, arguing that it rationally promoted the state’s legitimate interest in allocating limited public funds among the state’s most needy citizens. Id. The Court struck down the challenged statute finding that no legitimate governmental interest was served by the subject classification. 51. Upon review, the Eighth Circuit Court affirmed the District Court’s judgment striking down the utility subsidy law on Equal Protection grounds. The Circuit agreed that the state of Missouri generally possesses a legitimate interest in directing limited public funds to the most needy; however, it concluded that the challenged program’s eligibility classifications were irrational as they assured no greater need on the part of program recipients than was demonstrated by the nonrecipient plaintiffs. Id. at 1210. 52. The Eighth Circuit held: “[a]lthough states may have great discretion in the area of social welfare, they do not have unbridled discretion. They must still explain why they chose to favor one group of recipients over another. Thus, it is untenable
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to suggest that a state’s decision to favor one group of recipients over another by itself qualifies as a legitimate state interest.” Id. at 1211. 53. The classification imposed by Senate Bill 539 is as irrational as the classification struck down in Ranschburg. The means test in Senate Bill 539 is not rationally related to a legitimate governmental interest, and is arbitrary and harmfully unfair. No conceivable (let alone rational) thread ties means testing a child’s adoptive parents’ gross income because that same child’s biological parents’ income exceeded an income standard, to the governmental interest in directing state funds to the most needy. Undisputedly needy children will be denied the benefit -- the children whose adoption assistance subsidies are selectively denied or terminated under the new law are, by definition, at least equally in need of the benefit as those who will receive the subsidies. 54. The challenged law is also unfair and not rationally related to saving money by directing state funds to the most needy because it will never apply a means test to the income of the adoptive parents of IV-E eligible children, no matter how high their gross income may be. Moreover, the state will continue to fund all IV-E eligible children, regardless of their adoptive parents’ gross income, with 38% state dollars. See 69 Fed. Reg. 68,372 (Nov. 24, 2004) (Federal Financial Participation in State Assistance Expenditures, FY 2006, Ex. 92.) At the same time, the law will deny or terminate adoption assistance subsidies completely to only certain special needs children whose adoptive parents’ gross income exceeds 200% of the federal poverty level or “FPL” ($32,180 for a family of three) solely because their biological parents’ income exceeded the 1996 AFDC standard.
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State dollars will thus fund subsidies for children in adoptive homes with higher gross incomes than the homes where the state will deny or terminate subsidies for equally needy children. Adoptive parents with more than one adoptive child could arbitrarily lose the subsidy for one child, but retain it for another. (Preliminary Injunction hearing, at 188.) 55. Finally, the asserted governmental purpose underlying the means test is wholly illusory and non-existent because the means test will not save taxpayer money, but actually will increase the overall cost of child welfare in the State of Missouri. The state irrationally projected fiscal savings to flow from Senate Bill 539 based upon (1) the clearly erroneous assumption that 43% of all existing adoption subsidy beneficiaries in Missouri were non-IV-E eligible when, in actuality, only 18% were non-IV-E eligible, (2) the clearly erroneous assumption that the adoption subsidy population in Missouri would grow at the flat rate of 1300 per year when, in actuality, adoptions in Missouri had steadily declined from 1,515 in FY2002 to 1,123 in FY2005 according to readily available DSS adoption program data, (3) the arbitrary and false assumption that children whose adoptive placements disrupt as a result of the means test will experience, on average, a six month additional stay in foster care, even though readily available state foster care performance data demonstrated that additional stays of 24 months or longer should be expected, (4) a complete failure to account for the significant administrative and caseworker costs required to serve the increased foster care population resulting from Senate Bill 539, even though these cost impacts were fully recognized and anticipated by DSS officials, and (5) a failure to properly
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account for the legislature’s FY2006 adoption subsidy program appropriation at 250% of FPL, instead of 200% of FPL. (Morris Dep., Dec. 12, 2005, at 27-31; Table 28, February 2006 Children’s Services Management Report, Ex. 120; Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1; Preliminary Injunction hearing, at 46-47; Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 56. As a matter of law, the Court holds that it is beyond debate that the asserted governmental purpose for the adoption subsidy provisions of Senate Bill 539 is arbitrary and clearly erroneous. State of Minnesota v. Clover Leaf Creamery, 449 U.S. 456, 464 (1981). In the face of readily available DSS adoption data and the recognized additional foster care costs to flow from the means test, the budgetary savings asserted by the state could not reasonably be conceived to be valid or true by any reasonable governmental decision-maker.
COUNT III: Contracts Clause 57. The Contracts Clause of the United States Constitution prohibits the states from
enacting legislation that “impair[s] the Obligation of Contracts . . .” on a retroactive basis. United States Constitution, Art. I, Sec. 10, cl. 1. In adjudicating the legality of a statute under the Contracts Clause, the court must determine “whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.” Energy Reserves Group, Inc. v. Kansas Power and Light Co., 459 U.S. 400, 411 (1983) (citing Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244 (1978)). See also Koster v. City of Davenport, Iowa, 183 F.3d 762, 766 (8th Cir. 1999).
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58. The United States Supreme Court has established a three-part analysis for a constitutional inquiry under the Contracts Clause: “(1) does a contractual relationship exist, (2) does the change in the law impair that contractual relationship, and, if so, (3) is the impairment substantial.” Koster, 183 F.3d at 766 (quoting Honeywell, Inc. v. Minnesota Life and Health Ins. Guar. Assoc., 110 F.3d 547, 551 (8th Cir. 1997)).
59. Significantly, when the State is a party to the subject contract, the Court does not grant the customary level of deference it affords a state legislature when “reviewing economic and social regulation[.]” Energy Reserves Group, 459 U.S. at 412-413 (quoting United States Trust v. New Jersey, 431 U.S. 1, 22 (1977)) “Impairment of a State’s own contract … faces[s] more stringent examination under the Contract Clause than would laws regulating contractual relations between private parties.” Allied Structural Steel Company v. Spannaus, 438 U.S. 234, 245 n. 15 (1978)(citing United States Trust, 431 U.S. at 22-23). “When a State itself enters into a contract, it cannot simply walk away from its financial obligations.” Energy Reserves Group, 459 U.S. at 413 n.14. “Complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake.” Id. (quoting United States Trust, 431 U.S. at 26).
60. The Form CS-SA-2 Adoption Subsidy Agreements executed between the state of Missouri and adoptive parents, on behalf of their adopted children, constitute binding and enforceable contracts.
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61. The Form CS-SA-2 Adoption Subsidy Agreement, Part 1, A, 1-5 obligates the State to “subsidize adoptive parents” for expenses which are categorized in the contracts as “maintenance,” “recurring expenses” and “non-recurring expenses.”
62. The Form CS-SA-2 Adoption Subsidy Agreement, Part I, C obligates the State “to provide the necessary authorization for participation [of the adopted child] in the Missouri Medicaid Plan….”
63. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 on their face impair the obligation of the state to subsidize the expenses of adopted parents through maintenance payments as stated in the Form CS-SA-2 Adoption Subsidy Agreement and the Form CS-SA-2 Attachments.
64. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 on their face impair the State’s contractual obligation to “provide necessary authorization for participation [of adopted children] in the Missouri Medicaid Plan” as stated in the Form CSSA-2 Adoption Subsidy Agreement, Part I Sec. C.
65. The impairment of contractual rights caused by Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 is substantial. Section 453.073.3(4) abrogates all existing agreements (“all existing agreements will have been deemed to have expired ….”). Section 453.073.3(4) transforms what were binding contractual obligations for adoption assistance into payments made “at the discretion” of the State and reviewable by the State alone on a yearly basis.
66. By making all pre-existing contracts expire after one year, Section 453.073.3(4) fundamentally alters the duration of existing contracts. Significantly, the State’s obligation to authorize the participation of adopted children in the Missouri
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Medicaid Plan becomes an item subject to a yearly review for eligibility under Sections 453.073.3(4) and 453.073.4. 67. Finally, Section 453.073.4. adds requirements and conditions for adoption assistance and Medicaid participation which were not part of the original contracts. 68. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 are unconstitutional under the Contracts Clause of Article I, Section 10 of the United States Constitution. Under the heightened scrutiny standard set forth in U.S. Trust, Allied Structural Steel and Energy Reserves, the subject statutory revisions are not reasonable as they are intended solely to further an asserted governmental interest in saving money. (See e.g. U.S. Trust, 431 U.S. at 26: “If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”) 69. As a matter of law, that the state may not lawfully use the pre-printed termination clause of Form CS-SA-2 Adoption Subsidy Agreement, Sec. V.C, to terminate existing adoption assistance agreements. This provision states, “(f)urther, either party at any time may, upon thirty (30) days written notice, terminate this agreement without the necessity of showing good cause for this termination. The Division does not intend to terminate this Agreement unless legal, fiscal, or other circumstances necessitate some adjustment in the Missouri Adoption Subsidy Program expenditures or procedures.” (Form CS-SA-2, Ex. 99, at V.C.)
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70. First, the V.B. termination clause undermines the federal and state statutory schemes providing for the existence of the contracts in the first place. Missouri contract law requires the severance of clauses that violate public policy. See Swain v. Auto Services, Inc., 128 S.W.3d 103 (Mo. Ct. App. E.D. 2003) and High Life Sales Company v. Brown-Forman Corp., 823 S.W.2d 493 (Mo. 1992) (forum selection clauses voided for reasons of public policy; remainder of arbitration agreements held valid).
71. Where a party terminates a contract according to its provisions, the contract and all rights thereunder are wholly abandoned; after termination of a contract, all of the parties'unperformed undertakings are ended. HGS Homes, Inc. v. Kelly Residential Group, Inc. 948 S.W.2d 251, 255 (Mo. Ct. App. E.D. 1997); Thumm v. Lohr, 306 S.W.2d 604, 609 (Mo. App.1957). Such a result is clearly against public policy and unenforceable. The Adoption Assistance and Child Welfare Act of 1980, 42 U.S.C. Sec. 620-629(i), the Adoption and Safe Families Act of 1997, 42 U.S.C. Sec 670-679(b) and RSMO Chapter 453 were all enacted to help provide permanent homes for adopted children.
72. Second, operation of the termination clause would violate the principle that a party seeking to rescind or terminate a contract must act before the other party is placed in a position where it would be prejudiced by a rescission or termination. See e.g. Jetz Service Company, Inc. v. KC Citadel Apartments, L.L.C. Coinmach Corporation, 59 S.W.3d 527, 530 (Mo. Ct. App. W.D. 2001); Gilmartin Bros., Inc. v. Kern, 916 S.W.2d 324, 330 (Mo. Ct. App. E.D. 1995). While the parents did not adopt children solely because of the availability of financial assistance
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from the State, the parents relied upon the State to fulfill its contractual obligation to defray the considerable financial expenses required to raise and support special needs children. Adoptive parents, regardless of income, relied upon the State to provide financial assistance to special needs children until their eighteenth birthday. The State’s abandonment of the contracts is too late. Once the children were adopted, the parents became legally and morally obligated to raise their adopted children. 73. Finally, under Missouri law, specific contractual terms control over inconsistent general provisions. See e.g. A&L Holding Company v. Southern Pacific Bank, 34 S.W.3d 415, 418 (Mo. Ct. App. W.D. 2000); Tri-County Retreading, Inc. v. Bandag Inc., 851 S.W.2d 780 (Mo.Ct. App. E.D. 1993). It is a well-accepted rule in Missouri that where one contract clause is general, and another is more limited and specific, the more specific clause acts to modify and nullify the more general clause. Id. at 784; In re Marriage of Buchmiller, 566 S.W.2d 256, 259 (Mo. App., St.L.D.1978); Surface v. Ranger Insurance Company, 526 S.W.2d 44, 48 (Mo. App. 1975). 74. The purpose of the Form CS-SA-2 Adoption Subsidy Agreement is to make possible the permanent placement of special needs children in adoptive households. The general termination upon 30 days notice language in Part V., Paragraph B conflicts with the more specific contractual language contained in Part V. A(1)-(6) which identify particular events in the lives of the adoptive child and parent(s) that will terminate the agreement:
Assistance as agreed upon in this Agreement shall continue until: (1) The child’s 18th birthday or the age of 21 years … or; (2) The parent’s rights to the
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child have been terminated; (3) The parent is no longer financially responsible for the child; or (4) The child is no longer in the legal custody of the parent … or; (5) Child moved out of the home; or (6) Death of the child or both adoptive parents. 75. Use of the term “shall” demonstrates that the contract guarantees that assistance will continue until one of the specifically defined events occurs. Viewed in consideration of V.A and B and the overall purpose of the contract, Sec. V.B. provides the mechanism by which parents or the State would stop the receipt or payment of assistance following the occurrence of one of the events in V.A. Generalized terms in a contract are limited and restricted by the specific provisions. Surface v. Ranger Ins. Co., 526 S.W.2d 44, 48 (Mo.Ct. App.) 1975. (2) Irreparable Harm to Plaintiffs 76. Absent the entry of a permanent injunction, the Plaintiff children will suffer irreparable harm and the continuing threat of irreparable harm to the stability of their existing adoptive relationships and home settings, and, for children still in foster care, to their prospects for finding a permanent home through adoption. It is undisputed that children will remain in government custody in foster care for longer periods of time as a direct result of the Senate Bill 539 adoption subsidy provisions. (Bullet Points Memo, Ex. 93.) 77. The Section 453.073.4 means test of Senate Bill 539, if permitted to take effect, will likely reduce the overall number of adoptions of special needs children in Missouri by reducing the pool of financially capable adoptive parents. This will cause irreparable harm to those foster children who, as a result, will not achieve permanency. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
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78. The Section 453.073.4 means test of Senate Bill 539, if permitted to take effect, will substantially interfere with the financial ability of existing adoptive parents to care for and meet the unique needs of their adopted special needs children. This will cause harm to the adopted children in the form of either inadequate care or disrupted adoptions. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
79. For example, Named Plaintiff A.C., a 5 year-old boy, is an adopted special needs child with a congenital heart disorder. A.C. has already undergone 14 hospitalizations and requires additional heart surgeries for his serious medical condition. A.C.’s parent and Next Friend, Lana Capps, now earns an annual income (approximately $43,200), an amount that exceeds the Senate Bill 539 means test. Without the monthly $651 adoption subsidy provided by Missouri pursuant to the long-term adoption subsidy agreement executed at the time of A.C.’s adoption, however, Ms. Capps cannot sustain her household and financially meet the special needs of A.C. and his medical, psychiatric and educational care. (Anticipated testimony of Lana Capps; Declaration of Lana Capps, Ex. 7.)
80. Similarly, Named Plaintiff J.A., another 5 year-old boy, is an adopted special needs child who suffers from severe anxiety, ADHD, oppositional defiant behavior disorder, depression and delayed learning. J.A. lived in some 23 different DSS foster homes from ages 8 through 10 and later resided in a group foster home following a failed suicide attempt. J.A’s special needs are quite substantial; and his parent and Next Friend, John Antonich, along with his spouse,
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Sharon, relies upon J.A.’s long-term $651 monthly adoption subsidy to provide special professional care. Mr. Antonich earns an annual income that also surpasses the Senate Bill 539 means test. (Anticipated testimony of John H. Antonich; Preliminary Injunction hearing, at 136-142.) 81. Section 453.073.3(4) annual renewal provision of Senate Bill 539, if permitted to take effect, will erode public confidence in adoption assistance agreements as it directly undermines the reliability and duration of the stream of support payments to be furnished by the government under the contracts. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 82. On a prospective basis, the annual renewal provision of Senate Bill 539 will deter putative adoptive parents from choosing special needs children for adoption, as these otherwise interested parents will quite rationally worry about their long-term financial ability to support the adopted child. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 83. On a retroactive basis, the annual renewal provision threatens to negate the benefits now provided under the numerous existing adoption assistance agreements in Missouri. This basic threat to the viability of adoption assistance agreements creates an increased likelihood that numerous finalized adoptions will disrupt due to changed circumstances resulting in financial hardship within effected adoptive families and the risk that children’s special needs will go
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unaddressed. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 84. Effected special needs children, including the Named Plaintiffs, will suffer irreparable harm in the form of lost permanency, lost services to meet their special needs, and lost stability. (Anticipated testimony of Next Friends, Elizabeth W. Fischer, Robert Strange, Michael Patterson, Lana Capps, John Antonich, Lavada Johnson and Tammy Smith; and see Ex. 3, 4, 5, 7, 8, 9, 10; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 85. Moreover, Senate Bill 539 threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the courtsupervised consent decree entered in G.L. et al. v. Gary Stangler et al, No. 770242-CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. (July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al., Ex. 56.) 86. In enacting Senate Bill 539, the state of Missouri and DSS were aware that the new eligibility scheme would undermine the essential purpose underlying the state’s adoption subsidy program: the achievement of timely permanency with
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adoptive families for special needs children. Thus, DSS staff prepared a memorandum entitled, “Bullet Points for Means Testing Adoption Subsidy,” (“Bullet Points Memo”) that provided as follows:
(a) “By implementing a means test on only the state only adoptions, children who are not IV-E eligible will be put at a disadvantage to being adopted versus children that are IV-E eligible.” (b) “By reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy.” (c) “Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer.” (Bullet Points Memo, Ex. 93.) (3) Balancing the Equities 87. The irreparable harm to be suffered by Plaintiffs absent injunctive relief substantially outweighs any threat of prejudice to Defendants. In fact, the entry of a permanent injunction preventing implementation of the Senate Bill 539 means test will have a positive fiscal impact on the state of Missouri. 88. The only possible “harm” to the state is the loss of asserted “savings” to be generated by the new law. However, these purported savings are not only dwarfed by the undisputed harm to occur to the plaintiff children, they are false.
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89. The state irrationally projected fiscal savings to flow from Senate Bill 539 based upon (1) the clearly erroneous assumption that 43% of all existing adoption subsidy beneficiaries in Missouri were non-IV-E eligible when, in actuality, only 18% were non-IV-E eligible, (2) the clearly erroneous assumption that the adoption subsidy population in Missouri would grow at the flat rate of 1300 per year when, in actuality, adoptions in Missouri had steadily declined from 1,515 in FY2002 to 1,123 in FY2005 according to readily available DSS adoption program data, (3) the demonstrably false assumption that children whose adoptive placements disrupt as a result of the means test will experience, on average, a six month additional stay in foster care, even though readily available state foster care performance data demonstrated that additional stays of 24 months or longer should be expected, (4) a complete failure to account for the significant administrative and caseworker costs required to serve the increased foster care population resulting from Senate Bill 539, even though these cost impacts were fully recognized and anticipated by DSS officials and (5) a failure to properly account for the legislature’s FY2006 adoption subsidy program appropriation at 250% of FPL, instead of 200% of FPL. (Morris Dep., Dec. 12, 2005, at 27-31; Table 28, February 2006 Children’s Services Management Report, Ex. 120; Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1; Preliminary Injunction hearing, at 46-47; Savings from Means Testing, Ex. 106, at 1 PRP 28-36.)
90. The costs of disrupting the lives of special needs children, diminishing their opportunities for adoption, and maintaining them in state custody for longer
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periods of time – the likely results of the SB 539 provisions – far surpass the false, and, even if true, comparably insignificant, cost savings asserted by the state. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) (4) The Public Interest 91. The public interest will be served by the entry of permanent injunctive relief. Public policy strongly favors the efficient and expeditious provision of permanency for abused and neglected children taken into the temporary custody of the state and its child welfare agency. Moreover, the public has a strong interest in the sanctity and enforceability of contracts entered into between the state of Missouri and its citizens. Missouri Senate Bill 539, if allowed to take effect, will undermine these vital interests. 92. There is immense value to society and to individual foster children to have those children move from the foster care system into permanent, adoptive homes when reunification is not possible. (CWLA, Adoption Standards, Ex. 85, at 5; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 93. The federal adoption assistance program has been credited with significantly decreasing the number of children languishing in foster care by finding them permanent adoptive families. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4, citing Bussiere, in Segal, 1985, Ex. 87; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier
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Bower.) With adoption subsidies, more children find permanent loving homes and fewer graduate or “age out” of the foster care system. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 94. According to a January 2005 report from HHS, “Adoption subsidies are perhaps the single-most powerful tool by which the child welfare system can encourage and support adoptive families” and that “Subsidies have become an essential tool in moving children to permanent homes and supporting adoptive families.” (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 7, citing to “Understanding Adoption Subsidies: An Analysis of AFCARS Data”, Ex. 88, at 1, 4; anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 95. The Senate Bill 539 means test will cause emotional and developmental harm to those children who fail to achieve permanency through adoption. It is widely recognized that there is a higher incidence of poverty, emotional and mental disability, and criminal behavior among foster youth who have attained adulthood, particularly among those foster youth who aged out of the foster care system without ever knowing a permanent family. (Anticipated trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Wiedemeier Bower.) 96. The challenged provisions will serve to undermine the core purpose of the federal/state adoption subsidy program: to promote permanent homes for special
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needs foster children. The public interest in furthering the purpose of the

federal/state adoption subsidy program will thus be served by issuing a permanent

injunction.

DATED: April 17, 2006

Respectfully submitted,

SHOOK, HARDY & BACON L.L.P.

By /s/ Pamela Macer James P. Muehlberger, #51346 Loretta Burns-Bucklew, #32053 Nicholas P. Mizell, #51716 Pamela Macer, #55033 Kathleen A. Jeanetta, #48384
2555 Grand Blvd. Kansas City, Missouri 64108-2613 Phone: (816) 474.6550 FAX: (816) 421-5547

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CHILDREN’S RIGHTS, INC.
Marcia Robinson Lowry, Esq. Ira P. Lustbader, Esq. Sara Bartosz, Esq. 404 Park Avenue South, 11th Floor New York, New York 10016 Tel: (212) 683-2210 Fax: (212) 683-4015
SAINT LOUIS UNIVERSITY LEGAL CLINIC
John J. Ammann, Director Amy Sanders, Asst. Prof. 321 North Spring St. Louis, Missouri 63108 Tel: (314) 977-2778 Fax: (314) 977-3334
LAW OFFICES OF THOMAS E. KENNEDY, III, L.C.
Thomas E. Kennedy, III, Esq. Deborah Greider, Esq. 2745 E. Broadway, Ste. 101 Alton, Illinois 62002 Tel: (618) 474-5326 Fax: (618) 474-5331
BERG BORGMANN WILSON & WOLK, L.L.P.
James Wilson, Esq. Stephen Reynolds, Esq. Windsor Building, Suite 850 7711 Bonhomme Avenue St. Louis, Missouri 63105 Tel: (314) 725-5955 Fax: (314) 725-0559
ATTORNEYS FOR PLAINTIFFS
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that this 17th day of April, 2006, a true and correct copy of the foregoing was served by using the CM/ECF system; by first class mail, postage prepaid, and addressed to; by fax transmission to; by overnight delivery to; by personally delivering to or leaving with a person in charge of the office; or by electronic mail, as indicated below:

Attorney General’s Office Attn Gary Gardner Supreme Court Bldg. PO Box 899 Jefferson City MO 65101

[x] CM/ECF [ ] U.S. Mail [ ] FAX [ ] Overnight Delivery [ ] Hand Delivery [x] Electronic Mail

/s/ Pamela Macer_______

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 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G.,

)

each a minor by Next Friend, Jill Katz;

)

W.S., M.S., and D.S., each a minor by Next )

Friend, Robert Strange;

)

M.P., a minor by Next Friend, Michael

)

Patterson;

)

A.C., a minor by Next Friend, Lana Capps; )

J.A., a minor by Next Friend, John

)

Antonich;

)

T.J. and A.J., each a minor by Next Friend, )

Lavada Johnson; and

)

N.S., a minor by Next Friend, Tammy Smith, )

)

Plaintiffs,

)

)

vs.

)

)

K. Gary Sherman, in his official capacity as )

Director of the Missouri Department of

)

Social Services,

)

)

Defendant.

)

Case No. 05-0726-CV-C-SOW Senior District Court Judge Scott O. Wright

[PLAINTIFFS’ FINAL PROPOSED] FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF THE COURT’S MAY 1, 2006 ORDER AND FINAL JUDGMENT GRANTING PERMANENT INJUNCTIVE RELIEF
Plaintiffs, by their undersigned counsel, respectfully submit their final proposed
findings of fact and conclusions of law following the April 27, 2006 trial on the merits on
Plaintiffs’ Complaint for Permanent Declaratory, Injunctive and Other Relief and in
support of the Court’s May 1, 2006 Final Judgment Order granting permanent injunctive
relief.

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INTRODUCTION
Plaintiffs – a class of current or former Missouri foster children with special needs
– seek to permanently enjoin harmful and unlawful changes to Missouri’s adoption
subsidy program in Missouri Senate Bill 539.1 Specifically, Plaintiffs challenge (1)
changes to Missouri Revised Statutes Section 453.073.3(4) concerning the imposition of
a blanket policy that retroactively makes all existing adoption subsidy contracts expire on
their one year anniversary, makes all new contracts automatically expire annually, with
renewals in all circumstances at the sole discretion of the DSS Director2; and (2) the
creation of a new Section 453.073.4 concerning the imposition of a means test on the
income of existing or prospective adoptive parents of a targeted group of foster children.3
Plaintiffs assert (1) that the automatic expiration, blanket one year duration and
discretionary renewal provisions violate and are preempted by the Adoption Assistance
and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of
1997, 42 U.S.C. §§ 620-629(i) and 670-679(b) (collectively “AACWA”); (2) that the
1 The certified class includes “all future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a court-ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.” (September 29, 2005 Order of Judge Scott O. Wright.) Following a full evidentiary hearing, a preliminary injunction was issued on September 8, 2005. After a trial on the merits conducted on April 27, 2006, on May 1, 2006, this Court issued an Order Granting Permanent Injunctive Relief with a further order to be entered including findings of fact and conclusions of law. 2 Senate Bill 539 amends Section 453.073.3(4) of RSMo to require: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539 at 453.073.3(4).) 3 Senate Bill 539 amends Section 453.073.4 of RSMo to require: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.3(4).)
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means test violates the Equal Protection Clause of the Fourteenth amendment to the U.S. Constitution; and (3) that both challenged provisions, as they pertain to those children with existing subsidy contracts, violate the Contracts Clause of the U.S. Constitution.
Plaintiffs have presented an overwhelming case for permanent injunctive relief on the entire record before the Court. After insisting on a prolonged delay after a preliminary injunction was granted in September of 2005, supposedly in order to conduct discovery and to prepare for trial, Defendants at trial failed to present any factual or legal arguments that were not already submitted by Defendants in opposition to preliminary injunctive relief over seven months ago. Defendants even proffered at trial the same single live witness they earlier had proffered at the preliminary injunction hearing, with not a single additional or new fact for the Court’s consideration.
First, Plaintiffs’ showing of a significant risk of irreparable harm if the law is not permanently enjoined has not been rebutted by any contrary facts in the record. Rather, Defendants do not dispute and thus concede that (1) hundreds if not thousands of children who already have contracts entitling them to adoption assistance maintenance subsidies until they turn 18 will have those subsidies permanently terminated as a result of the challenged law; (2) children still in state custody in foster care who are targeted by the challenged law will be disadvantaged in relation to other foster children in their chances of ever getting adopted; (3) children still in state custody in foster care who are targeted by the challenged law will be forced to stay in custody longer as a direct result of the challenged law; (4) the new law will have the likely effect of deterring parents from adopting special needs foster children and will likely shrink the pool of available adoptive parents for such children - even without implementation of Senate Bill 539,
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there are currently almost 2,000 children in foster care awaiting adoption; and (5) even Title IV-E eligible children who currently hold contracts for subsidies will at best continue to receive payments until June 30, 2006, after which renegotiation is solely at the discretion of the DSS Director. The risk of harm is extremely high.4
Second, while the risk of harm to Plaintiffs is considerable, no harm will befall Defendants from a permanent injunction. The evidence presented in the record shows that Defendants made obvious and knowingly false assumptions in projecting savings from the challenged law. Additionally, it is undisputed in the record that foster care is significantly more expensive than adoption assistance subsidies, and Defendants concede that the law will directly result in children spending longer time in foster care. The State will not save money under Senate Bill 539; it will lose money.
Third, Plaintiffs have firmly established success on the merits of their claims. Section 453.073.3(4) plainly applies to all subsidy contracts, both “IV-E eligible” children and “non IV-E eligible” children. The automatic expiration, blanket one year duration and discretionary renewal policy violates, and are preempted by, the plain language of 42 U.S.C. 673(a)(3), which prohibits any change in the amount of the subsidy (including shrinking the amount to zero by automatically terminating the contract) without the concurrence of the adoptive parents. The challenged provision also violates several explicit official issuances of the federal Department of Health and Human Services (HHS), which are both persuasive and controlling interpretive authority here, under applicable case law and pursuant to the “State Plan” contract between DSS
4 Defendants’ own internal “Bullet Points” memo, presented at trial, concedes the disadvantage to targeted children under the new law, and the resulting longer stays in government custody for targeted foster children.
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and the federal government in which DSS binds itself to these very official HHS issuances. Moreover, the Court was presented at trial with an undisputed and unrebutted letter from HHS itself to Defendant Sherman, outlining the very same violations of federal law and official HHS issuances.
Defendants’ only defense to preemption under the statute is that all contracts (even those for IV-E eligible children) expire in one year, but that DSS “intends” at present not to do what their own statute says for the IV-E eligible children. This supposed “intent” – never reduced to even a written policy and included solely as a position in litigation – is belied by Senate Bill 539 and current DSS policies unchanged by the new law. DSS policy makes an explicit distinction between contracts that are reviewed and may be “renewed” and those that “expire” and must be “renegotiated.” See Plaintiffs’ Exh. 48, at 30.4.G. Since Senate Bill 539 deems every contract to “expire” on its one-year anniversary, Defendants’ position is logically inconsistent and easily rejected. Defendants would further remain free to change their “intent” next month.
Plaintiffs have established success on their Equal Protection claim. Defendants notably did not even attempt to defend the “means test” at trial. The new means test provision alters over 30 years of a unitary and equally-applied subsidy program in Missouri and plainly discriminates against one group of similarly situated abused and neglected special needs foster children over another. Defendants’ argument that the two groups -- those targeted for the means test and those not targeted – are not similarly situated because of the different funding streams misses the point entirely: the federal AACWA is silent on means testing non-IV-E eligible children but does not require Defendants to target that group for discriminatory treatment – the federal law actually
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bans means testing, as does accepted adoption subsidy policy and practice standards. Missouri has chosen to target the non-IV-E eligible children for affirmative discriminatory treatment. The only way to equally apply the means test would have been to means test all adoptive parents, but the federal statute expressly bans that practice.
The means test triggers strict scrutiny because it infringes on Plaintiffs’ fundamental right to be free from unnecessarily prolonged government confinement, and the law is not narrowly tailored to a compelling state interest. Nor can the means test survive rational basis scrutiny. The means test is not rationally related to directing money to the most needy children and families because: (1) the income of the biological parents of the targeted group is not rationally related to these children’s adoptive parents’ income; (2) the adoptive parents’ gross income tested by the new law is irrelevant to the child’s needs or the family’s actual expenses; (3) all of the children excluded are by definition as needy as those not excluded under the new law; and (4) the state expends 40% of state dollars on subsidies for all IV-E eligible children without regard to the adoptive parents’ income. Finally, the means test is not rationally related to saving the state money because the evidence shows, beyond debate, that the state will lose money under the new law. Defendants also fail to credibly distinguish the controlling Ranschburg decision.
Plaintiffs have also established success on their Contracts Clause claim. It is not disputed that the subsidy agreements are legal contracts and that the State is a party to the contracts, triggering heightened scrutiny. Nor is it disputed that the retroactive termination impairs children’s rights under the contracts – indeed the impairment is total since children will permanently lose their subsidies and Medicaid benefits. Defendants’
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false cost savings argument fails to provide a sufficient governmental justification for the substantial impairment. Defendants half-heartedly point only to a “termination without cause” provision in the individual contracts, which is plainly void under both applicable contract law and public policy.
Fourth, a permanent injunction will further the public interest. The parties do not dispute that the central premise of the entire federal-state adoption subsidy program, accepted good subsidy policy and practice, and the State’s own policies, is to increase opportunities for the adoption of special needs foster children so they do not grow up as state wards. The challenged provisions run directly counter to this important public policy; the permanent injunction promotes this critical public interest.
For all these reasons, as set forth in the findings of fact and conclusions of law presented below, there is overwhelming support for a permanent injunction in this case. I. PLAINTIFFS’ PROPOSED FINDINGS OF FACT: Adoption Assistance Subsidies: Promotion of Permanency for Special Needs Foster Children
1. The state of Missouri, through the Department of Social Services (“DSS”), Children’s Division, acts to remove children who are subject to abuse and/or neglect at home into the temporary custody of the state and to provide care and services to those vulnerable children until a permanent placement can be secured, either through reunification with their biological parent(s) or through adoption by a new family when reunification is not in the child’s best interests. Such services are referred to as “permanency” services. (DSS Child Welfare Manual, Sec. 1, Ch. 1, Ex. 77, at 1.1, 1.2.)
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2. DSS has statutory responsibility and authority for accepting and investigating all reports of child abuse or neglect within the state under RSMo Ch. 210 and for serving the needs of Missouri’s abused and neglected children through temporary foster care and permanency services under RSMo Ch. 207 and 211. (See DSS Child Welfare Manual, Philosophical Base of Child Welfare Practice, Ex. 76.)
3. Defendant, K. Gary Sherman, is the Director of DSS and, in that capacity, oversees the administration and management of the Children’s Division and the implementation of its child welfare programs and services, including adoption services. (RSMo Section 660.010.1; Sherman Dep., Jan 26, 2006, at 4-5.)
4. The DSS Children’s Division serves the citizens of Missouri and is charged with advancing the public’s interest in the safety and well being of Missouri’s children, including all special needs foster children residing in state custody. (DSS Child Welfare Manual, Sec. 1, Ch. 1, Ex. 77, at 1.2.)
5. As of December 31, 2005, there were 10,772 foster children in the custody of DSS’s Children Division. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 1.)
6. For all children adopted from DSS custody in FY2003 and FY2004, the average length of stay in foster care was 33 and 31.7 months, respectively, which is significantly longer than the national standard of 24 months promulgated by the U.S. Department of Health and Human Services. (Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1.)
7. As of December 31, 2005, a total of 1891 foster children in DSS custody had been assigned a permanency plan or goal of adoption. (Defendants’ Response to
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Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 1.) As of January 31, 2006, a total of 1919 foster children in DSS custody had been assigned a permanency plan or goal of adoption. (Caseload Counter, http://www.dss.mo.gov/mis/clcounter/history.htm., Ex. 53.) 8. As of December 31, 2005, the total number of foster children who were adopted and receiving adoption assistance maintenance subsidies was 11,450. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 2.) 9. As of December 31, 2005, 8,845 of 11,450 former foster children who were adopted and receiving adoption assistance maintenance subsidies, received subsidies funded by a combination of federal and state funds, also known as Title IV-E subsidies. (Id. at 2.) 10. For those children receiving adoption assistance maintenance subsidies paid with a combination of federal and state funds, the allocation is 62% federal funding and 38% state funding. (69 Fed. Reg. 68,372 (Federal Financial Participation in State Assistance Expenditures, FY2006), Ex. 92.) 11. As of December 31, 2005, 2,605 of 11,450 former foster children who were adopted and receiving adoption assistance maintenance subsidies received subsidies funded by solely state funds. 12. Governor Matt Blunt stated in his January 26, 2005 State of the State Address, “We have a responsibility to provide safe settings for at-risk children and [to] facilitate permanent placement for children who cannot return home.” (State of the State Address, January 26, 2005, Ex. 81.)
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13. In the area of child welfare generally, and adoption subsidies in particular, there is a body of knowledge in terms of what comprises good and accepted practice and policy, including: federal statutes, federal regulations, the federal Child Welfare Policy Manual, published national standards such as the Child Welfare League of America (CWLA) standards for foster care and adoption, published research and papers in the field, and shared experiences at conferences held throughout the U.S. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 7; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
14. Available to the public on-line since September of 2001, the federal Child Welfare Policy Manual provides official issuances of the U.S. Department of Health and Human Services (HHS) on the interpretation of federal law and federal regulations in the area of child welfare, including adoption subsidies. (Federal Child Welfare Policy Manual, Ex. 113; http://www.acf.hhs.gov/j2ee/programs/cb/laws_policies/laws/cwpm/index.jsp; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
15. In addition to providing official HHS issuances on the interpretation of federal law and federal regulations, the federal Child Welfare Policy Manual, specifically in the area of adoption subsidy policy and practice, also establishes generally accepted good adoption subsidy policy and practice. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 7-8; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
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16. Pursuant to accepted professional standards, “The primary purpose of family foster care is to provide children with protection, care, and nurturing away from their parents and in the homes of agency-approved foster families for a limited period of time. . . . Family foster care should primarily be a temporary arrangement . . .” (See CWLA FC 1.11, Ex. 114; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeannette Weidemeier Bower.)
17. Children enter state foster care systems because they are abused and/or neglected, and for some reason their biological parent(s) could not keep them safe. The goal of the foster care system is to attempt reunification with biological parent(s) and to create a plan to help parents make the necessary changes in their lives or living conditions so that their child or children can be returned to their care. Foster care is intended to be a short-term, temporary stay for children. (CWLA, Family Foster Care Standards, Ex. 114, at 0.13; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
18. Nationally, approximately 55 percent of children are returned to their biological homes. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3, citing to AFCARS data, 2005, Ex. 82; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
19. In some cases, however, children cannot be safely returned to their birth parents, their permanent case plan will be identified as adoption, and social workers working on behalf of these children will begin to look for permanent adoptive homes for them. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3-4;
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trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 20. A majority of children in foster care who need permanent adoptive homes require additional services to meet their special needs, often due to the circumstances of their abuse or neglect. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3-4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) The array of services they need to address their special needs is both extensive and varied, and can include, without limitation, specialized medical care, dental care, mental health care, physical therapy, occupational therapy, play or talk therapy, or educational tutoring. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115 at 4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 21. Missouri state policy, as stated in the DSS Child Welfare Manual, provides, “[i]n keeping with the philosophical base that every child is entitled to a safe, secure and permanent home, the Children’s Division is obligated to make a diligent search for appropriate adoptive placements for those children for whom adoption has become the permanent plan.” (DSS Child Welfare Manual, Sec. 4, Ch. 27, Ex. 78, at 27.1.) 22. Congress enacted the Title IV-E Adoption Assistance Act to “establish a program of federal support to encourage adoptions of children with special needs.” (1980 U.S. Code Cong. and Admin. News, Ex. 36, at 1448, 1460.) 23. The State of Missouri has a qualifying “State Plan for Title IV-E of the Social Security Act Foster Care, Independent Living and Adoption Assistance”
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(“Missouri State Plan”) and receives federal funding for adoption assistance. Missouri DSS is the state agency responsible for submitting the Missouri State Plan to the Secretary of Health and Human Services for approval and for administering the plan. (Missouri Title IV-E State Plan, Ex. 45.) 24. The Missouri Title IV-E State Plan states “As a condition of the receipt of Federal funds under title IV-E of the Social Security Act … the [state agency] … hereby agrees to administer the program in accordance with the provisions of this State plan, title IV-E of the Act, and all applicable Federal regulations and other official issuances of the Department.” ( Missouri Title IV-E State Plan, Ex. 45, at 2.) (emphasis added) 25. The state of Missouri, through DSS, is to provide basic shelter, food and care to all foster children in its legal custody. To meets this obligation, DSS remits foster care maintenance payments to all foster families, group homes and child-placing agencies licensed by the state to provide day-to-day care to the foster child population. (DSS Child Welfare Manual, Sec. 4, Ch. 11, Atmt. A, Ex. 101; Missouri State Plan, Ex. 45, at Sec. 2.) The obligation of the state to remit these foster care maintenance payments continues until a child exits from state legal custody by virtue of reunification, adoption or attainment of adulthood. (See generally, HHS Child Welfare Policy Manual, Section 8.3 (foster care maintenance payment programs.)) (DSS Child Welfare Manual, Sec. 4, Ch. 11, at 11.12, Ex. 123; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
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26. The Federal Child Welfare Policy Manual of the United States Department of Health and Human Services (“HHS”), Administration for Children and Families, states: … “the legislative history [of the Adoption Assistance Act] indicates that Congress was concerned primarily with moving children in State foster care systems into permanent adoptive homes when appropriate. The Title IV-E adoption assistance program, therefore, was developed to provide permanency for children with special needs in public foster care by assisting States in providing ongoing financial and medical assistance on their behalf to the families who adopt them.” (Federal Child Welfare Policy Manual, ACYF-CB-PA-01-01, Jan. 23, 2001, Ex. 40; expert report of Jeanette Wiedemeier Bower, Ex. 115, at 3, 4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
27. Missouri State DSS policy defines a special needs child as “any child in the custody of the Children’s Division, Division of Youth Services, Department of Mental Health or a Missouri licensed child-placing agency and who meets one of the following conditions: minority parentage; handicapping condition – mental, physical or emotional; member of a sibling group …; guarded prognosis …; is over five years of age, without any of the above characteristics. Children who meet the criteria for special needs may qualify for adoption subsidy.” (DSS Child Welfare Manual, Sec. 4, Ch. 27, Ex. 47, at 27.4.2.)
28. Missouri State DSS policy states: “[c]hildren placed in the custody of the Division with a history of abuse and/or neglect may be defined as children having special needs and are, therefore, eligible for subsidy.” All current or former foster
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children are designated as “special needs” for purposes of an adoption assistance subsidy in Missouri. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.C; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 5; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 29. Adoptive children meeting the definition of “special needs” in Missouri receive adoption assistance subsidies funded by either a combination of federal and state dollars or solely by state dollars. Children with adoption subsidies funded by a combination of federal and state dollars are also referred to as Title IV-E eligible children. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) Children with adoption subsidies funded by state dollars only are also referred to as non-Title IV-E eligible children. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1; testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeannette Weidemeier Bower.) 30. There is significant value to society and to an individual foster child to have that specific child move from the foster care system into a permanent, adoptive home when reunification is not possible. (CWLA, Adoption Standards, Ex. 85, at 5; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 31. While a child remains in foster care without a permanent home, a move from one placement to another may come at any time, which creates anxiety for the child
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and causes emotional harm. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4, citing Triseliotis, 2002, Ex. 86; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 32. It is widely accepted in the adoption field that parenting children with special needs, including foster children, requires more attention and time than parenting children without special needs – including more extensive parenting skills and more intensive supportive services. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 33. CWLA standards state that “. . . subsidies may make possible the adoption of children who have special medical needs or are a part of a special population for whom these benefits are intended.” (CWLA, Family Foster Care Standards, Ex. 114, at 2.100; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 34. The federal adoption assistance program has been credited with significantly decreasing the number of children languishing in foster care by finding them permanent adoptive families. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4, citing Bussiere, in Segal, 1985, Ex. 87; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) With adoption subsidies, more children find permanent loving homes and fewer graduate or “age out” of the foster care system. (Expert Report of Jeanette
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Wiedemeier Bower, Ex. 115, at 4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 35. A widely accepted policy reason behind the provision of adoption subsidies for children is that it eliminates financial barriers to adoption for parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6-7; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 36. According to a January 2005 report from HHS, “Adoption subsidies are perhaps the single-most powerful tool by which the child welfare system can encourage and support adoptive families” and “Subsidies have become an essential tool in moving children to permanent homes and supporting adoptive families.” (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 7, citing to “Understanding Adoption Subsidies: An Analysis of AFCARS Data”, Ex. 88, at 1, 4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 37. The Missouri Child Welfare Manual states: “[s]ignificant to the use of an adoption/legal guardianship subsidy, is the realization that without this resource a family would not otherwise have the resources to provide permanency to a special needs child.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1.) 38. The federal Child Welfare Policy Manual states that the intended beneficiaries of adoption assistance payments are the special needs children themselves, not their adoptive parents. (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at
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8.2D.4.) ("Unlike other public assistance programs in the Social Security Act, the IV-E adoption assistance program is intended to encourage an action that will be a lifelong social benefit to certain children and not to meet short term monetary needs during a crisis. Further, the adoptive parents'income is not relevant to the child's eligiblity for the program.") (Expert report of Jeanette Wiedemeier Bower, Ex. 115, at 4-5; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 39. The Internal Revenue Service of the United States Department of the Treasury instructs adoptive parents in IRS Publication 17, “do not include in your income payments from a state agency to help you care for your adopted child.” (Publication 17, 1986, Ex. 43, at 67.) In Publication 17, 1990, the IRS explicitly stated, “… Title IV-E payments are income exempt for purposes of taxation.” Federal and State Adoption Assistance Subsidies 40. Special needs children qualify for adoption subsidies funded with a combination of state dollars and federal dollars (using federal Title IV-E funds) by meeting one of the following eligibility categories: (1) the special needs child was eligible for Aid for Families With Dependent Children program (AFDC) benefits (as defined in 1996) during the month in which court proceedings for adoption were initiated, or was eligible for said benefits within 6 months prior to that time; or (2) the special needs child was eligible for Supplemental Security Income (“SSI”) programs under the Social Security Act before adoption; or (3) the special needs child’s parent was in foster care and receiving Title IV-E funds that covered both the parent and the child when the adoption was initiated; or (4) the special needs
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child previously received adoption assistance, and his or her adoptive parent died or the adoption was dissolved. The special needs child need only meet one of the above four eligibility prongs to claim a right to Title IV-E adoption assistance. (See 42 U.S.C. Sec. 673; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 5-6; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower 41. The primary qualification for Title IV-E eligibility for adoption assistance subsidies is through AFDC eligibility. The other categories involve a relatively small group of children. The SSI eligible children are generally medically fragile or medically-oriented; the minor-child-of-a-foster-child eligibility allows infants in foster care to receive IV-E eligibility if the parent in custody is IV-E eligible and the minor-parent and minor-child live together; and the death/dissolution eligibility assumes that the child’s adoption is finalized and the child is coming back into the care of the department after the adoptive parents’ death or the legal dissolution of the adoption. (See 42 U.S.C. Sec. 673; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 42. In general, an AFDC child is a child who is removed from a low-income birth family where only one parent is in the home such that there is a deprivation of parental support. To receive Title IV-E adoption assistance, the child must be removed from their biological home either through a voluntary placement agreement or as a result of a judicial determination that continuation in the home would be contrary to the welfare of the child. If the AFDC child is special needs
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and meets either of these removal qualifications, the child will receive a federalstate funded adoption assistance subsidy upon adoptive placement. (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2B.13; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 43. Eligibility for a federally subsidized adoption assistance agreement under IV-E is based upon 1996 AFDC income thresholds, which have not been adjusted for inflation. See 42 U.S.C. 673(a)(3). What was defined as “poor” ten years ago remains the standard today under the Title IV-E adoption assistance program. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 44. Special needs children not meeting one of the four Title IV-E eligibility prongs receive adoption assistance payments under the terms of the state-funded adoption subsidy program in Missouri. As stated in the Missouri Department of Social Services (“DSS”) Child Welfare Manual, “[a]n adoption subsidy is a service that may be used to assist in providing permanency for children who, because of special needs, might not otherwise be adopted, and for whom a family is not readily available.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1.) 45. Since adoption assistance rates under federal law must be less than foster care maintenance payments, many states have parity between foster care and adoption assistance payments or pay $1 less in adoption assistance rates. The basic
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adoption assistance rates in Missouri are $225 for children ages 5 and under, $275 for children ages 6 through 12, and $304 for children ages 13 and older. Missouri’s adoption assistance rates remain the second lowest in the United States. (NACAC Adoption Subsidy Profiles, 2004, Ex. 90; Expert Report of Jeanette Wiedemeier Bower, Ex. 115 at 16; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 46. Missouri has provided a single system for adoption assistance maintenance subsidies to both IV-E eligible and non IV-E eligible children continuously for over 25 years. (Simmens, Preliminary Injunction hearing, at 38-41.) 47. The DSS Child Welfare Manual states that an adoption subsidy agreement must be approved by the Division Director and executed on a Form CS-SA-2 contract document. “The CS-SA-2 … is a legally binding agreement.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.2.) The CS-SA-2 Adoption Subsidy Agreement is a pre-printed form contract prepared by DSS and presented to adoptive parents for signature on behalf of their special needs adopted child. (Form CS-SA-2, Ex. 99) 48. The Form CS-SA-2 Adoption Subsidy Agreement states the contractual obligations of the State to the adoptive parent and the adopted children. The State agrees to subsidize adoptive parents for “maintenance,” “recurring expenses for special services” and other “nonrecurring expenses.” (Form CS-SA-2, Ex. 99, at 2.)
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49. Form CS-SA-2 Adoption Subsidy Agreement states the contractual obligation of the State “to provide the necessary authorization for participation [of the adopted child] in the Missouri Medicaid Plan….” (Form CS-SA-2, Ex. 99, at 2.)
50. The DSS Child Welfare Manual states: “[s]ubsidy agreements … are considered a contract, which must be reviewed annually and renewed prior to the end of the Missouri fiscal year (i.e., June 30, 2XXX). Contracts are automatically renewed unless changes are agreed to as a result of the annual review or requested by the adoptive parent(s) or legal guardian(s). However if approved services on the attachment (CS-SA-2 ATT/CS-LG-2 ATT) have expired, a new attachment must be developed between the family and the agency.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.G.)
51. In FY2006, which runs from July 1, 2005 through June 30, 2006, approximately 11,400 children formerly in the Missouri foster care system will be beneficiaries of adoption assistance subsidy contracts between Missouri and the children’s adoptive parent(s). (Defendant’s Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, at 2.)
52. All adoption subsidy agreements executed by the state of Missouri utilize state funds to meet the government’s monthly payment obligations. Title IV-E adoption subsidy agreements are funded 62% by federal matching dollars and 38% by state dollars. State-only adoption subsidy agreements are funded 100% by state dollars. (69 Fed. Reg. 68,372 (Federal Financial Participation in State Assistance Expenditures, FY2006), Ex. 92.)
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The Governmental Purpose Underlying Senate Bill 539 53. Missouri Governor Matt Blunt signed Senate Bill 539 into law on April 26, 2005.
By its terms, Senate Bill 539 has an effective date of August 28, 2005. (Current Bill Summary, published at: www.senate.mo.gov, Ex. 34). 54. Governor Blunt and the Missouri legislature enacted Senate Bill 539 with the stated intent to “reform Missouri’s social welfare system to ensure that taxpayer funded assistance is getting to the most needy ….” (Press Release from the Office of Governor Matt Blunt, May 13, 2005, Ex. 54, at 1.) As stated in the accompanying emergency rule, the law was necessary “to achieve a balanced state budget for SFY 2006.” (Emergency Rule 13 CSR 35-38.020, Ex. 50.) Emergency Rule 13 CSR 35-38.020 became effective on August 28, 2005, and expired on February 23, 2006. 55. The State of Missouri and the Department of Social Services (“DSS”), through duly authorized and responsible state officials, have identified a single governmental purpose to be advanced by the means test provision of Senate Bill 539: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the state’s most needy families. (Renne Dep., Jan. 26, 2006, at 31-32; Boies Dep., Jan. 18, 2006, at 103; Kinkade Dep., Jan. 18, 2006, at 64; Martin Dep., Dec. 13, 2005, at 37; Martin, Preliminary Injunction hearing, at 164.) 56. William Boies, a Budget Analyst 2 in the Budget and Planning Division of the state Office of Administration (“OA”), testified at his deposition regarding the origin and development of the adoption subsidy means test provision during the
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FY2006 budget process in Missouri. Boies testified that following the November 2004 gubernatorial election, in which now Governor Matt Blunt prevailed over incumbent Governor Holden, the FY2006 budget process (for the FY beginning July 1, 2005) was turned over to Governor-Elect Blunt’s transition team. Michael Keathley, who was later named Commissioner of OA by Governor Blunt, headed the transition team within OA. (Boies Dep., Jan. 18, 2006, at 2, 20-25.) 57. William Boies testified in his deposition that Keathley, upon joining OA in November or December 2004, took note of the historic rate of growth in the costs of the adoption subsidy program in Missouri when reviewing the FY2006 departmental budget submitted by DSS and inquired about the program. Mr. Keathley specifically inquired about methods that could be used to control further growth in the program and suggested means testing recipient adoptive families to reduce cost. (Boies Dep., Jan. 18, 2006, at 32-39.) 58. Thereafter, OA and DSS staff developed a means test scheme with the intended purpose of reducing costs within the Missouri adoption subsidy program by directing a decreased subsidy appropriation to low income adoptive families only, regardless of the needs of the adoptive child. The only governmental purpose to be served by the means test was cost reduction. (Boies Dep., Jan. 18, 2006, at 103.) 59. William Boies testified at his deposition that he never heard discussion of any other governmental purpose or justification for the new eligibility scheme. (Boies Dep., Jan. 18, 2006, at 103.)
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60. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, testified at her deposition that the only policy justification she heard discussed for the Senate Bill 539 means test was “cost savings.” (Martin Dep., Dec. 13, 2005, at 37.)
61. Amy Martin also testified at her deposition that she was not able to identify any way in which the Senate Bill 539 provisions regarding adoption subsidies would serve to benefit children, whether they were in adoptive or foster care. (Id. at 38.)
62. Steve Renne, Acting Director of DSS through April 1, 2005, now Deputy Director of DSS, also testified to his understanding that the Senate Bill 539 means test was designed simply to achieve cost reductions in the state’s adoption subsidy program. (Renne Dep., Jan. 26, 2006, at 31-32.)
63. Defendant K. Gary Sherman, the current Director of DSS, testified at his deposition that he played no role in the development of Senate Bill 539 and its adoption subsidy provisions due to the timing of his nomination for DSS Director by Governor Blunt and subsequent Senate confirmation, which occurred less than one month before the enactment of Senate Bill 539. (Sherman Dep., Jan. 26, 2006, at 5, 10, 11, 23.)
64. Boies participated in a final FY2006 DSS budget presentation to Governor Blunt in January 2005, conducted by means of a telephone conference that occurred shortly before the January “State of the State” address. During this conference, the means test and cost reduction scheme, later made law through Senate Bill 539, were presented to and discussed with Governor Blunt. Neither the Governor nor
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his staff identified additional policy bases for the means test. (Boies Dep., Jan. 18, 2006, 98-102.) 65. On Jan 26, 2005, Governor Blunt submitted a budget that called for reductions in the adoption subsidy program consistent with a means test set at 200% of the federal poverty level (“FPL”.) (Initial Summary of Missouri Governor’s Budget Proposal, Feb. 11, 2005, Ex. 51.) 66. The federal poverty guidelines, which include the FPL, are published annually by HHS for administrative purposes, including for use in determining financial eligibility for certain federal programs. (HHS Poverty Guidelines, 2005 Ex. 42.) 67. DSS staff, specifically Patrick Luebbering, Assistant Deputy Director of the Family Support and Children’s Division, prepared a memorandum in the course of researching the fiscal impact of the proposed changes in the adoption subsidy program, entitled, “Bullet Points for Means Testing Adoption Subsidy,” (“Bullet Points Memo”) that stated among other things:
(a) “By implementing a means test on only the state only adoptions, children who are not IV-E eligible will be put at a disadvantage to being adopted versus children that are IV-E eligible.” (b) “By reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy.”
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(c) “Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer.” (d) “Projecting an accurate amount for the savings is difficult.” (Bullet Points Memo, Ex. 93; Luebbering Dep., Dec. 13, 2005, at 50.) The Bullet Points Memo was distributed from DSS to OA, and from OA to the Office of the Governor in revised form. (Boies Dep., Jan. 18, 2006, at 84-87) Senate Bill 539, Section 453.073.3(4): Blanket Annual Renewal and Automatic Expiration Provision 68. Senate Bill 539 amends Section 453.073.3(4) of RSMo to provide: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) 5 The text of Section 453.073.3(4), as amended by Senate Bill 539, makes no distinction between and applies to both federal/state funded and state-only funded adoption assistance agreements. 69. The HHS Child Welfare Policy Manual, Section 8.2D.2, states: “States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.” (HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.2)
5 Plaintiffs present this legal citation here solely for the Court’s convenience.
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70. Good and accepted adoption subsidy practice also prohibits blanket duration or termination policies. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 810; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
71. Senate Bill 539 violates federal policy and good and accepted subsidy practice, which prohibit the blanket limitation on duration or termination of all adoption assistance agreements. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 8-10; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
72. The HHS Child Welfare Policy Manual, Section 8.2D.5, provides: “Once an adoption assistance agreement is signed and in effect, it can be terminated under three circumstances only: (1) the child has attained the age of 18 (or 21 if the state has determined that the child has a mental or physical disability which would warrant the continuation of assistance); (2) the State determines that the adoptive parents are no longer legally responsible for the support of the child; or (3) the State determines that the adoptive parents are no longer providing any support to the child.” ( HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.5.)
73. HHS Child Welfare Policy Manual, Sec. 8.2B.9 similarly states: “Once a child has been determined eligible and is receiving adoption assistance, a State may terminate the assistance only under the circumstances specified at section 473(a)(4) of the Social Security Act.” (HHS Child Welfare Manual, Ex. 59, at Sec. 8.2B.9.)
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74. The DSS Child Welfare Manual states that the Division may close an adoption subsidy upon one of the following events, “(a) The child reaches age 18 or age 21 (if child’s condition is extraordinary); or … (b) At the request of the family; or … (c) Upon determination that the child is no longer receiving any financial support from the adoptive family; or … (d) Upon determination that the adoptive parent(s) are no longer legally responsible for the support of the child (TPR has occurred); or … (e) In the event of death of the subsidized child; or … (f) In the event of the death of both adoptive parents or the death of a single adoptive parent if the subsidy was granted to a single adoptive parent ….” (See DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.11.)
75. The DSS Child Welfare Manual also states: “[s]ubsidy agreements … are considered a contract, which must be reviewed annually and renewed prior to the end of the Missouri fiscal year (i.e., June 30, 2XXX). Contracts are automatically renewed unless changes are agreed to as a result of the annual review or requested by the adoptive parent(s) or legal guardian(s). However if approved services on the attachment (CS-SA-2 ATT/CS-LG-2 ATT) have expired, a new attachment must be developed between the family and the agency.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.G.)
76. Fred Simmens, the DSS Director from August 2003 to October 2005, testified that he agreed that, apart from the exceptions set forth by the federal statutes, any changes to the subsidy contracts would have to be agreed to by the parents. (Preliminary Injunction hearing, at 57-58.)
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77. Senate Bill 539 violates federal policy, DSS policy, and good and accepted subsidy practice, which prohibit the termination of adoption subsidy agreements in cases other than the categories proscribed, and allows only periodic readjustments of subsidies on a case by case basis, with the concurrence of the adoptive parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 8-10; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
78. Specifically, Section 453.073.3(4) of Senate Bill 539 explicitly causes all existing adoption agreements to “expire” upon their one-year anniversary and, if implemented, would trigger the provision of Section 30.4.G of the DSS Child Welfare Manual requiring that if approved services in the subsidy agreement have “expired,” a new attachment must be renegotiated without automatic renewal.
79. It is generally recognized that many states’ use of an annual review process was originally intended to determine whether a child was still being cared for by adoptive parents, and whether the financial and medical benefits were adequate for the child’s needs. This is typically an administrative task undertaken for accounting purposes. No state has proposed, as has Missouri, to impose a review policy under which adoptive assistance agreements would automatically expire annually. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 10; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
80. Good and accepted practice prohibits the automatic termination of subsidy agreement because to do so undermines the certainty and reliability in the receipt
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of subsidies that are used to help provide for an adoptive child’s special needs. For these children, it is recognized that adoption is unlikely without the subsidy; and parents, who agree to adopt them, accept the commitment to care for the child at least through the child’s age of majority. The automatic termination and need to renegotiate, without the consent of the adoptive parents, undermines the core purposes behind adoption subsidies. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 10; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 81. An August 29, 2005 letter from Linda K. Lewis, Regional Administrator of the United States Department of Health and Human Services, to DSS Director K. Gary Sherman states, “The Administration for Children and Families has determined that Missouri is out of compliance with title IV-E requirements because SB 539 states that the period for which all subsidies will be granted will not exceed one year and the director has the discretion as to whether the agreement can be renewed for subsequent years.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 386.) 82. The August 29, 2005 HHS letter further states, “Federal requirements state that once a child is determined eligible for title IV-E adoption assistance, he or she remains eligible and the subsidy continues for reasons specified in the Federal policy [Child Welfare Policy Manual, Section 8.2B.9 and Social Security Act – Section 473]. The Federal policy further states that States may not have a blanket policy which limits the duration of adoption assistance payments to a date earlier
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than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents … [Child Welfare Policy Manual, Section 8.2D.2 and Social Security Act – section 473]. The Missouri legislation, however, states that the period for which all subsidies will be granted will not exceed one year.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) 83. The August 29, 2005 letter also states, “Federal policy [Child Welfare Policy Manual Section 8.2D.5 and Social Security Act – section 473; and 45 CFR 1356.40(b)] provides that once a child is determined eligible for adoption assistance under IV-E, he or she remains eligible and the subsidy continues unabated. Once an adoption assistance agreement is signed and in effect, it can only be terminated if 1) the child has reached the age of 18 (or the age of 21 if the State has determined that the child has a mental or physical disability which would warrant continuation of assistance), 2) the State determines that the adoptive parents are no longer legally responsible for the support of the child, or 3) the State determines that the adoptive parents are no longer providing any support to the child. Missouri’s legislation, however, states that the agreement can be renewed for subsequent years “at the discretion of the director” and therefore violates Federal policy.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.)
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Senate Bill 539, Section 453.073.4: Means Test 84. Senate Bill 539 amends Section 453.073.4 of RSMo to provide: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.4.)6 85. The use of an income standard for adoptive parents to determine a child’s eligibility for adoption assistance subsidies is commonly referred to as a “means test.” 86. The means test established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards of the foster care system. The means test will be applied to deny adoption subsidy benefits to one group of children and not the other. Specifically, for one group in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the AFDC eligibility standard for Title IV-E purposes, the means test will be imposed on the income of the children’s existing or prospective adoptive parents to deny or terminate their adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes, no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; trial testimony of
6 Plaintiffs present this legal citation here solely for the convenience of the Court.
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Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 87. HHS policy, reflected in Federal Policy Announcement, PIQ-90-02, October 2, 1990, states, “Congress at first considered the inclusion of a ‘means test’ as a requirement under the Title IV-E adoption assistance program … the restriction was later dropped after the Committee noted ‘we should not design a program to foster adoptions only in those families with the least financial capacity to care for these special needs children.’” (Federal Policy Announcement, PIQ-90-02, October 2, 1990, Ex. 41, at 1, citing Congressional Record – Senate – S11704, Aug. 3, 1979.) 88. The HHS Child Welfare Policy Manual, Section 8.2A.2, states: “The use of a means test is prohibited in the process of selecting a suitable adoptive family, or in negotiating an adoption assistance agreement, including the amount of the adoption assistance payment.” (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2A.2.) 89. Good and accepted adoption subsidy practice also prohibits the use of means testing to determine eligibility of adoption subsidies. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115 at 11-12; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 90. Means testing a select group of children for purposes of determining a child’s eligibility for an adoption subsidy violates good and accepted subsidy practice and is harmful to children because it significantly decreases the pool of prospective adoptive resources for children with special needs. (Expert Report of
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Jeanette Wiedemeier Bower, Ex. 115, at 11; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 91. Means testing a select group of children for purposes of determining a child’s eligibility for an adoption subsidy violates good and accepted subsidy practice and is harmful to children because it will result in more children remaining in foster care for longer periods of time. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower; Bullet Points Memo, Ex 93.) 92. Means testing a select group of children for purposes of determining a child’s eligibility for an adoption subsidy violates good and accepted subsidy practice because it creates a disincentive to adoption and a “disadvantage” for a certain group of children (non IV-E eligible children) solely on the basis of the income of their biological parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower; Bullet Points Memo, Ex. 93.) 93. Means testing a select group of children for purposes of determining a child’s eligibility for an adoption subsidy violates good and accepted subsidy practice because it fails to recognize that the subsidy is attached to and follows the child, rather than being made available to supplement the income of the adoptive parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
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94. Fred Simmens, the DSS Director from August 2003 to September 2005, testified that in his 26 years with the agency, he had never suggested a means test for people who adopt special needs children. (Preliminary Injunction hearing, at 38.) Mr. Simmens testified that he had concerns about the adoption subsidy revisions in Senate Bill 539 because they were changing longstanding policy in the state to treat all children the same, whether or not they were receiving federal funds through Title IV-E. (Id. at 39-40.) Mr. Simmens testified that this longstanding policy was a very fair system. (Id. at 41.) Mr. Simmens further testified that the adoption subsidy program was an important one, and was a factor that encouraged parents to adopt children with special needs. (Id. at 44, 41.)
95. Steve Renne, the Acting Director of DSS at all relevant times until April 1, 2005, and now Deputy Director of DSS, testified that in the 20-plus years he had worked for Missouri’s Department of Social Services, a means test had never before been proposed and that he had never before personally advocated such a test. (Renne Dep., Jan. 26, 2006, at 16.) He testified that a non-IV-E eligible child could have more significant needs than a IV-E eligible child, (id. at 52-53), and that the means test does not ensure that the most needy children receive subsidies due to the fact that the subsidy is based on the adoptive family’s income. (Id. at 52.) Renne testified that, as a “bureaucrat,” he would not recommend different treatment among the two groups of adoptive children that Senate Bill 539 creates. (Id. at 50-51.)
96. The means test under Senate Bill 539 creates two distinct groups of children based solely on the fact one group of children (those who will not have subsidies
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denied or terminated) came from a poorer biological family, while the other (whose subsidies will be denied or terminated) did not. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 12; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 97. The practice of means testing violates good and accepted subsidy practice and harms non IV-E eligible children just as it would IV-E eligible children. Children who receive state only funded adoption assistance subsidies are, by definition, no less needy than children who receive subsidies funded with both state and federal funds – factually, they are all special needs children. See Mo.Rev.Stat. § 453.073.2. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 98. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, also agreed that from a policy standpoint, the natural birth parents’ income had “no relevance” in determining whether a child should get an adoption subsidy. (Martin Dep., Dec. 13, 2005, at 85.) 99. As a factual matter, an adoptive child’s special needs are in no way correlated with his or her birth family’s income. For example, if two brothers who suffered from fetal alcohol syndrome as well as other behavioral disabilities were removed separately from their biological mother’s home at times when her income differed, one boy might receive a subsidy jointly funded by state and federal
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dollars, and the other a purely state-funded subsidy. Adoptive parents would be faced with the situation of being financially able to adopt one brother and not the other, or face the prospect of not being able to meet both boys’ needs. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11-12; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 100. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division, also testified that there could be families who had adopted more than one child, where one child might be Title IV-E eligible and the other not. Under the SB 539 scheme, the same family could possibly lose the adoption subsidy for one child, but keep it for the other. When asked if that made sense to her, she testified, “It’s difficult for me to get my head around.” (Preliminary Injunction hearing, at 188.) 101. If a family were moving ahead with the adoption of a IV-E eligible child, the state would never inquire of the income of the adoptive parents no matter how high the income. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 102. DSS cannot state the number of class member children currently receiving adoption assistance subsidies funded by state and federal funds and whose adoptive parents earn more than 200% of the federal poverty level. (Defendants’ First Supplemental Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 102, at 2-3.)
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103. The Senate Bill 539 means test is an irrational mechanism for directing funds to the “most needy” because it uses the gross income of putative or existing adoptive families as an eligibility threshold and fails to account for actual family expenses and other pertinent circumstances that clearly impinge upon a family’s ability to adopt and provide for a special needs child. (Emergency Rule 13 CSR 35-38.020, Ex. 50, at (12)(C); Preliminary Injunction hearing, at 162-163.)
The Challenged Provisions of Senate Bill 539, if Implemented, Will Serve to Increase the Cost of Child Welfare to the State of Missouri 104. The State of Missouri and the Department of Social Services (“DSS”), through
duly authorized and responsible state officials, have identified a single governmental purpose to be advanced by the means test provision of Senate Bill 539: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the state’s most needy families. (Renne Dep., Jan. 26, 2006, at 31-32; Boies Dep., Jan. 18, 2006, at 103; Kinkade Dep., Jan. 18, 2006, at 64; Martin, Preliminary Injunction hearing, at 164.) 105. Prior to enactment of the Senate Bill 539 mean test provision, DSS prepared a fiscal impact analysis in order to project the cost savings to be generated by the new eligibility scheme in relation to state-only adoption subsidy agreements. Specifically, Patrick Luebbering, an Assistant Deputy Director within DSS, performed a fiscal impact analysis of the proposed means test at the request of the state’s Office of Administration, the agency charged with compiling the annual statewide budget for the Office of the Governor. This fiscal impact analysis concluded that the Senate Bill 539 means test provision would yield a projected
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annual cost savings of $9,716,863 in the state’s adoption subsidy program, assuming that the income threshold was set at 200% of FPL. (Luebbering Dep., Dec. 13, 2005, at 29-32; Fiscal Impact Analysis, Ex. 103, at Bates 1 PRP 28-7.) 106. The fiscal impact analysis prepared by Mr. Luebbering served as the sole basis for the later April 25, 2005 Fiscal Note authored by the Missouri legislature’s Committee on Legislative Research, Oversight Division for purposes of informing elected legislative members and the general public regarding, among other things, the anticipated fiscal implications of the Senate Bill 539 means test. (Luebbering Dep., Dec. 13, 2005, at 81-82; 134-136; Summary of Fiscal Impact, Ex. 104; Fiscal Note, Ex. 35; Kinkade Dep., Jan. 18, 2006, at 73-78.) 107. The April 25, 2005 Fiscal Note published by the Committee on Legislative Research includes and adopts the fiscal analysis prepared by Mr. Luebbering. (Fiscal Note, Ex. 35.) 108. The fiscal analysis prepared by Mr. Luebbering erroneously and irrationally projected that cost savings would flow from the Senate Bill 539 means test. The means test, if implemented, actually will increase the overall cost to the state to finance its child welfare program. 109. First, the projected $9,716,863 reduction in adoption subsidy costs is overstated due to the subsequent decision by the Missouri legislature to fund the state’s adoption subsidy program in FY2006 at 250% of FPL, as opposed to 200% of FPL, as provided in Senate Bill 539. This legislative action, alone, served to reduce the annual cost savings to be generated by the means test from $9,716,863 to $5,886,654 (the savings figures derived by Mr. Luebbering’s fiscal impact
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analysis performed at 200% and 250% of FPL, respectively). (Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 110. Second, the fiscal impact analysis substantially over-counted the number of existing state-only adoption subsidy recipients to be effected by the Senate Bill 539 means test. The fiscal impact analysis assumed that 43% of all existing adoption subsidy recipients in Missouri received state-only funded benefits, as opposed to Title IV-E federally subsidized benefits. (Luebbering Dep., Dec. 13, 2005, at 62-68, 72, 78; Fiscal Impact Analysis, Ex. 103, at Bates 1 PRP 28-7.) 111. This assumption was erroneous for two reasons. First, DSS audited all existing state-only funded adoption subsidy files in the Spring of 2005 to confirm whether Title IV-E eligibility had been properly denied in the first instance. As a result of the audit process, DSS determined that over 1,000 existing state-only adoption subsidy agreements were actually eligible for Title IV-E federal funding and, therefore, retroactively re-designated those cases to Title IV-E status. (Morris Dep., Dec. 12, 2005, at 50-53; State-Only Adoption Subsidy Case Review, Ex. 107, at 1PRP 27-2.) Second, the state of Missouri reported a Title IV-E adoption subsidy penetration rate of 82% as of the summer of 2005, meaning that only 18% of adoption subsidy recipients in the state were then receiving state-only funded subsidy payments. Mr. Morris testified that the state of Missouri never has reported a Title IV-E adoption subsidy penetration rate below 70% to his knowledge. (Morris Dep., Dec. 12, 2005, at 27-31.) 112. The $5,886,654 in projected cost savings, as calculated by Mr. Luebbering at 250% of FPL, reflects the patently erroneous and irrational assumption that 43%
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of all adoption subsidy recipients in Missouri are state-only funded. This projected cost savings figure, when recalculated to reflect the fact that only 18% of all adoption subsidy recipients in Missouri are state-only funded, falls to $2,452,772. Put another way, Mr. Luebbering overstated the size of the relevant non-Title IV-E population by a factor of 2.4 (43% versus 18%), resulting in a projected cost savings figure that was also overstated by a factor of 2.4. 113. Moreover, the fiscal impact analysis substantially over-counted the number of prospective state-only adoption recipients to be effected by the Senate Bill 539 means test. The fiscal impact analysis simply carried forward to the population of prospective adoption subsidy recipients the assumption that 43% of the program’s recipients in Missouri receive state-only funded benefits. (Luebbering Dep., Dec. 13, 2005, at 76, 78.) 114. This assumption was erroneous for two reasons. First, as reflected above, the accurate figure for the current percentage of state-only adoption subsidy recipients within the overall adoption subsidy population in Missouri is 18%. Second, the fiscal impact analysis projected a total FY2006 adoption subsidy population in Missouri of 12,474, an estimate that assumed growth in the subject population of 1300 new adoptive children per year. In reality, the state of Missouri experienced a steady decline in the annual number of finalized adoptions from FY2002 through the present as follows: 1,515 in FY2002, 1,429 in FY2003, 1,356 in FY2004, 1,123 in FY2005, and 1,008 projected for FY2006 based upon the actual number of finalized adoptions through the first three quarters of the year. (Table 28, February 2006 Children’s Services Management Report, Ex. 120.)
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115. The fiscal impact analysis overstated the prospective effect of the means test by assuming too large a prospective recipient population to be means tested. (Renne Dep., Jan. 26, 2006, at 20-23; Martin Dep., Dec. 13, 2005, at 35-36.) Indeed, as of December 31, 2005, the total number of foster children who were adopted and receiving adoption assistance maintenance subsidies in Missouri was 11,450, fully 1,000 children lower than assumed by Mr. Luebbering. (Defendant’s Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, at 2.)
116. Additionally, as demonstrated below, the $2,452,772 adjusted figure must further be reduced to account for significant, additional governmental costs to flow from implementation of the mean test that were not adequately addressed, if at all, in Mr. Luebbering’s fiscal analysis.
117. First, the fiscal impact analysis adopted by the state of Missouri underestimated the cost implications of the Senate Bill 539 means test provision in terms of the additional expenses it would impose by causing disruption to existing and putative adoptions. The major component of this increased governmental cost relates to the continuing obligation of DSS to pay monthly foster care maintenance payments to that group of otherwise adoptable children who remain in temporary foster care longer because the means test prevented finalization of their adoptions. (Fiscal Impact Analysis, Ex. 103, at 1 PRP 28-4.)
118. As stated in the “Bullet Points” memorandum prepared by Mr. Leubbering, “[b]y reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy,
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not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy … Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer … Projecting an accurate amount for savings is difficult.” (Bullet Points Memo, Ex. 93.) 119. Though the fiscal impact analysis properly assumed that the eligibility means test would serve to prevent or disrupt a number of adoptions due to the financial constraints it would impose on adoptive families, it arbitrarily and unreasonably assumed that these disruptions would result in additional foster care stays for displaced children of only six months duration on average. (Luebbering Dep., Dec. 13, 2005, at 98-99; Fiscal Impact Analysis, Ex. 103, at 1 PRP 28-4.) No state witness has provided an empirical or any other rational basis for this sixmonth figure. (Luebbering Dep., Dec. 13, 2005, at 98-99; Kinkade Dep., Jan. 18, 2006, at 96; Boies Dep., Jan. 18, 2006, at 80-83.) 120. The assumption of an average six-month additional stay in state foster care is arbitrary and demonstrably erroneous based upon DSS adoption policy and Missouri law. Specifically, Section 29.4 of the DSS Child Welfare Manual sets forth agency policy, consistent with RSMo. §453.077.1, that any adoption of a child from temporary state care may not be finalized by a court until the child has lived in the putative adoptive placement for a period of no less than six months. (DSS Child Welfare Manual, Sec. 4, Ch. 29.4, Ex. 80.) The pre-finalization period also must include vital pre-placement activities such as the completion of an adoptive home study, a thorough assessment of the child’s readiness and
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suitability for the adoptive placement facilitated by a series of supervised preplacement visits between the child and adoptive family, and a determination of the child’s eligibility for adoption subsidy assistance. (Id.) 121. As a matter of fact, prolonged stays in foster care of six months for children whose adoptive placements are disrupted due to implementation of the Senate Bill 539 means test, even assuming immediately available new adoptive homes for all such children, is impossible. 122. Existing, and readily available, DSS data supports the conclusion that adoptive disruptions will cause children to experience additional foster care stays of 24 months or longer as the state seeks to identify and qualify new adoptive parents. The state of Missouri has reported the following percentages of children exiting foster care into finalized adoptions within 24 months of removal from home: 33.10% in FFY2003, 33.70% in FFY 2004, and 38.6% in FFY2005. (DSS Adoption/Guardianship Subsidy Fact Sheet, February 2, 2006, Ex. 95, at 1.) Based upon these reported statistics by DSS, some 61.4% to 66.9% of the children in state legal custody who attain finalized adoptions only to do so after residing in temporary care for a period in excess of 24 months. 123. An October 2005 Yellow Sheet published by the Missouri State Auditor reported that the average length of stay in foster care for children exiting to adoption was 33 months in FY2003 and 31.7 months in FY2004. (Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1.) 124. The number of children awaiting adoption in Missouri whose biological parents already have lost their parental rights through court ordered termination has been
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increasing. This subgroup of children in temporary care has risen from 1,527 on September 30, 2000 to 1,660 on September 30, 2002 to 1,919 as of January 2006. (HHS AFCARS Performance Data, Missouri Context Data, Ex. 83, at VI-202; Caseload Counter, http://www.dss.mo.gov/mis/clcounter/history.htm., Ex. 53.) 125. Based upon the above readily available DSS adoption data, the state of Missouri should reasonably anticipate additional foster care stays of 24 months, or even longer, for difficult-to-place, special needs children whose adoptive placements disrupt as a result of the means test. Mr. Luebbering’s cost figure of $427,635, which assumes 6 month additional stays for children experiencing disrupted adoptions (with a means test at 250% of FPL), is understated by a factor of at least 3, or by some $1.5 million. (Savings from Means Test, Ex. 106, at Bates 1 PRP 28-35.) 126. The fiscal impact analysis likewise failed to account for the increased administrative and caseworker costs directly attributable to adoptive disruptions occasioned by the Senate Bill 539 means test. As noted in the April 25, 2005 Fiscal Note published by the Committee on Legislative Research, Oversight Division, “additionally, there may be some additional cost in staff time due to children staying in care longer. However the impact is unknown.” (Fiscal Note, Ex. 35, at 9.) Though unknown in terms of its precise amount, this increased overhead is not inconsequential. Fred Simmens testified that he agreed that there were expenses to foster care outside the maintenance payment to foster parents, such as administrative costs for caseworkers, deputy juvenile officers, and court time (Preliminary Injunction hearing, at 46-47), and that this comment in the
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Fiscal Note essentially meant that “this fiscal note did not calculate what the added expense was going to be by kids being in foster care longer.” (Id. at 47, 6971.) 127. Finally, the fiscal impact analysis, which only looked out over a three year horizon, failed to account for the long-term governmental and societal costs to be imposed by the Senate Bill 539 means test as a result of the emotional and developmental harm it would inflict on those children who fail to achieve permanency through adoption. Numerous empirical studies have demonstrated the higher incidence of poverty, emotional and mental disability, and criminal behavior among foster youth who have attained adulthood, particularly among those foster youth who aged out of the foster care system without ever knowing a permanent family. 128. These well-recognized, negative consequences of childhood instability and displacement generate substantial governmental costs in the form of TANF supplemental income payments, increased Medicaid expenses, and the costs of maintaining a more robust criminal justice system, including a larger prison network. The state’s fiscal impact analysis makes no reference to these significant long-term economic harms to be caused by Senate Bill 539 and its negative impact on permanency through adoption. 129. In a recent peer review publication of the University of Chicago, University of North Carolina Professor Richard Barth stated “the burgeoning numbers of children receiving adoption subsidies have led some states to be concerned about or even to curtail adoption subsidy levels … This study uses longitudinal adoption
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subsidy and foster care placement data to estimate the relative costs of foster care and adoption …” and concluded, “[o]n balance, adoption achieves substantial governmental savings.” (“A Comparison of the Governmental Costs of LongTerm Foster Care and Adoption,” Richard P. Barth, Chung Kwon Lee, Judith Wildfire, and Shenyang Guo, University of Chicago Social Service Review, March 2006, Ex. 105, at 1.) Senate Bill 539 Means Test: Elimination of a Threshold into Medicaid for Special Needs Children 130. The DSS Child Welfare Manual expressly recognizes that the “Adoption and Safe Families Act of 1997 requires that Medicaid is provided for children who have a state funded adoption assistance agreement.” (DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.3.) 131. The state of Missouri provides Medicaid coverage to children under a variety of programs including: (1) “MC+ for Children” which covers children under the age of one whose family income is at or less than 185% of the FPL, children between the ages of one and six whose family income is at or less than 133% of the FPL, and children from ages six to eighteen whose family income is at or less than 100% of the FPL; (2) “MC+ for Kids,” Missouri’s State Children’s Health Insurance Program (SCHIP), 1115 Demonstration Waiver which covers children whose family income is at or less than 300% of the FPL and who do not otherwise benefit from employer-subsidized health care insurance or other health care coverage; and (3) “Children’s Division Adoption Subsidy” which provides coverage to all children receiving state-funded adoption assistance payments.
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(DSS Missouri Medicaid Description, published at http://www.dss.mo.gov/dms/global/pages/about.htm, Ex. 55) 132. Prior to the implementation of the Senate Bill 539 means test, special needs children adopted by families with an income above 300% of the FPL remain eligible for Medicaid coverage under the “Children’s Division Adoption Subsidy” program because they receive adoption subsidies, though they are not qualified for Medicaid coverage under the means tests employed in Missouri’s alternative Medicaid programs. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.3) 133. Section 208.640.2 of Senate Bill 539 amends RSMo to provide that “[p]arents and guardians of uninsured children with incomes between one hundred fifty-one and three hundred percent of the federal poverty level who do not have access to affordable employer-sponsored health care insurance or other affordable health care coverage may obtain coverage pursuant to this section.” 134. Upon implementation of the Senate Bill 539 means test, special needs children adopted by families earning more than 300% of the FPL will lose their adoption subsidy eligibility and, therefore, their access into the state’s Medicaid program through the Children’s Division Adoption Subsidy program. (Senate Bill 539, Ex. 34, at 208.640.2, 453.073.) 135. Upon implementation of the Senate Bill 539 means test, special needs children adopted by families earning above 200% of the FPL and carrying available employer-sponsored health care coverage will be entitled to Medicaid coverage only if the family purchases such coverage under Section 208.640.2. Prior to the
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implementation of the Senate Bill 539 means test, these same special needs children qualify for Medicaid under the Children’s Division Adoption Subsidy program at no additional cost to the adoptive family. 136. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, testified that SB 539 includes “vague” language about the ability of families to keep Medicaid if they are means-tested out. She testified that the view she and the Children’s Division have taken, however, is that children whose subsidies are denied or terminated under the implementation of SB 539 will continue to keep their Medicaid. She further characterized Medicaid as an “essential” benefit under adoption agreements. (Martin Dep., Dec. 13, 2005, at 18-19.) 137. Counsel for Defendant stipulated on the record that all children adopted from DSS temporary care must be and will be provided with Medicaid coverage, regardless of the income of their adoptive parent. Counsel for Defendant further stipulated that the state intended to implement Senate Bill 539 consistent with this obligation. (Preliminary Injunction hearing, at 6-9.) Senate Bill 539: Threat of Irreparable Harm to Current Foster Children and Adopted Foster Children in Missouri 138. As of August 17, 2005, the Children’s Division projected that at least 1274 special needs children currently receiving an adoption subsidy under an existing contract with DSS will lose their benefit as a result of the Senate Bill 539 amendments. (Adoption Subsidy and Legal Guardianship, Ex. 121, at Bates 1 PRP 41-17.)
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139. It is undisputed that the direct result of the adoption subsidy provisions of Senate Bill 539, if implemented, will be longer stays by special needs children in government foster care. (Bullet Points Memo, Ex. 93.)
140. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539, if implemented, also will create uncertainty in relation to the financial capacity of existing adoptive families and putative adoptive parents to meet the serious, and oftentimes expensive, medical, educational and emotional needs of the special needs children they adopt or wish to adopt. The essential bargain underlying an adoption assistance agreement is the promise by the adoptive parent(s) to accept legal custody, and the concurrent responsibilities and duties, of a special needs child until he or she reaches the age of majority in exchange for the state’s commitment to provide monthly assistance payments to make the adoption financially possible without causing undue economic burden on the adoptive family. Senate Bill 539 threatens to undermine or completely withdraw the state’s end of this vital bargain. The resulting uncertainty will cause a reduction in the number of adoptions and will prolong the stays of special needs children in temporary foster care placements much to their emotional detriment. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Wiedemeier Bower.)
141. Fred Simmens, the DSS Director from August 2003 to October 2005, testified that he agreed that the means test in SB 539 could have a negative impact on the level of confidence that foster parents and prospective adoptive parents have in some portions of the child welfare system in Missouri, based on the “reasonable
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assumption” that parents might feel that the state broke its promise to them in the subsidy contracts. (Preliminary Injunction hearing, at 78.) 142. Steve Renne, Acting Director of DSS at all relevant times until April 1, 2005, now Deputy Director of DSS, agreed that Missouri’s adoption subsidy program helped to move children from foster care to adoptive families more quickly than if there were not a subsidy program. (Renne Dep., Jan. 26, 2006, at 9.) He also testified that an adoption subsidy can make the difference between adopting and not adopting for some families. (Id. at 39.) He testified that SB 539’s scheme regarding adoption subsidies provided no direct benefits to children. (Id. at 32.) 143. Martin testified that her department recognized that 1) some children may remain in foster care for longer periods of time under SB 539; 2) some children may come back into foster care due to the inability of families to support their needs; and 3) the bill was “unfair” to those children who are not eligible for IV-E federal funds. (Martin Dep., Dec. 13, 2005, at 14-17; DSS Bill Review, Ex. 97, at Bates 1 PRP 40-123.) Martin testified that if adoptive families were means tested out, but kept their child, the loss of the adoption subsidy could present a hardship to the family. (Martin Dep., Dec. 13, 2005, at 39.) 144. Martin testified that DSS had a fact sheet observing that children are less likely to be abused if they are adopted, as opposed to remaining in foster care. (Id. at 5254; DSS Fact Sheet, Ex. 98, at Bates 1 PRP 40-145.) Martin further testified that she was aware of and accepted studies that found it is harmful for children to stay in foster care longer, and that it is preferable to be in an adoptive family as opposed to staying in foster care longer. (Martin Dep., Dec. 13, 2005, at 29.)
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145. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 will also deter foster parents from adopting special needs children placed into their temporary physical custody. These foster parents currently receive for the duration of the child’s foster care episode a dependable stream of foster care maintenance payments from the state to assist in the care of the child. If Senate Bill 539 takes effect, foster parents will become less inclined to adopt a special needs foster child and thereby exchange the certain stream of foster care maintenance payments for the, oftentimes, reduced flow of adoption assistance payments, particularly when the stream of adoption assistance benefits is rendered uncertain in duration and amount. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Weidemeier Bower.)
146. As children spend more time in foster care, they are likely to be subjected to multiple moves in custody, which is harmful. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 14; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Weidemeier Bower.)
147. Senate Bill 539 also threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the courtsupervised consent decree entered in G.L., An Infant, by and through his Next Friend, et al. v. Gary Stangler et al, No. 77-0242-CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and
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assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. (July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al., Ex. 56.) Harm to Named Plaintiffs: Impact of Senate Bill 539 on Adoption Assistance Agreements E.C. 148. Named Plaintiff E.C., by her Next Friend Jill Katz, resides in the legal custody of the Children’s Division of the Missouri Department of Social Services in Jackson County, Missouri. E.C. is a member of the class of foster children privy to the consent decree entered in G.L., An Infant, by and through his Next Friend, et al. v. Stangler, et al., No. 77-0242-CV-W-1 (United States District Court for the Western District of Missouri). (Trial testimony of E.C.; Preliminary Injunction hearing, at 22.) 149. E.C. has lived in numerous foster homes since entering foster care at the age of seven and has tired of moving from one home to another. E.C. has lived in her current foster home for two years, has formed a bond with her current foster mother, and wishes to be adopted by her. She desperately wants to enjoy safety and stability in her life. (Trial testimony of E.C.; Preliminary Injunction hearing, at 23-26. 150. The Children’s Division had previously determined that E.C. was ineligible for Title IV-E adoption assistance, but in February 2006, the Children’s Division found that it had determined E.C.’s Title IV-E eligibility status in error, and that E.C. is in fact entitled to federally funded adoption assistance, if she is adopted.
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(Katz Dep., February 23, 2006, at 12-13.) This also means that a family who wishes to adopt E.C. will not be subjected to a means test as provided for in Missouri Revised Statute section 453.073.4, as amended by Senate Bill 539, nor will such a family risk losing adoption assistance in the future because their income has surpassed the level permitted by the amended statute. 151. E.C.'s foster mother, Niann Hines received monthly foster care maintenance payments from DSS to care for E.C.. Though she wished to adopt E.C., Ms. Hines feared that loss of the foster care maintenance payments, coupled with E.C.’s nonIV-E adoption subsidy status, would impose an economic hardship and prevent her from fully providing for E.C.’s special needs. Upon learning that E.C. is actually eligible for a Title IV-E adoption subsidy, Ms. Hines shortly thereafter instituted proceedings to adopt E.C. (Trial testimony of Niann Hines.) A.C. 152. Named Plaintiff A.C., by his parent and Next Friend Lana Capps, is a six-year-old boy who was adopted from the Missouri foster care system in 2002. A.C. and Ms. Capps live in Boone County, Missouri. (Declaration of Lana Capps, Ex. 7; Capps Dep., February 28, 2006, at 6, 9, 10.) 153. A.C. suffers from a congenital heart disorder that has necessitated 14 hospitalizations and two open-heart surgeries during his young life. He will require additional heart surgeries. (Declaration of Lana Capps, Ex. 7.) 154. Ms. Capps earns approximately $3,600 a month. She currently receives a monthly adoption subsidy of $651 under an adoption assistance agreement she executed with the State of Missouri. The adoption subsidy is a significant portion
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of Ms. Capps’ monthly income, and without it Ms. Capps ability to meet A.C.’s necessary and regular medical, emotional, psychological, and educational needs will be severely and negatively affected. (Declaration of Lana Capps, Ex. 7.) 155. The Children’s Division determined that A.C. is not eligible for federally funded adoption assistance under Title IV-E because A.C.’s natural mother had income that exceeded Title IV-E guidelines at the time A.C. was removed from the home and placed into foster care. ((Declaration of Lana Capps, Ex. 7; Capps Dep., February 28, 2006, at 32; Letter to L. Capps from L. Cole, July 29, 2005, Ex. 119, PR 14-285.) 156. Because A.C. is ineligible for Title IV-E adoption assistance, the State of Missouri has subjected Ms. Capps’ income to a means test and has determined that her income exceeds the amount permitted by Missouri Revised Statute section 473.053.4, as amended by Senate Bill 539. If Senate Bill 539 is permitted to take effect, the state-funded monthly maintenance adoption subsidy of $651 that Ms. Capps has received since she adopted A.C. will terminate. (Declaration of Lana Capps, Ex. 7.) J.C. 157. Named Plaintiff J.C., by his Next Friend Jill Katz, is a 16-year-old now living in the legal custody of the Children’s Division, Missouri Department of Social Services, in Jackson County, Missouri. J.C. is a member of the G.L. v. Stangler, et al. class. (Preliminary Injunction hearing, at 31-32.) 158. J.C. has lived in foster care since 1997, following the death of his mother and a short stay with his legal guardian. J.C.’s father’s parental rights have been
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terminated. Since 1997, J.C. has been placed into more foster homes and group homes than he can recall, and he presently resides in a group home. (Preliminary Injunction hearing, at 32-33.) 159. J.C. wishes to be adopted and has experienced several adoptive placements that disrupted before finalization. After J.C.’s mother died and his legal guardian had relinquished custody, it was discovered that J.C. had been the victim of severe abuse while in his mother’s care. These experiences left J.C. physically and emotionally traumatized and have necessitated ongoing therapy and treatment. J.C.’s condition and prognosis have improved, but he continues to require therapy and medication. (Child Profile, January 28, 2000, Ex. 108, at Bates RP 3 – 20002007) 160. J.C. would like to have a family that he can count on and trust, and J.C. believes he could have a better life if he were adopted. In foster care, J.C. has not been able to do some of the things that other 16-year-olds do, such as go with friends to the mall or get a driver’s license, and J.C. has not been able to spend the Christmas holidays with a family since he has been in foster care. J.C. fears that the absence of an adoption subsidy will prevent his dream of having an adoptive family. (Preliminary Injunction hearing, at 32-34; Katz Dep., February 23, 2006, at 5-6; Judgment, TR02-00083, In the Interest of J.C., Ex. 74.) T.F., B.F. and A.F. 161. Named Plaintiffs T.F., B.F. and A.F., (formerly known as T.G., B.G., and A.G.), by their Next Friend Jill Katz are biological siblings, ages ten, seven, and five, living with their adoptive parents, Elizabeth W. Fischer and John S. Fischer, in
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Jackson County, Missouri. Prior to their adoption of T.F., B.F., and A.F., Mr. and Mrs. Fischer were foster parents to the three children through the Missouri foster care system. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 5-6.) 162. T.F., B.F, and A.F. were severely neglected by their biological parents with farreaching consequences for the children. T.F. is diagnosed with ADHD and has required residential treatment in the past. T.F. continues to be evaluated for other possible disorders. B.F., who was also subjected to abuse in her biological home, has long-term conditions, including bipolar and attachment disorders. B.F. has also required hospitalization for her disorders, including after the finalization of her adoption by Mr. and Mrs. Fischer. A.F. has been diagnosed with posttraumatic stress disorder for which she receives therapy and takes prescription medication. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 17-22.) 1. As foster parents for T.F., B.F., and A.F., Mr. and Mrs. Fischer received approximately $1,800 per month in foster care maintenance and subsidies, which included the behavioral rate for T.F. and B.F. Federal law prohibits the payment of Title IV-E adoption assistance benefits in amounts in excess of the pre-existing foster care maintenance payments. See 42 U.S.C. 673(a)(3). (Missouri Title IV-E State Plan, Ex. 45, at Sec. 4, Requirement 3(c).) Because of the preliminary injunction granted by the Court in this cause, the state now pays the Fischer’s approximately $1,500 per month in adoption assistance maintenance payments.
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T.F. and B.F. continue to be paid at the behavioral rate. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 10-11.) 163. All three siblings would have been eligible for federally-funded assistance under Title IV-E but for errors in family court documents only detected by the state after the timeframe for perfecting Title IV-E eligibility had expired. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 14-15.) 164. Because the three children do not qualify for Title IV-E adoption assistance, if the means test in Senate Bill 539 is enforced, the Fischer’s eligibility for state-funded adoption subsidies will depend upon their income. The Fischer’s monthly income is approximately $7,800 – well above the level permitted by Senate Bill 539. Thus, the Fischer’s will lose the adoption assistance they now receive for their three adopted children, which constitutes approximately 15% of their present family income. (Affidavit of Elizabeth Fischer Ex. 3.) W.S., M.S. and D.S. 165. Named Plaintiffs W.S., M.S., and D.S., by their parent and Next Friend Robert Brian Strange, are boys aged 10, 7 and 6, respectively, who were adopted from the Missouri foster care system in 2000 as a sibling group. The boys were all in the G.L. v. Stangler et al. class prior to their adoption. (Trial testimony of Robert Strange.) 166. W.S., M.S. and D.S. now live with their adoptive parents, Robert and Jennifer Strange, in Cass County, Missouri. The boys were initially removed from their biological home after M.S. sustained severe burns when held against a hot water
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heater by his mother. D.S. is developmentally disabled. (Trial testimony of Robert Strange.) 167. The Strange’s annual income is about $62,400. They currently receive three separate $275 adoption assistance payments each month under the adoption assistance agreements they executed with the state of Missouri on behalf of each of the boys. The Strange’s cannot support the medical, educational, emotional and physical needs of the boys absent the adoption assistance. (Trial testimony of Robert Strange.) 168. The state of Missouri sent a notice letter to the Strange’s stating that W.S.’s and M.S.’s adoption subsidies will terminate permanently if the family’s gross annual income exceeds the Senate Bill 539 means test. The letter further gave notice that should the family’s gross income meet the means test, all three boys’ adoption assistance agreements will, by operation of Senate Bill 539, permanently expire within the year. (Trial testimony of Robert Strange.) M.P. 169. Named Plaintiff M.P., by adoptive parent and Next Friend Michael Patterson, is a 16-year-old adopted child who currently reside with his father in Jackson County, Missouri. M.P. was a member of the G.L. v. Stangler et al. class prior to his adoption. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 4-7.) 170. M..P. was placed in Michael Patterson’s home as a foster child. Mr. Patterson has been a foster parent to over 20 children in the past eight years. In addition to M.P., Mr. Patterson has adopted four other children from foster care, three of
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whom are now adults and living on their own. Mr. Patterson is proud that all of his three grown children graduated from high school, and the youngest was offered a college scholarship. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 7-8, 18-19.) 171. M.P. was removed from his home and placed in foster care in 1992 because of neglect and his mother’s drug abuse. He was placed in Mr. Patterson’s foster home in December 2002 after having lived in over 15 foster homes and children’s shelters. Mr. Patterson received the behavioral rate for M.P.’s foster care because of problems that M.P. was experiencing both at home and at school. Mr. Patterson has adopted M.P. and continues to receive the behavioral rate as maintenance under an adoption subsidy agreement executed with DSS. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 16-18; Psychological Evaluation, July 15, 2003, Ex. 109, at Bates PR12 / 43-47.) 172. Mr. Patterson has been informed that M.P. is not eligible for federal adoption assistance under Title IV-E, and that therefore, under Senate Bill 539, M.P.’s adoption assistance for maintenance will terminate permanently if Mr. Patterson’s gross annual income fails the bill’s means test. Mr. Patterson expects that his income will exceed the level permitted by Senate Bill 539. Mr. Patterson has been further informed that even if his gross income passes the means test, M.P.’s adoption assistance agreement will, by operation of Senate Bill 539, permanently expire at the end of one year. (Affidavit of Michael Patterson Ex. 5; Letter to M. Patterson from F. Simmens of DSS, May 25, 2005, Ex. 63; Letter to M. Patterson from F. Simmens of DSS, July 25, 2005, Ex. 64, at 1.)
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J.A. 173. Named Plaintiff J.A., by his parent and Next Friend John Antonich, is a 15 yearold boy. He was adopted from the Missouri foster care system in 2004 after some 6 years in foster care. J.A. lives with his adoptive parents in Jefferson County, Missouri. (Trial testimony of J.A..) 174. While in foster care, J.A. lived in 23 different foster homes between the ages of 8 and 10. He later was placed into group care after a suicide attempt. J.A. suffers from severe anxiety, attention deficit hyperactive disorder (“ADHD”), oppositional defiant behavior, and depression. The depression condition has required hospitalization. J.A. also has required intensive tutoring to improve his challenged educational growth. (Testimony of John Antonich at preliminary injunction hearing.) 175. Mr. Antonich earns approximately $4,580 a month. The Antonich’s currently receive a monthly $651 adoption subsidy under an adoption assistance agreement they executed with the state of Missouri. The Antonich’s cannot afford the considerable educational, psychiatric and behavioral care necessary to address J.A.’s special needs absent the adoption subsidy. (Testimony of John Antonich at preliminary injunction hearing.) 176. The state of Missouri has sent a notice letter to the Antonich’s stating that their adoption subsidies will be terminated permanently if their annual income exceeds the Senate Bill 539 means test – 200% of the FPL for a family of 3 is $32,180 under current federal guidelines. Mr. Antonich earns approximately $54,960 per year, and his income will, therefore, surpass the Senate Bill 539 means test. The
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letter further gave notice that should the family’s gross income meet the means test, J.A.’s adoption assistance agreement will, by operation of Senate Bill 539, permanently expire within the year. (Testimony of John Antonich at preliminary injunction hearing.) T.J. and A.J. 177. Named Plaintiffs T.J. and A.J., by their parent and Next Friend Lavada Johnson, are 7 and 5 years old, respectively. They were adopted from the Missouri foster care system. Ms. Johnson, who is 60 years old, also supports two children in therapeutic foster care. (Trial testimony of Lavada Johnson.) 178. T.J. suffers from severe asthma, sinus disease, ADHD and hypoglycemia and requires daily medication. A.J. suffers from chronic lung disease, chronic and persistent asthma and ADHD and also requires daily medication. (Trial testimony of Lavada Johnson.) 179. Ms. Johnson earns approximately $1,160 a month. She currently receives monthly $651 adoption subsidy payments under the adoption assistance agreements she executed with the state of Missouri. Ms. Johnson cannot afford the considerable medical, psychiatric, educational and emotional care necessary to address T.J.’s and A.J.’s special needs absent the adoption subsidy. (Trial testimony of Lavada Johnson.) 180. The state of Missouri has sent a notice letter to Ms. Johnson stating that the children are Title IV-E eligible, but that her adoption assistance agreements will automatically expire in 2006. (Trial testimony of Lavada Johnson.)
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N.S. 181. Named Plaintiff N.S., by his parent and Next Friend Tammy Smith, is a fouryear-old boy who was adopted from the Missouri foster care system in 2002 by Mrs. Smith and her husband, Harold Smith. N.S. lives with his adoptive parents in St. Charles County, Missouri. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 6-7.) 182. N.S.’s natural mother consented to the termination of her parental rights shortly after N.S. was born. The parental rights of N.S.’s natural father were terminated by default. (Order, Judgment and Decree of Court, St. Louis County, June 12, 2002, Ex. 111, at Bates PR 20 / 9-11.) 183. At the time of N.S.’s adoption, Mr. and Mrs. Smith executed an adoption subsidy agreement with the Division of Family Services (now Children’s Division) that provides a monthly adoption assistance maintenance payment at the standard rate until the year 2020 when N.S. will be eighteen years old. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 6-7.) 184. N.S. suffers from severe asthma and takes four different medications daily to control the condition. N.S. also requires two breathing treatments twice daily. The asthma condition occasionally results in asthmatic crises and has required as many as 11 visits to the hospital in one 13-month span. (Declaration of Tammy Smith Ex. 10.) 185. Because of N.S.’s severe asthma and allergies, Mr. and Mrs. Smith requested that N.S.’s adoption assistance maintenance payment be increased to the medical rate of $651 per month, and that request was granted by the Division of Family
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Services in 2004. Mr. and Mrs. Smith use the additional money to pay for daycare services not provided by the state, co-pays for N.S.’s medical care, and N.S.’s medications not covered by insurance. Because of N.S.’s condition and special needs, the Smith’s have had to modify their home, including, but not limited to, the removal of carpeting and the installation of special flooring and bedding, and the increased payment helps to cover that expense. Utility costs are higher for the Smith’s because windows in the home must be kept closed. Finally, N.S.’s frequent illnesses have required Mrs. Smith to be absent from her job, so much that she uses her allowable time off as quickly as she earns it, and thus the maintenance payment helps to make up for income lost when Mrs. Smith is forced to take unpaid leave in order to care for N.S. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 14-15.) 186. N.S. is eligible for federally funded adoption assistance under Title IV-E. The state, however, has informed Mr. and Mrs. Smith that their subsidy agreement will expire within one year and have to be renegotiated. (Declaration of Tammy Smith Ex. 10.) 187. The Smith’s have obtained approval to adopt a second child, but they are concerned that the changes in the adoption subsidy program will make adoption a financial hardship, and they have lost confidence that the state will adhere to its agreements in these matters. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 21.)
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II. CONCLUSIONS OF LAW: Elements of Proof for Permanent Injunctive Relief
1. Entry of an injunction is proper where (1) there is a threat of irreparable harm to the movant, (2) the threatened irreparable harm outweighs the injury that granting the injunction will inflict on other litigants, (3) the movant has a probability or likelihood of success on the merits, and (4) the public interest will be served by granting an injunction. Dataphase Systems v C L Systems, Inc., 640 F.2d 109, 114 (8th Cir. 1980) (en banc). The standard for granting a permanent injunction is essentially the same as for a preliminary injunction, except that to obtain a permanent injunction the movant must attain success on the merits. Bank One v. Guttau, 190 F.3d 844, 847 (8th Cir. 1999) (citing Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n.12 (1987)). The grant of a permanent injunction lies within the discretion of the trial court and is subject to review for abuse of that discretion. Randolph v. Rogers, 170 F.3d 850, 856 (8th Cir. 1999).
2. This Court entered a preliminary injunction on September 9, 2005. By order dated September 29, 2005, this Court certified a plaintiff class in this action comprised of “all future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a court-ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.”
Federal and State Statutory and Regulatory Scheme for Missouri Adoption Subsidy Program
3. Defendant, K. Gary Sherman, is the Director of DSS and, in that capacity, oversees and is legally responsible for the administration and management of the
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Children’s Division and the implementation of its child welfare programs and services, including adoption services. (RSMo Section 660.010.1; Sherman Dep., Jan. 26, 2006, at 4, 19-21.) 4. The federal Title IV-E adoption assistance program provides federal matching funds to states that establish HHS-approved “qualifying plans” to provide adoption assistance for children with special needs. 42 U.S.C. §671. 5. The state of Missouri has a qualifying “State Plan for Title IV-E of the Social Security Act Foster Care, Independent Living and Adoption Assistance” (“Missouri State Plan”) and receives federal funding for adoption assistance purposes. (Missouri Title IV-E State Plan, Ex. 45.) 6. Missouri state law, § 453.074.1, states that “the division of family services shall have the following duties in the administration of the subsidy program: . . . Comply with all federal laws relating to adoption subsidies in order to maintain the eligibility of the state of Missouri for federal funds.” § 453.074.1 RSMo. As a matter of law, DSS is required to operate its entire adoption subsidy program in compliance with federal law. 7. Additionally, the Missouri State Plan requires that “[a]s a condition of the receipt of Federal funds under title IV-E of the Social Security Act … the [state agency] … hereby agrees to administer the program in accordance with the provisions of this State plan, title IV-E of the Act, and all applicable Federal regulations and other official issuances of the Department.” (Missouri Title IV-E State Plan, Ex. 45, at 2.) As a matter of law, DSS is required to operate its entire adoption subsidy program in compliance with federal law.
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8. As held by the Eighth Circuit Court of Appeals, “The state of Missouri has availed itself of the funds offered by Congress through the [Adoption Assistance Act]. Although Congress may not require a state to participate in a program created pursuant to the Spending Clause, once a state agrees to take the funds offered through such programs the state is bound to comply with federally imposed conditions . . . . The [Adoption Assistance Act] requires Missouri to submit to the Secretary of Health and Human Services (HHS) a state plan for providing foster care and adoption assistance that meets the standards enacted by Congress. 42 U.S.C. § 671. In Missouri, the Department of Social Services, through its Division of Family Services, has been designated to administer the state plan and assure compliance with the [federal] Act. Mo.Rev.Stat. §§ 207.010, 207.060, 660.010 (2000).” Missouri Child Care Ass’n v. Cross, 294 F.3d 1034, 1036 (8th Cir. 2002) (internal quotation marks and citation omitted).
9. As a matter of law, the state of Missouri has agreed through its State Plan to comply with federal regulations and official HHS issuances in administering its entire adoption subsidy program to Title IV-E eligible and state-only recipients. (Missouri Title IV-E State Plan, Ex. 45.)
10. Available to the public on-line since September of 2001, the federal Child Welfare Policy Manual provides official issuances of the U.S. Department of Health and Human Services (HHS) on the interpretation of federal law and federal regulations in the area of child welfare, including adoption subsidies. (Federal Child Welfare Policy Manual, Ex. 113; http://www.acf.hhs.gov/j2ee/programs/cb/laws_policies/laws/cwpm/index.jsp;
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trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 11. Children with “special needs” are those whom the State has “determined . . . cannot be returned to the home of his parents” and for whom “there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance under this section or medical assistance under title XIX.” See 42 U.S.C. § 673(c). 12. Missouri law and Missouri DSS policy include all foster children in the custody of the Children’s Division of DSS as “special needs” children for purposes of adoption assistance subsidies. See Mo.Rev.Stat. § 453.073.2. 13. As a matter of law, all class members are thus “special needs” children under federal and state law. 14. The federal Adoption Assistance Act, Section 673(a)(3), requires, in part: “[t]he amount of the payments [adoption subsidies] to be made in any case under clauses (i) and (ii) of paragraph (1)(B) shall be determined though agreement between the adoptive parents and the State or local agency administering the program under this section, which shall take into consideration the circumstances of the adopting parents and the needs of the child to be adopted, and may be readjusted periodically, with the concurrence of the adopting parents (which may be
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specified in the adoption assistance agreement), depending upon changes in such circumstances.” 15. Section 673(a)(21) of the Adoption Assistance Act requires that a state’s Title IVE plan must: “provide for health insurance coverage … for any child who has been determined to be a child with special needs, for whom there is in effect an adoption assistance agreement (other than an agreement under this part [42 USCS §§670 et seq.] between the state and an adoptive parent or parents, and who the state has determined cannot be placed with an adoptive parent or parents without medical assistance ….” 16. As a matter of law, all current or former DSS foster children are entitled to full medical benefits upon adoption regardless of the income of their adoptive parents. See Section 673(a)(21). 17. Federal law prohibits the payment of Title IV-E adoption assistance benefits in amounts in excess of the pre-existing foster care maintenance payments. (Missouri Title IV-E State Plan, Ex. 45, at Sec. 4, Requirement 3(c).) See 42 U.S.C. 673(a)(3). 18. The federal Adoption Assistance Act, Section 675(3), requires that “[t]he term “adoption assistance agreement” means a written agreement, binding on the parties to the agreement, between the State agency, other relevant agencies, and the prospective adoptive parents of a minor child which at a minimum (A) specifies the nature and amount of any payments, services, and assistance to be provided under such agreement, and (B) stipulates that the agreement shall remain
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in effect regardless of the State of which the adoptive parents are residents at any given time.” See 42 U.S.C. §675(3). 19. Section 453.073 RSMo requires: “a written agreement shall be entered into by the division and the parents. The agreement shall set forth the following terms and conditions: (1) The type of allotment; (2) The amount of assistance payments; (3) The services to be provided; (4) The time period for which the subsidy is granted.” 20. Senate Bill 539 amends Section 453.073.3(4) of RSMo to require: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) Section 453.073.3(4) of Senate Bill 539, on its face, applies to both Title IV-E eligible (federal/state funded) and non-Title IV-E eligible (stateonly funded) adoption assistance agreements. 21. Senate Bill 539 amends Section 453.073.4 of RSMo to require: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) Section 453.073.4, on its face, applies to non-Title IV-E eligible adoption assistance agreements.
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22. HHS regulations require that “there must be no income eligibility requirement (means test) for the prospective adoptive parent(s) in determining eligibility for adoption assistance payments.” 45 CFR 1356.40(c). (1) Plaintiffs’ Success on the Merits
23. Plaintiffs have succeeded on the merits of the statutory and constitutional causes averred in Counts I, II and III of their complaint. COUNT I: Violation of Adoption Assistance Act
24. Under 42 U.S.C. § 1983, a federal cause of action exists against anyone acting pursuant to state authority that violates any “rights, privileges or immunities secured by the Constitution and laws of the United States.” Pediatric Specialty Care, Inc. v. Arkansas Dep’t of Human Services, 293 F.3d 472, 477 (8th Cir. 2002) (quoting 42 U.S.C. § 1983). Section 1983 provides a federal claim for violations of both federal constitutional and statutory law. Id. (citing Maine v. Thiboutot, 448 U.S. 1, 4 (1980).
25. The Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. §§ 620-629(i) and 670679(b), constitutes controlling federal statutory law under the Supremacy Clause of the United States Constitution. See Blum v. Bacon, 457 U.S. 132, 145-56 (1986)(holding that, under the Supremacy Clause, federal Spending Clause legislation, such as the Adoption Assistance Act, supercedes conflicting state statutes and regulations). See also Missouri Child Care Association v. Cross, 294 F.3d 1034 (8th Cir. 2002)(the Adoption Assistance Act constitutes the supreme law of the land).
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26. Moreover, Section 673(a)(3) of the Adoption Assistance Act is privately enforceable. See Pediatric Specialty Care, supra,, 293 F.3d 472, 477-78 (8th Cir. 2002) (setting forth private right of action standard); ASW v. Oregon, 424 F.3d 970, 975-78 (9th Cir. 2005) (§ 673(a)(3) creates private right of action); Missouri Child Care Ass’n v. Martin, 241 F. Supp. 2d 1032, 1041-42 (W.D. Mo. 2003) (on remand) (§§ 672 and 675 confer enforceable private rights of action).
27. Three factors determine whether a particular statute creates a private right of action: (1) whether the provision in question was “intend[ed] to benefit the putative plaintiff”; (2) whether the interest the plaintiff asserts is not so “vague and amorphous” that it is beyond the competence of the judiciary to enforce; and (3) whether the provision in question creates a binding obligation on the governmental unit. Pediatric Specialty, 293 F.3d 472, 477 (8th Cir. 2002)(citing Blessing v. Freestone, 520 U.S. 329, 340 (1997)).
28. Section 673(a)(3) meets the first prong of the private right of action test, as Plaintiffs are the clearly intended recipients and beneficiaries of the adoption assistance benefits conferred under the federal statute. Missouri Child Care, 241 F. Supp. 2d 1032, 1041 (W.D.Mo. 2003)(the beneficiaries of Section 672 foster care maintenance payments are the foster children though their benefits may be paid indirectly through licensed providers); ASW, 424 F.3d 970, 975-78 (9th Cir. 2005). Section 673(a)(3) contains “rights creating language” that demonstrates a statutory intent to confer a private right of action. See Gonzaga University v. Doe, 536 U.S. 273 (2002)(where the Court clarified the three-pronged standard in
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Blessing. Id at 283); see also Masterman v. Goodno, 2004 U.S. Dist. LEXIS 354 at *20-24 (D.Minn. Jan. 8, 2004). 29. Section 673(a)(3) additionally satisfies the second prong of the private right of action test requiring that plaintiff assert an interest that is not so “vague and amorphous” as to be beyond the competence of the judiciary to enforce. Pediatric Specialty Care, 293 F.3d at 477 (citing Blessing, 520 U.S. at 340). See also Missouri Child Care, 241 F. Supp. 2d 1032, 1041 (W.D.Mo. 2003); ASW, 424 F.3d 970, 975-78 (9th Cir. 2005) Section 673(a)(3) explicitly provides that the amount of any adoption assistance payments may be adjusted only with the “concurrence” of the adopting parents, and in consideration of specific factors, including the “the needs of the child being adopted.” 42 U.S.C § 673. As a matter of law, this statutory provision is well suited to court enforcement. 30. The final prong of the test, “whether the provision in question creates a binding obligation on the governmental unit,” is also satisfied by § 673(a)(3). Pediatric Specialty Care, 293 F.3d at 477 (citing Blessing, 520 U.S. at 340)(the statutory provision to be enforced must be couched in mandatory rather than precatory terms.”). Section 673(a)(3) states that the adoption subsidy “shall be determined through agreement between the adoptive parents and the state or local agency” and that the only circumstance where the subsidy may be “adjusted periodically” is “with the concurrence of the adopting parents.” See also ASW, 424 F.3d 970, 975-78 (9th Cir. 2005) (concluding § 673(a)(3) creates a private right of action). 31. Section 453.073.3(4) places within the discretion of the DSS Director the unilateral authority to renew adoption subsidy agreements executed by the state of
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Missouri for both IV-E eligible and non-IV-E eligible subsidies. On its face, this provision conflicts with, violates, and is preempted by the express language of 42 U.S.C. 673(a)(3) which states that adoption subsidy agreements “may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.” (emphasis added.) 32. Section 453.073.3(4) further imposes a blanket one-year limitation upon the duration of all adoption subsidy agreements and causes all existing adoption subsidy agreements to expire automatically upon their one-year anniversary. On its face, this provision likewise conflicts with, violates, and is preempted by the express language of 42 U.S.C. 673(a)(3) which states that adoption subsidy agreements “may be readjusted periodically with the concurrence of the adopting parents …” 33. In evaluating an alleged statutory violation or conflict, courts first look to the plain meaning of the subject statutory provisions. Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984); See also Camacho v. Texas Workforce Comm’n, 408 F.3d 229, 236-37 (5th Cir. 2005). Additionally, official policy issuances of HHS, the federal agency charged with implementing the Title IV-E program, are to be given deference. See id. at 844 (“a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of any agency”). 34. Here, the plain language of Section 673(a)(3) is dispositive. However, even if the Court were to look beyond this plain statutory language, Section 453.073.3(4), in
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imposing a blanket limitation on duration and automatic expiration, conflicts with and is preempted by the controlling official HHS issuance in the HHS Child Welfare Policy Manual, Section 8.2D.2, which states: “States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.” 35. Moreover, the blanket limitation on duration provision also conflicts with and is preempted by the controlling official HHS issuance in the HHS Child Welfare Policy Manual, Section 8.2D.5, requiring that adoption assistance payments must continue until (1) the child has attained the age of 18 (or 21 if the state has determined that the child has a mental or physical disability which would warrant the continuation of assistance); (2) the State determines that the adoptive parents are no longer legally responsible for the support of the child; or (3) the State determines that the adoptive parents are no longer providing any support to the child. ( HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.5.) 36. As a matter of law, under the challenged amendments to 473.073.3(4), all existing adoption subsidy contracts expire on June 30, 2006, and all new subsidy contracts will expire on their one-year anniversary. DSS policy, unchanged by the challenged provision, expressly distinguishes between review and automatic renewal on the one hand, and renegotiation upon expiration on the other hand. (Plaintiffs'Ex. 48; Defendant's Post Trial Proposed Findings of Fact para. 39; Plaintiffs'Post Trial Proposed Findings of Fact para. 77.) Defendant's assertion of
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an "intent" not to do what the challenged provision and DSS policy both say to the contrary -- taken as a litigation position and never reduced in writing within even a DSS policy -- is without merit. See, e.g., Idaho Dep’t of Health and Welfare v. United States Dep’t of Energy, 959 F.2d 149, 153 (9th Cir. 1992) (“We grant no deference to [a regulatory] interpretation put forth merely as a litigation position.”) 37. Finally, the Court has received into the evidentiary record an August 29, 2005 letter from Linda K. Lewis, Regional Administrator of the United States Department of Health and Human Services to DSS Director K. Gary Sherman. This letter sets forth the following official position of HHS: “[t]he Administration for Children and Families has determined that Missouri is out of compliance with title IV-E requirements because SB 539 states that the period for which all subsidies will be granted will not exceed one year and the director has the discretion as to whether the agreement can be renewed for subsequent years.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 38. The August 29, 2005 HHS letter further states, “Federal requirements state that once a child is determined eligible for title IV-E adoption assistance, he or she remains eligible and the subsidy continues for reasons specified in the Federal policy [Child Welfare Policy Manual, Section 8.2B.9 and Social Security Act – Section 473]. The Federal policy further states that States may not have a blanket policy which limits the duration of adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set
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in individual cases with the concurrence of the adopting parents … [Child Welfare Policy Manual, Section 8.2D.2 and Social Security Act – section 473]. The Missouri legislation, however, states that the period for which all subsidies will be granted will not exceed one year.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 39. The August 29, 2005 letter also states, “Federal policy [Child Welfare Policy Manual Section 8.2D.5 and Social Security Act – section 473; and 45 CFR 1356.40(b)] provides that once a child is determined eligible for adoption assistance under IV-E, he or she remains eligible and the subsidy continues unabated. Once an adoption assistance agreement is signed and in effect, it can only be terminated if 1) the child has reached the age of 18 (or the age of 21 if the State has determined that the child has a mental or physical disability which would warrant continuation of assistance), 2) the State determines that the adoptive parents are no longer legally responsible for the support of the child, or 3) the State determines that the adoptive parents are no longer providing any support to the child. Missouri’s legislation, however, states that the agreement can be renewed for subsequent years “at the discretion of the director” and therefore violates Federal policy.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 40. The Court gives due deference to this letter as well as official HHS policy issuances in construing of 42 U.S.C. Section 673(a)(3). Section 453.073.3(4) conflicts with and is preempted by the plain meaning of 673(a)(3) of the Adoption Assistance Act, the reasonable official HHS issuances under that Act, and as
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specifically construed and applied by HHS in the Lewis letter in administering the Title IV-E federal program. COUNT II: Equal Protection 41. Missouri Senate Bill 539 amends the state’s adoption subsidy law to include a new Mo.Rev.Stat. § 453.073.4. The “means test” established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards of the Missouri foster care system. The means test will be applied both retroactively and prospectively to initially deny or terminate existing adoption subsidy benefits to one group of children and not the other. 42. Specifically, for one group, in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the 1996 Aid for Families With Dependent Children (AFDC) eligibility standard for Title IV-E purposes (also referred to as “non IV-E eligible” children), the new means test will be imposed on the income of the children’s existing or prospective adoptive parents to initially deny or terminate their existing adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes (“IV-E eligible” children), no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. Mo.Rev.Stat. § 453.073.4 creates an unlawful discriminatory classification under the Equal Protection Clause. 43. A single governmental purpose has been advanced for § 453.073.4 and its means test: achieving cost savings in the state’s adoption subsidy program by reducing
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the amount of state funds appropriated for the program and directing those funds to the most needy. 44. First, this classification infringes on the fundamental right of foster children -their liberty interest in avoiding unnecessary government confinement -- and cannot survive strict scrutiny review. A discriminatory classification implicating a suspect class or a fundamental right triggers strict scrutiny. Plyler v. Doe, 457 U.S. 202, 216-218 (1982); Lubin v. Panish, 415 U.S. 709, 721-22 (1974). Under strict scrutiny, a statute’s classification must be narrowly tailored to achieve a compelling state purpose. Plyler v. Doe, 457 U.S. at 216-218. 45. “Liberty from bodily restraint always has been recognized as the core of the liberty protected by the Due Process Clause from arbitrary governmental action.” Youngberg v. Romeo, 457 U.S. 307, 316 (1982) (citing Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1, 18 (1979) (Powell, J., concurring in part and dissenting in part). See also DeShaney v. Winnebago, 489 U.S. 189, 200 (1989); Ingraham v. Wright, 430 U.S. 651, 673-674 (1977); Collins v. Bellinghausen, 153 F.3d 591, 596 (8th Cir. 1998). 46. Unnecessarily prolonged confinement in government foster care invokes the substantive due process liberty interests of foster children. See DeShaney, 489 U.S. at 201 n.9; Taylor v. Ledbetter, 818 F.2d 791, 796-97 (11th Cir. 1987) (recognizing due process liberty interest of foster child in state custody in a damages action under § 1983); Kenny A. v. Perdue, 356 F.Supp.2d 1353, 1360-61 (N.D.Ga., 2005) (finding that “the evidence shows that foster children in state custody are subject to placement in a wide array of different types of foster care
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placements, including institutional facilities where their physical liberty is greatly restricted”). See also Norfleet ex rel. Norfleet v. Arkansas Dep’t of Human Servs., 989 F.2d 289, 293 (8th Cir. 1993) (foster children have constitutional right to “adequate medical care, protection and supervision”). See also Foucha v. Louisiana, 504 U.S. 71, 85-86 (1992) (plurality opinion) (four justices acknowledged that restraint on liberty is a fundamental right and violative of equal protection where the State had not provided a “particularly convincing reason.”) The asserted purpose of cost savings here fails to meet this articulation of heightened scrutiny. 47. Defendant in this case concedes that Mo.Rev.Stat. § 453.073.4 will result in foster children staying in foster care for at least six months longer. This impingement of foster children’s substantive due process rights constitutes a violation of their fundamental rights, triggering strict scrutiny review. Section 453.073.4 must be enjoined because it is not narrowly tailored to serve a compelling state interest. The state’s asserted government purpose, cost savings, is not sufficient to withstanding this rigorous standard of review. See Shapiro v. Thompson, 394 U.S. 618, 632 (1969). The means test is not narrowly tailored, as it selectively tests some adoptive parents’ gross income without consideration of actual expenditures or even the child’s needs. 48. Second, even assuming arguendo that rational basis review applies, the means test in RsMo 453.073.4 is not rationally related to a legitimate government interest. 49. The means test established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs
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children, all current or former state wards. The means test will be applied to deny adoption subsidy benefits to one group of children and not the other. Specifically, for one group in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the AFDC eligibility standard for Title IV-E purposes, the means test will be imposed on the income of the children’s existing or prospective adoptive parents to deny or abrogate their adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes, no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. In the area of economics and social welfare, equal protection analysis requires that the state establish that the challenged classification is rationally related to some legitimate governmental purpose. Ranschburg, 709 F.2d 1207, 1209 (8th Cir. 1983) (citing United States Dep’t of Agric. v. Moreno, 413 U.S. 528, 533 (1973); Dandridge v. Williams, 397 U.S. 471, 485 (1970); Medora v. Colautti, 602 F.2d 1149, 1152 (3d Cir. 1979); Alcala v. Burns, 545 F.2d 1101, 1104 (8th Cir. 1976)). 50. A virtually identical social welfare classification in Missouri failed to withstand Equal Protection scrutiny in Ranschburg, 709 F.2d 1207 (8th Cir. 1983). In Ranschburg, Plaintiffs challenged on Equal Protection grounds a utility subsidy program in Missouri that granted financial assistance to multiple classifications of disabled citizens, whose eligibility for a statutory utility program under state law was determined solely by their additional participation in other statutorily enumerated public assistance programs. Id. at 1208-09. Plaintiffs, deemed
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“disabled” under the purview of the Missouri Medical Assistance Program, were nonetheless denied utility subsidy benefits because they did not participate in any of the public assistance programs specifically enumerated in the challenged statute. Id. 51. Plaintiffs contended that because they were equally situated in terms of need and disability with those receiving the utility subsidy, the state had acted unconstitutionally in excluding them from the program benefits. See Id. at 120911. The state of Missouri defended its statutory scheme in the District Court, arguing that it rationally promoted the state’s legitimate interest in allocating limited public funds among the state’s most needy citizens. Id. The Court struck down the challenged statute finding that no legitimate governmental interest was served by the subject classification. 52. Upon review, the Eighth Circuit Court affirmed the District Court’s judgment striking down the utility subsidy law on Equal Protection grounds. The Circuit agreed that the state of Missouri generally possesses a legitimate interest in directing limited public funds to the most needy; however, it concluded that the challenged program’s eligibility classifications were irrational as they assured no greater need on the part of program recipients than was demonstrated by the nonrecipient plaintiffs. Id. at 1210. 53. The Eighth Circuit held: “[a]lthough states may have great discretion in the area of social welfare, they do not have unbridled discretion. They must still explain why they chose to favor one group of recipients over another. Thus, it is untenable
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to suggest that a state’s decision to favor one group of recipients over another by itself qualifies as a legitimate state interest.” Id. at 1211. 54. The classification imposed by Senate Bill 539 is as irrational as the classification struck down in Ranschburg. The means test in Senate Bill 539 is not rationally related to a legitimate governmental interest, and is arbitrary and harmfully unfair. No conceivable (let alone rational) thread ties means testing a child’s adoptive parents’ gross income because that same child’s biological parents’ income exceeded an income standard, to the governmental interest in directing state funds to the most needy. Undisputedly needy children will be denied the benefit -- the children whose adoption assistance subsidies are selectively denied or terminated under the new law are, by definition, at least equally in need of the benefit as those who will receive the subsidies. 55. The challenged law is also unfair and not rationally related to saving money by directing state funds to the most needy because it will never apply a means test to the income of the adoptive parents of IV-E eligible children, no matter how high their gross income may be. Moreover, the state will continue to fund all IV-E eligible children, regardless of their adoptive parents’ gross income, with 38% state dollars. See 69 Fed. Reg. 68,372 (Nov. 24, 2004) (Federal Financial Participation in State Assistance Expenditures, FY 2006). At the same time, the law will deny or terminate adoption assistance subsidies completely to only certain special needs children whose adoptive parents’ gross income exceeds 200% of the federal poverty level or “FPL” ($32,180 for a family of three) solely because their biological parents’ income exceeded the 1996 AFDC standard.
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State dollars will thus fund subsidies for children in adoptive homes with higher gross incomes than the homes where the state will deny or terminate subsidies for equally needy children. Adoptive parents with more than one adoptive child could arbitrarily lose the subsidy for one child, but retain it for another. (Preliminary Injunction hearing, at 188.) 56. Finally, the asserted governmental purpose underlying the means test is wholly illusory and non-existent because the means test will not save taxpayer money, but actually will increase the overall cost of child welfare in the State of Missouri. The state irrationally projected fiscal savings to flow from Senate Bill 539 based upon (1) the clearly erroneous assumption that 43% of all existing adoption subsidy beneficiaries in Missouri were non-IV-E eligible when, in actuality, only 18% were non-IV-E eligible, (2) the clearly erroneous assumption that the adoption subsidy population in Missouri would grow at the flat rate of 1300 per year when, in actuality, adoptions in Missouri had steadily declined from 1,515 in FY2002 to 1,123 in FY2005 according to readily available DSS adoption program data, (3) the arbitrary and false assumption that children whose adoptive placements disrupt as a result of the means test will experience, on average, a six month additional stay in foster care, even though readily available state foster care performance data demonstrated that additional stays of 24 months or longer should be expected, (4) a complete failure to account for the significant administrative and caseworker costs required to serve the increased foster care population resulting from Senate Bill 539, even though these cost impacts were fully recognized and anticipated by DSS officials, and (5) a failure to properly
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account for the legislature’s FY2006 adoption subsidy program appropriation at 250% of FPL, instead of 200% of FPL. (Morris Dep., Dec. 12, 2005, at 27-31; Table 28, February 2006 Children’s Services Management Report, Ex. 120; Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1; Preliminary Injunction hearing, at 46-47; Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 57. As a matter of law, the Court holds that it is beyond debate that the asserted governmental purpose for the adoption subsidy provisions of Senate Bill 539 is arbitrary and clearly erroneous. State of Minnesota v. Clover Leaf Creamery, 449 U.S. 456, 464 (1981). In the face of readily available DSS adoption data and the recognized additional foster care costs to flow from the means test, the budgetary savings asserted by the state could not reasonably be conceived to be valid or true by any reasonable governmental decision-maker.
COUNT III: Contracts Clause 58. The Contracts Clause of the United States Constitution prohibits the states from
enacting legislation that “impair[s] the Obligation of Contracts . . .” on a retroactive basis. United States Constitution, Art. I, Sec. 10, cl. 1. In adjudicating the legality of a statute under the Contracts Clause, the court must determine “whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.” Energy Reserves Group, Inc. v. Kansas Power and Light Co., 459 U.S. 400, 411 (1983) (citing Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244 (1978)). See also Koster v. City of Davenport, Iowa, 183 F.3d 762, 766 (8th Cir. 1999).
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59. The United States Supreme Court has established a three-part analysis for a constitutional inquiry under the Contracts Clause: “(1) does a contractual relationship exist, (2) does the change in the law impair that contractual relationship, and, if so, (3) is the impairment substantial.” Koster, 183 F.3d at 766 (quoting Honeywell, Inc. v. Minnesota Life and Health Ins. Guar. Assoc., 110 F.3d 547, 551 (8th Cir. 1997)).
60. Significantly, when the State is a party to the subject contract, the Court does not grant the customary level of deference it affords a state legislature when “reviewing economic and social regulation[.]” Energy Reserves Group, 459 U.S. at 412-413 (quoting United States Trust v. New Jersey, 431 U.S. 1, 22 (1977)) “Impairment of a State’s own contract … faces[s] more stringent examination under the Contract Clause than would laws regulating contractual relations between private parties.” Allied Structural Steel Company v. Spannaus, 438 U.S. 234, 245 n. 15 (1978)(citing United States Trust, 431 U.S. at 22-23). “When a State itself enters into a contract, it cannot simply walk away from its financial obligations.” Energy Reserves Group, 459 U.S. at 413 n.14. “Complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake.” Id. (quoting United States Trust, 431 U.S. at 26).
61. The Form CS-SA-2 Adoption Subsidy Agreements executed between the state of Missouri and adoptive parents, on behalf of their adopted children, constitute binding and enforceable contracts.
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62. The Form CS-SA-2 Adoption Subsidy Agreement, Part 1, A, 1-5 obligates the State to “subsidize adoptive parents” for expenses which are categorized in the contracts as “maintenance,” “recurring expenses” and “non-recurring expenses.”
63. The Form CS-SA-2 Adoption Subsidy Agreement, Part I, C obligates the State “to provide the necessary authorization for participation [of the adopted child] in the Missouri Medicaid Plan….”
64. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 on their face impair the obligation of the state to subsidize the expenses of adopted parents through maintenance payments as stated in the Form CS-SA-2 Adoption Subsidy Agreement and the Form CS-SA-2 Attachments.
65. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 on their face impair the State’s contractual obligation to “provide necessary authorization for participation [of adopted children] in the Missouri Medicaid Plan” as stated in the Form CSSA-2 Adoption Subsidy Agreement, Part I Sec. C.
66. The impairment of contractual rights caused by Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 is substantial. Section 453.073.3(4) abrogates all existing agreements (“all existing agreements will have been deemed to have expired ….”). Section 453.073.3(4) transforms what were binding contractual obligations for adoption assistance into payments made “at the discretion” of the State and reviewable by the State alone on a yearly basis.
67. By making all pre-existing contracts expire after one year, Section 453.073.3(4) fundamentally alters the duration of existing contracts. Significantly, the State’s obligation to authorize the participation of adopted children in the Missouri
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Medicaid Plan becomes an item subject to a yearly review for eligibility under Sections 453.073.3(4) and 453.073.4. 68. Finally, Section 453.073.4. adds requirements and conditions for adoption assistance and Medicaid participation which were not part of the original contracts. 69. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 are unconstitutional under the Contracts Clause of Article I, Section 10 of the United States Constitution. Under the heightened scrutiny standard set forth in U.S. Trust, Allied Structural Steel and Energy Reserves, the subject statutory revisions are not reasonable as they are intended solely to further an asserted governmental interest in saving money. (See e.g. U.S. Trust, 431 U.S. at 26: “If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”) 70. As a matter of law, that the state may not lawfully use the pre-printed termination clause of Form CS-SA-2 Adoption Subsidy Agreement, Sec. V.C, to terminate existing adoption assistance agreements. This provision states, “(f)urther, either party at any time may, upon thirty (30) days written notice, terminate this agreement without the necessity of showing good cause for this termination. The Division does not intend to terminate this Agreement unless legal, fiscal, or other circumstances necessitate some adjustment in the Missouri Adoption Subsidy Program expenditures or procedures.” (Form CS-SA-2, Ex. 99, at V.C.)
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71. First, the V.B. termination clause undermines the federal and state statutory schemes providing for the existence of the contracts in the first place. Missouri contract law requires the severance of clauses that violate public policy. See Swain v. Auto Services, Inc., 128 S.W.3d 103 (Mo. Ct. App. E.D. 2003) and High Life Sales Company v. Brown-Forman Corp., 823 S.W.2d 493 (Mo. 1992) (forum selection clauses voided for reasons of public policy; remainder of arbitration agreements held valid).
72. Where a party terminates a contract according to its provisions, the contract and all rights thereunder are wholly abandoned; after termination of a contract, all of the parties'unperformed undertakings are ended. HGS Homes, Inc. v. Kelly Residential Group, Inc. 948 S.W.2d 251, 255 (Mo. Ct. App. E.D. 1997); Thumm v. Lohr, 306 S.W.2d 604, 609 (Mo.App.1957). Such a result is clearly against public policy and unenforceable. The Adoption Assistance and Child Welfare Act of 1980, 42 U.S.C. Sec. 620-629(i), the Adoption and Safe Families Act of 1997, 42 U.S.C. Sec 670-679(b) and RSMO Chapter 453 were all enacted to help provide permanent homes for adopted children.
73. Second, operation of the termination clause would violate the principle that a party seeking to rescind or terminate a contract must act before the other party is placed in a position where it would be prejudiced by a rescission or termination. See e.g. Jetz Service Company, Inc. v. KC Citadel Apartments, L.L.C. Coinmach Corporation, 59 S.W.3d 527, 530 (Mo. Ct. App. W.D. 2001); Gilmartin Bros., Inc. v. Kern, 916 S.W.2d 324, 330 (Mo. Ct. App. E.D. 1995). While the parents did not adopt children solely because of the availability of financial assistance
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from the State, the parents relied upon the State to fulfill its contractual obligation to defray the considerable financial expenses required to raise and support special needs children. Adoptive parents, regardless of income, relied upon the State to provide financial assistance to special needs children until their eighteenth birthday. The State’s abandonment of the contracts is too late. Once the children were adopted, the parents became legally and morally obligated to raise their adopted children. 74. Finally, under Missouri law, specific contractual terms control over inconsistent general provisions. See e.g. A&L Holding Company v. Southern Pacific Bank, 34 S.W.3d 415, 418 (Mo. Ct. App. W.D. 2000); Tri-County Retreading, Inc. v. Bandag Inc., 851 S.W.2d 780 (Mo.Ct. App.E.D. 1993). It is a well-accepted rule in Missouri that where one contract clause is general, and another is more limited and specific, the more specific clause acts to modify and nullify the more general clause. Id. at 784; In re Marriage of Buchmiller, 566 S.W.2d 256, 259 (Mo.App., St.L.D.1978); Surface v. Ranger Insurance Company, 526 S.W.2d 44, 48 (Mo.App., Spfld.D.1975). 75. The purpose of the Form CS-SA-2 Adoption Subsidy Agreement is to make possible the permanent placement of special needs children in adoptive households. The general termination upon 30 days notice language in Part V., Paragraph B conflicts with the more specific contractual language contained in Part V. A(1)-(6) which identify particular events in the lives of the adoptive child and parent(s) that will terminate the agreement:
Assistance as agreed upon in this Agreement shall continue until: (1) The child’s 18th birthday or the age of 21 years … or; (2) The parent’s rights to the
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child have been terminated; (3) The parent is no longer financially responsible for the child; or (4) The child is no longer in the legal custody of the parent … or; (5) Child moved out of the home; or (6) Death of the child or both adoptive parents. 76. Use of the term “shall” demonstrates that the contract guarantees that assistance will continue until one of the specifically defined events occurs. Viewed in consideration of V.A and B and the overall purpose of the contract, Sec. V.B. provides the mechanism by which parents or the State would stop the receipt or payment of assistance following the occurrence of one of the events in V.A. Generalized terms in a contract are limited and restricted by the specific provisions. Surface v. Ranger Ins. Co., 526 S.W.2d 44, 48 (Mo.Ct. App.) 1975. (2) Irreparable Harm to Plaintiffs 77. Absent the entry of a permanent injunction, the Plaintiff children will suffer irreparable harm and the continuing threat of irreparable harm to the stability of their existing adoptive relationships and home settings, and, for children still in foster care, to their prospects for finding a permanent home through adoption. It is undisputed that children will remain in government custody in foster care for longer periods of time as a direct result of the Senate Bill 539 adoption subsidy provisions. (Bullet Points Memo, Ex. 93.) 78. The Section 453.073.4 means test of Senate Bill 539, if permitted to take effect, will likely reduce the overall number of adoptions of special needs children in Missouri by reducing the pool of financially capable adoptive parents. This will cause irreparable harm to those foster children who, as a result, will not achieve permanency. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
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79. The Section 453.073.4 means test of Senate Bill 539, if permitted to take effect, will substantially interfere with the financial ability of existing adoptive parents to care for and meet the unique needs of their adopted special needs children. This will cause harm to the adopted children in the form of either inadequate care or disrupted adoptions. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
80. For example, Named Plaintiff A.C., a 5 year-old boy, is an adopted special needs child with a congenital heart disorder. A.C. has already undergone 14 hospitalizations and requires additional heart surgeries for his serious medical condition. A.C.’s parent and Next Friend, Lana Capps, now earns an annual income (approximately $43,200), an amunt that exceeds the Senate Bill 539 means test. Without the monthly $651 adoption subsidy provided by Missouri pursuant to the long-term adoption subsidy agreement executed at the time of A.C.’s adoption, however, Ms. Capps cannot sustain her household and financially meet the special needs of A.C. and his medical, psychiatric and educational care.
81. Similarly, Named Plaintiff J.A., another 5 year-old boy, is an adopted special needs child who suffers from severe anxiety, ADHD, oppositional defiant behavior disorder, depression and delayed learning. J.A. lived in some 23 different DSS foster homes from ages 8 through 10 and later resided in a group foster home following a failed suicide attempt. J.A’s special needs are quite substantial; and his parent and Next Friend, John Antonich, along with his spouse, Sharon, relies upon J.A.’s long-term $651 monthly adoption subsidy to provide
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special professional care. Mr. Antonich earns an annual income that also surpasses the Senate Bill 539 means test. (Testimony of John H. Antonich at the preliminary injunction hearing.) 82. Section 453.073.3(4) annual renewal provision of Senate Bill 539, if permitted to take effect, will erode public confidence in adoption assistance agreements as it directly undermines the reliability and duration of the stream of support payments to be furnished by the government under the contracts. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 83. On a prospective basis, the annual renewal provision of Senate Bill 539 will deter putative adoptive parents from choosing special needs children for adoption, as these otherwise interested parents will quite rationally worry about their long-term financial ability to support the adopted child. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 84. On a retroactive basis, the annual renewal provision threatens to negate the benefits now provided under the numerous existing adoption assistance agreements in Missouri. This basic threat to the viability of adoption assistance agreements creates an increased likelihood that numerous finalized adoptions will disrupt due to changed circumstances resulting in financial hardship within effected adoptive families and the risk that children’s special needs will go unaddressed. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
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85. Effected special needs children, including the Named Plaintiffs, will suffer irreparable harm in the form of lost permanency, lost services to meet their special needs, and lost stability. (Declarations of Next Friends, John Fischer, Robert Strange, Michael Patterson, Lana Capps, John Antonich, Lavada Johnson and Tammy Smith; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
86. Moreover, Senate Bill 539 threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the courtsupervised consent decree entered in G.L. et al. v. Gary Stangler et al, No. 770242-CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. (July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al., Ex. 56.)
87. In enacting Senate Bill 539, the state of Missouri and DSS were aware that the new eligibility scheme would undermine the essential purpose underlying the state’s adoption subsidy program: the achievement of timely permanency with adoptive families for special needs children. Thus, DSS staff prepared a memorandum entitled, “Bullet Points for Means Testing Adoption Subsidy,” (“Bullet Points Memo”) that provided as follows:
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(a) “By implementing a means test on only the state only adoptions, children who are not IV-E eligible will be put at a disadvantage to being adopted versus children that are IV-E eligible.” (b) “By reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy.” (c) “Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer.” (Bullet Points Memo, Ex. 93.) (3) Balancing the Equities 88. The irreparable harm to be suffered by Plaintiffs absent injunctive relief substantially outweighs any threat of prejudice to Defendants. In fact, the entry of a permanent injunction preventing implementation of the Senate Bill 539 means test will have a positive fiscal impact on the state of Missouri. 89. The only possible “harm” to the state is the loss of asserted “savings” to be generated by the new law. However, these purported savings are not only dwarfed by the undisputed harm to occur to the plaintiff children, they are false. 90. The state irrationally projected fiscal savings to flow from Senate Bill 539 based upon (1) the clearly erroneous assumption that 43% of all existing adoption subsidy beneficiaries in Missouri were non-IV-E eligible when, in actuality, only
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18% were non-IV-E eligible, (2) the clearly erroneous assumption that the adoption subsidy population in Missouri would grow at the flat rate of 1300 per year when, in actuality, adoptions in Missouri had steadily declined from 1,515 in FY2002 to 1,123 in FY2005 according to readily available DSS adoption program data, (3) the demonstrably false assumption that children whose adoptive placements disrupt as a result of the means test will experience, on average, a six month additional stay in foster care, even though readily available state foster care performance data demonstrated that additional stays of 24 months or longer should be expected, (4) a complete failure to account for the significant administrative and caseworker costs required to serve the increased foster care population resulting from Senate Bill 539, even though these cost impacts were fully recognized and anticipated by DSS officials and (5) a failure to properly account for the legislature’s FY2006 adoption subsidy program appropriation at 250% of FPL, instead of 200% of FPL. (Morris Dep., Dec. 12, 2005, at 27-31; Table 28, February 2006 Children’s Services Management Report, Ex. 120; Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1; Preliminary Injunction hearing, at 46-47; Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 91. The costs of disrupting the lives of special needs children, diminishing their opportunities for adoption, and maintaining them in state custody for longer periods of time – the likely results of the SB 539 provisions – far surpass the false, and, even if true, comparably insignificant, cost savings asserted by the state.
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(4) The Public Interest 92. The public interest will be served by the entry of permanent injunctive relief.
Public policy strongly favors the efficient and expeditious provision of permanency for abused and neglected children taken into the temporary custody of the state and its child welfare agency. Moreover, the public has a strong interest in the sanctity and enforceability of contracts entered into between the state of Missouri and its citizens. Missouri Senate Bill 539, if allowed to take effect, will undermine these vital interests. 93. There is immense value to society and to individual foster children to have those children move from the foster care system into permanent, adoptive homes when reunification is not possible. (CWLA, Adoption Standards, Ex. 85, at 5; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 94. The federal adoption assistance program has been credited with significantly decreasing the number of children languishing in foster care by finding them permanent adoptive families. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4, citing Bussiere, in Segal, 1985, Ex. 87; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) With adoption subsidies, more children find permanent loving homes and fewer graduate or “age out” of the foster care system. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
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95. According to a January 2005 report from HHS, “Adoption subsidies are perhaps the single-most powerful tool by which the child welfare system can encourage and support adoptive families” and that “Subsidies have become an essential tool in moving children to permanent homes and supporting adoptive families.” (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 7, citing to “Understanding Adoption Subsidies: An Analysis of AFCARS Data”, Ex. 88, at 1, 4; trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.)
96. The Senate Bill 539 means test will cause emotional and developmental harm to those children who fail to achieve permanency through adoption. It is widely recognized that there is a higher incidence of poverty, emotional and mental disability, and criminal behavior among foster youth who have attained adulthood, particularly among those foster youth who aged out of the foster care system without ever knowing a permanent family. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert Jeanette Wiedemeier Bower.)
97. The challenged provisions will serve to undermine the core purpose of the federal/state adoption subsidy program: to promote permanent homes for special needs foster children. The public interest in furthering the purpose of the federal/state adoption subsidy program will thus be served by issuing a permanent injunction.
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THE COURT FURTHER ORDERS: 1. Pursuant to Rule 23(c)(3) of the Federal Rules of Civil Procedure, the Court incorporates its September 29, 2005 order to describe those whom it finds to be members of the plaintiff class. 2. On or before May 15, 2006, Defendant shall furnish notice of the Court’s May 1, 2006 order granting permanent injunctive relief in the form as shown in Attachment “A” hereto. Defendant shall provide a copy of the notice by U.S. Mail to all Missouri foster parents; the counsel, guardian ad litem and court appointed special advocates of record for all Missouri foster children; each of the CASA (Court Appointed Special Advocates) and Guardian ad Litem programs in the state of Missouri; the judges of the Family Court divisions of the Missouri Circuit Courts; the juvenile officers employed by Missouri’s judiciary; and, the adoptive parents of Missouri foster children. Defendant shall cause a copy of the notice to be posted in a generally accessible location in all Family Court and Juvenile Court facilities for a period of twelve months. Defendant shall provide a copy of the notice by intra-office correspondence to all DSS foster care and adoption caseworkers and their supervisors, and all DSS Title IV-E eligibility specialists. Defendant shall also make general publication of the notice by posting it in an easily accessible and readable fashion on the DSS and its Children’s Division websites for a period of twelve months. Defendant shall bear all the costs of publishing and mailing the notice. DATED: May __, 2006
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Respectfully Submitted, SHOOK, HARDY & BACON L.L.P. By /s/ Nicholas P. Mizell
James P. Muehlberger, #51346 Loretta Burns-Bucklew, #32053 Nicholas P. Mizell, #51716 Pamela Macer, #55033 Kathleen A. Jeanetta, #48384 2555 Grand Blvd. Kansas City, Missouri 64108-2613 Phone: (816) 474.6550 FAX: (816) 421-5547
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CHILDREN’S RIGHTS, INC.
Marcia Robinson Lowry, Esq. Ira P. Lustbader, Esq. Sara Bartosz, Esq. Priy Sinha, Esq. 404 Park Avenue South, 11th Floor New York, New York 10016 Tel: (212) 683-2210 Fax: (212) 683-4015
SAINT LOUIS UNIVERSITY LEGAL CLINIC
John J. Ammann, Director Amy Sanders, Asst. Prof. 321 North Spring St. Louis, Missouri 63108 Tel: (314) 977-2778 Fax: (314) 977-3334
LAW OFFICES OF THOMAS E. KENNEDY, III, L.C.
Thomas E. Kennedy, III, Esq. Deborah Greider, Esq. 2745 E. Broadway, Ste. 101 Alton, Illinois 62002 Tel: (618) 474-5326 Fax: (618) 474-5331
BERG BORGMANN WILSON & WOLK, L.L.P.
James Wilson, Esq. Stephen Reynolds, Esq. Windsor Building, Suite 850 7711 Bonhomme Avenue St. Louis, Missouri 63105 Tel: (314) 725-5955 Fax: (314) 725-0559
ATTORNEYS FOR PLAINTIFFS
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that this 3rd day of May, 2006, a true and correct copy of the foregoing was served by using the CM/ECF system; by first class mail, postage prepaid, and addressed to; by fax transmission to; by overnight delivery to; by personally delivering to or leaving with a person in charge of the office; or by electronic mail, as indicated below:

Attorney General’s Office Attn Gary Gardner Supreme Court Bldg. PO Box 899 Jefferson City MO 65101

[x] CM/ECF [ ] U.S. Mail [ ] FAX [ ] Overnight Delivery [ ] Hand Delivery [ ] Electronic Mail

/s/ Nicholas P. Mizell_______

103 Case 2:05-cv-00726-SOW Document 100 Filed 05/03/06 Page 103 of 103

 
 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G.,

)

each a minor by Next Friend, Jill Katz;

)

et al.,

)

)

Plaintiffs,

)

vs.

)

)

K. Gary Sherman, in his official capacity as )

Director of the Missouri Department of

)

Social Services,

)

)

Defendant.

)

)

Case No. 05-0726-CV-C-SOW Senior District Court Judge Scott O. Wright

NOTICE OF ORDER GRANTING INJUNCTIVE RELIEF

THIS NOTICE CONCERNS THE LEGAL RIGHTS OF CURRENT, FORMER AND FUTURE MISSOURI FOSTER CHILDREN TO RECEIVE AN ADOPTION ASSISTANCE MAINTENANCE SUBSIDY FROM THE MISSOURI DEPARTMENT OF SOCIAL SERVICES.

On May 1, 2006, the United States District Court for the Western District of Missouri entered an order in E.C. v. Sherman, No. 05-0726-CV-W-SOW, granting permanent injunctive relief in favor of a class of current, former and future Missouri foster children.

This order permanently enjoins and prohibits the Missouri Department of Social Services (“DSS”) from directly or indirectly implementing certain provisions of 2005 Missouri Senate Bill 539 that would have modified Missouri laws pertaining to the state’s adoption assistance subsidy program.

In particular, because it found that their implementation would violate Title IV-E of the Social Security Act and the Adoption Assistance and Child Welfare Act of 1980 as amended by the Adoption and Safe Families Act of 1997, as well as the Equal Protection Clause of the Fourteenth Amendment to and the Contracts Clause of the United States Constitution, the Court prohibited DSS from imposing either of the following conditions in its adoption assistance contracts with adoptive parents:

• The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into. [Senate Bill 539’s modification of Mo. R.S. § 453.073.3(4)]

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• The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance. [Senate Bill 539’s modification of Mo. R.S. § 453.073.4]

As a result, you should note the following:

(1) no existing adoption subsidy agreement in the state of Missouri may be deemed automatically expired upon its one-year anniversary;

(2) DSS is prohibited from applying a blanket limitation of duration on prospective adoption subsidy agreements or on the renewal of existing adoption subsidy agreements;

(3) an adjustment in the amount of any adoption subsidy agreement can only take place with the concurrence of adoptive parents, and the DSS Director does not have the unilateral discretion to terminate or adjust adoption subsidy agreements;

(4) DSS is prohibited from applying a means test to the income of putative or existing adoptive parents in determining eligibility for an adoption subsidy agreement; and,

(5) every child who is eligible for an adoption assistance subsidy is entitled to Medicaid benefits.

IF YOU HAVE ANY QUESTIONS CONCERNING THIS NOTICE, OR IF YOU WOULD LIKE A COMPLETE COPY OF THE COURT’S ORDER, YOU MAY CONTACT THE FOLLOWING ATTORNEYS FOR THE PLAINTIFFS IN THIS ACTION:

SAINT LOUIS UNIVERSITY LEGAL CLINIC John J. Ammann, Director 321 North Spring St. Louis, Missouri 63108 Tel: (314) 977-2778 Fax: (314) 977-3334

SHOOK, HARDY & BACON L.L.P. Loretta Burns-Bucklew, #32053 2555 Grand Blvd. Kansas City, Missouri 64108-2613 Tel: (816) 474-6550 Fax: (816) 421-5547

DATED:

APPROVED AND SO ORDERED:

__________________________________ SCOTT O. WRIGHT, SENIOR U.S.D.J

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 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G.,

)

each a minor by Next Friend, Jill Katz;

)

W.S., M.S., and D.S., each a minor by Next )

Friend, Robert Strange;

)

M.P., a minor by Next Friend, Michael

)

Patterson;

)

A.C., a minor by Next Friend, Lana Capps; )

J.A., a minor by Next Friend, John Antonich;)

T.J. and A.J., each a minor by Next Friend, )

Lavada Johnson; and

)

N.S., a minor by Next Friend, Tammy Smith, )

)

Plaintiffs,

)

)

vs.

)

)

K. Gary Sherman, in his official capacity as )

Director of the Missouri Department of

)

Social Services,

)

)

Defendant.

)

)

No. 05-726-CV-W-SOW

FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF THE COURT’S
MAY 1, 2006 ORDER AND FINAL JUDGMENT GRANTING PERMANENT INJUNCTIVE RELIEF
Plaintiffs seek to permanently enjoin harmful and unlawful changes to Missouri’s
adoption subsidy program in Missouri Senate Bill 539.1 Specifically, plaintiffs challenge
(1) changes to Missouri Revised Statutes Section 453.073.3(4) concerning the imposition
of a blanket policy that retroactively makes all existing adoption subsidy contracts expire

1 The certified class includes “all future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a court-ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.” (September 29, 2005 Order of Judge Scott O. Wright.) Following a full evidentiary hearing, a preliminary injunction was issued on September 8, 2005. After a trial on the merits conducted on April 27, 2006, on May 1, 2006, this Court issued an Order Granting Permanent Injunctive Relief with a further order to be entered including findings of fact and conclusions of law.
1
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on their one year anniversary, makes all new contracts automatically expire annually, with renewals in all circumstances at the sole discretion of the DSS Director2; and (2) the creation of a new Section 453.073.4 concerning the imposition of a means test on the income of existing or prospective adoptive parents of a targeted group of foster children.3
Plaintiffs assert (1) that the automatic expiration, blanket one year duration and discretionary renewal provisions violate and are preempted by the Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. §§ 620-629(i) and 670-679(b) (collectively “AACWA”); (2) that the means test violates the Equal Protection Clause of the Fourteenth amendment to the U.S. Constitution; and (3) that both challenged provisions, as they pertain to those children with existing subsidy contracts, violate the Contracts Clause of the U.S. Constitution.
Plaintiffs’ showing of a significant risk of irreparable harm if the law is not permanently enjoined has not been rebutted by any contrary facts in the record. Plaintiffs have adduced evidence showing that (1) hundreds, if not thousands, of children who already have contracts entitling them to adoption assistance maintenance subsidies until they turn 18 will have those subsidies permanently terminated as a result of the challenged law; (2) children still in state custody in foster care who are targeted by the challenged law will be disadvantaged in relation to other foster children in their chances of ever getting adopted; (3) children still in state custody in foster care who are targeted by the challenged law will be forced to stay in custody longer as a direct result of the challenged law; (4) the new law will have the likely effect of deterring parents from adopting special needs foster children and will likely shrink the pool of available adoptive
2 Senate Bill 539 amends Section 453.073.3(4) of RSMo to require: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will be deemed to have expired one year after they were initially entered into.” (Senate Bill 539 at 453.073.3(4).) 3 Senate Bill 539 amends Section 453.073.4 of RSMo to require: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.3(4).)
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parents for such children - even without implementation of Senate Bill 539, there are currently almost 2,000 children in foster care awaiting adoption; and (5) even Title IV-E eligible children who currently hold contracts for subsidies will at best continue to receive payments until June 30, 2006, after which renegotiation is solely at the discretion of the DSS Director.
While the risk of harm to plaintiffs is considerable, no harm will befall defendant from a permanent injunction. The evidence presented in the record shows that defendant made obvious and questionable assumptions in projecting savings from the challenged law. Additionally, it is undisputed that foster care is significantly more expensive than adoption assistance subsidies, and defendant concedes that the law will directly result in children spending longer time in foster care. The State will not save money under Senate Bill 539; it will lose money.
Plaintiffs have firmly established success on the merits of their claims. Section 453.073.3(4) plainly applies to all subsidy contracts, both “IV-E eligible” children and “non IV-E eligible” children. The automatic expiration, blanket one year duration and discretionary renewal policy violates, and are preempted by, the plain language of 42 U.S.C. 673(a)(3), which prohibits any change in the amount of the subsidy (including shrinking the amount to zero by automatically terminating the contract) without the concurrence of the adoptive parents. The challenged provision also violates several explicit official issuances of the federal Department of Health and Human Services (HHS). The Court was presented at trial with an undisputed and unrebutted letter from HHS to defendant Sherman, outlining the very same violations of federal law and official HHS issuances.
Defendant’s only defense to preemption under the statute is that all contracts (even those for IV-E eligible children) expire in one year, but that DSS “intends” at present not to do what their own statute allows for the IV-E eligible children. This supposed “intent” – never reduced to even a written policy and included solely as a
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position in litigation – is belied by Senate Bill 539 and current DSS policies unchanged by the new law. DSS policy makes an explicit distinction between contracts that are reviewed and may be “renewed” and those that “expire” and must be “renegotiated.” See Plaintiffs’ Exh. 48, at 30.4.G. Since Senate Bill 539 deems every contract to “expire” on its one-year anniversary, defendant’s position is logically inconsistent and easily rejected. Defendant would remain free to change the “intent” next month.
Plaintiffs have established success on their Equal Protection claim. Defendant’s argument that the two groups -- those targeted for the means test and those not targeted – are not similarly situated because of the different funding streams misses the point entirely: the federal AACWA is silent on means testing non-IV-E eligible children, but does not require defendant to target that group for discriminatory treatment – the federal law actually bans means testing, as does accepted adoption subsidy policy and practice standards. Missouri has chosen to target the non-IV-E eligible children for affirmative discriminatory treatment. The only way to equally apply the means test would have been to means test all adoptive parents, but the federal statute expressly bans that practice.
The means test triggers strict scrutiny because it infringes on plaintiffs’ fundamental right to be free from unnecessarily prolonged government confinement, and the law is not narrowly tailored to a compelling state interest. Even if the Court were to evaluate the means test using rational basis scrutiny, it would not survive. The means test is not rationally related to directing money to the most needy children and families because: (1) the income of the biological parents of the targeted group is not rationally related to these children’s adoptive parents’ income; (2) the adoptive parents’ gross income tested by the new law is irrelevant to the child’s needs or the family’s actual expenses; (3) all of the children excluded are by definition as needy as those not excluded under the new law; and (4) the state expends 40% of state dollars on subsidies for all IVE eligible children without regard to the adoptive parents’ income. Finally, the means test is not rationally related to saving the state money because the evidence shows that the
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state will lose money under the new law. Plaintiffs have also established success on their Contracts Clause claim. It is not
disputed that the subsidy agreements are legal contracts and that the State is a party to the contracts, triggering heightened scrutiny. Nor is it disputed that the retroactive termination impairs children’s rights under the contracts – indeed the impairment is total since children will permanently lose their subsidies and Medicaid benefits. Defendant’s false cost savings argument fails to provide a sufficient governmental justification for the substantial impairment. Defendant points only to a “termination without cause” provision in the individual contracts, which is plainly void under both applicable contract law and public policy.
Finally, a permanent injunction will further the public interest. The parties do not dispute that the central premise of the entire federal-state adoption subsidy program, accepted good subsidy policy and practice, and the State’s own policies, is to increase opportunities for the adoption of special needs foster children so they do not grow up as state wards. The challenged provisions run directly counter to this important public policy; the permanent injunction promotes this critical public interest.
For all these reasons, as set forth in the findings of fact and conclusions of law presented below, the Court is entering a permanent injunction in this case.
I. FINDINGS OF FACT Adoption Assistance Subsidies: Promotion of Permanency for Special Needs Foster Children
1. The state of Missouri, through the Department of Social Services (“DSS”), Children’s Division, acts to remove children who are subject to abuse and/or neglect at home into the temporary custody of the state and to provide care and services to those vulnerable children until a permanent placement can be secured, either through reunification with their biological parent(s) or through adoption by a new family when reunification is not in the child’s best interests. Such services are referred to as “permanency” services. (DSS Child Welfare Manual, Sec. 1, Ch. 5
Case 2:05-cv-00726-SOW Document 104 Filed 05/09/06 Page 5 of 75

1, Ex. 77, at 1.1, 1.2.) 2. DSS has statutory responsibility and authority for accepting and investigating all
reports of child abuse or neglect within the state under RSMo Ch. 210 and for serving the needs of Missouri’s abused and neglected children through temporary foster care and permanency services under RSMo Ch. 207 and 211. (See DSS Child Welfare Manual, Philosophical Base of Child Welfare Practice, Ex. 76.) 3. Defendant, K. Gary Sherman, is the Director of DSS and, in that capacity, oversees the administration and management of the Children’s Division and the implementation of its child welfare programs and services, including adoption services. (RSMo Section 660.010.1; Sherman Dep., Jan 26, 2006, at 4-5.) 4. The DSS Children’s Division serves the citizens of Missouri and is charged with advancing the public’s interest in the safety and well being of Missouri’s children, including all special needs foster children residing in state custody. (DSS Child Welfare Manual, Sec. 1, Ch. 1, Ex. 77, at 1.2.) 5. As of December 31, 2005, there were 10,772 foster children in the custody of DSS’s Children Division. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 1.) 6. For all children adopted from DSS custody in FY2003 and FY2004, the average length of stay in foster care was 33 and 31.7 months, respectively, which is longer than the national standard of 24 months promulgated by the U.S. Department of Health and Human Services. (Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1.) 7. As of December 31, 2005, a total of 1891 foster children in DSS custody had been assigned a permanency plan or goal of adoption. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 1.) As of January 31, 2006, a total of 1919 foster children in DSS custody had been assigned a permanency plan or goal of adoption. (Caseload Counter,
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http://www.dss.mo.gov/mis/clcounter/history.htm., Ex. 53.) 8. As of December 31, 2005, the total number of foster children who were adopted
and receiving adoption assistance maintenance subsidies was 11,450. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 2.) 9. As of December 31, 2005, 8,845 of 11,450 former foster children who were adopted and receiving adoption assistance maintenance subsidies, received subsidies funded by a combination of federal and state funds, also known as Title IV-E subsidies. (Id. at 2.) 10. For those children receiving adoption assistance maintenance subsidies paid with a combination of federal and state funds, the allocation is 62% federal funding and 38% state funding. (69 Fed. Reg. 68,372 (Federal Financial Participation in State Assistance Expenditures, FY2006), Ex. 92.) 11. As of December 31, 2005, 2,605 of 11,450 former foster children who were adopted and receiving adoption assistance maintenance subsidies received subsidies funded by solely state funds. 12. Children enter state foster care systems because they are abused and/or neglected, and for some reason their biological parent(s) could not keep them safe. The goal of the foster care system is to attempt reunification with biological parent(s) and to create a plan to help parents make the necessary changes in their lives or living conditions so that their child or children can be returned to their care. Foster care is intended to be a short-term, temporary stay for children. (CWLA, Family Foster Care Standards, Ex. 114, at 0.13; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3; trial testimony Wiedemeier Bower.) 13. Nationally, approximately 55 percent of children are returned to their biological homes. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3, citing to AFCARS data, 2005, Ex. 82; trial testimony of Wiedemeier Bower.)
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14. In some cases, however, where children cannot be safely returned to their birth parents, their permanent case plan will be identified as adoption, and social workers working on behalf of these children will begin to look for permanent adoptive homes for them. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3-4; trial testimony of Wiedemeier Bower.)
15. A majority of children in foster care who need permanent adoptive homes require additional services to meet their special needs, often due to the circumstances of their abuse or neglect. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3-4; trial testimony of Wiedemeier Bower.) The array of services they need to address their special needs is both extensive and varied, and can include, without limitation, specialized medical care, dental care, mental health care, physical therapy, occupational therapy, play or talk therapy, or educational tutoring. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115 at 4; trial testimony of Wiedemeier Bower.)
16. Missouri state policy, as stated in the DSS Child Welfare Manual, provides, “[i]n keeping with the philosophical base that every child is entitled to a safe, secure and permanent home, the Children’s Division is obligated to make a diligent search for appropriate adoptive placements for those children for whom adoption has become the permanent plan.” (DSS Child Welfare Manual, Sec. 4, Ch. 27, Ex. 78, at 27.1.)
17. Congress enacted the Title IV-E Adoption Assistance Act to “establish a program of federal support to encourage adoptions of children with special needs.” (1980 U.S. Code Cong. and Admin. News, Ex. 36, at 1448, 1460.)
18. The State of Missouri has a qualifying “State Plan for Title IV-E of the Social Security Act Foster Care, Independent Living and Adoption Assistance” (“Missouri State Plan”) and receives federal funding for adoption assistance. Missouri’s DSS is the state agency responsible for submitting the Missouri State
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Plan to the Secretary of Health and Human Services for approval and for administering the plan. (Missouri Title IV-E State Plan, Ex. 45.) 19. The Missouri Title IV-E State Plan states “As a condition of the receipt of Federal funds under title IV-E of the Social Security Act … the [state agency] … hereby agrees to administer the program in accordance with the provisions of this State plan, title IV-E of the Act, and all applicable Federal regulations and other official issuances of the Department.” ( Missouri Title IV-E State Plan, Ex. 45, at 2.) (emphasis added) 20. The state of Missouri, through DSS, is to provide basic shelter, food and care to all foster children in its legal custody. To meets this obligation, DSS remits foster care maintenance payments to all foster families, group homes and child-placing agencies licensed by the state to provide day-to-day care to the foster child population. (DSS Child Welfare Manual, Sec. 4, Ch. 11, Atmt. A, Ex. 101; Missouri State Plan, Ex. 45, at Sec. 2.) The obligation of the state to remit these foster care maintenance payments continues until a child exits from state legal custody by virtue of reunification, adoption or attainment of adulthood. (See generally, HHS Child Welfare Policy Manual, Section 8.3 (foster care maintenance payment programs.)) (DSS Child Welfare Manual, Sec. 4, Ch. 11, at 11.12, Ex. 123; trial testimony of Wiedemeier Bower.) 21. The Federal Child Welfare Policy Manual of the United States Department of Health and Human Services (“HHS”), Administration for Children and Families, states: … “the legislative history [of the Adoption Assistance Act] indicates that Congress was concerned primarily with moving children in State foster care systems into permanent adoptive homes when appropriate. The Title IV-E adoption assistance program, therefore, was developed to provide permanency for children with special needs in public foster care by assisting States in providing ongoing financial and medical assistance on their behalf to the families who adopt
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them.” (Federal Child Welfare Policy Manual, ACYF-CB-PA-01-01, Jan. 23, 2001, Ex. 40; expert report of Jeanette Wiedemeier Bower, Ex. 115, at 3, 4; trial testimony of Wiedemeier Bower.) 22. Missouri State DSS policy defines a special needs child as “any child in the custody of the Children’s Division, Division of Youth Services, Department of Mental Health or a Missouri licensed child-placing agency and who meets one of the following conditions: minority parentage; handicapping condition – mental, physical or emotional; member of a sibling group …; guarded prognosis …; is over five years of age, without any of the above characteristics. Children who meet the criteria for special needs may qualify for adoption subsidy.” (DSS Child Welfare Manual, Sec. 4, Ch. 27, Ex. 47, at 27.4.2.) 23. Missouri State DSS policy states: “[c]hildren placed in the custody of the Division with a history of abuse and/or neglect may be defined as children having special needs and are, therefore, eligible for subsidy.” All current or former foster children are designated as “special needs” for purposes of an adoption assistance subsidy in Missouri. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.C; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 5; trial testimony of Wiedemeier Bower.) 24. Adoptive children meeting the definition of “special needs” in Missouri receive adoption assistance subsidies funded by either a combination of federal and state dollars or solely by state dollars. Children with adoption subsidies funded by a combination of federal and state dollars are also referred to as Title IV-E eligible children. (Trial testimony of Jeanette Wiedemeier Bower.) Children with adoption subsidies funded by state dollars only are referred to as non-Title IV-E eligible children. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1; testimony of Weidemeier Bower.) 25. There is significant value to society and to an individual foster child to have that
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specific child move from the foster care system into a permanent, adoptive home when reunification is not possible. (CWLA, Adoption Standards, Ex. 85, at 5; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 26. CWLA standards state that “. . . subsidies may make possible the adoption of children who have special medical needs or are a part of a special population for whom these benefits are intended.” (CWLA, Family Foster Care Standards, Ex. 114, at 2.100; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 27. The federal adoption assistance program has been credited with significantly decreasing the number of children languishing in foster care by finding them permanent adoptive families. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4, citing Bussiere, in Segal, 1985, Ex. 87; trial testimony of Wiedemeier Bower.) With adoption subsidies, more children find permanent loving homes and fewer graduate or “age out” of the foster care system. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 28. A widely accepted policy reason behind the provision of adoption subsidies for children is that it eliminates financial barriers to adoption for parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6-7; trial testimony of Wiedemeier Bower.) 29. The Missouri Child Welfare Manual states: “[s]ignificant to the use of an adoption/legal guardianship subsidy, is the realization that without this resource a family would not otherwise have the resources to provide permanency to a special needs child.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1.) 30. The federal Child Welfare Policy Manual states that the intended beneficiaries of
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adoption assistance payments are the special needs children themselves, not their adoptive parents. (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.4.) ("Unlike other public assistance programs in the Social Security Act, the IV-E adoption assistance program is intended to encourage an action that will be a lifelong social benefit to certain children and not to meet short term monetary needs during a crisis. Further, the adoptive parents' income is not relevant to the child's eligiblity for the program.") (Expert report of Jeanette Wiedemeier Bower, Ex. 115, at 4-5; trial testimony of Wiedemeier Bower.) Federal and State Adoption Assistance Subsidies 31. Special needs children qualify for adoption subsidies funded with a combination of state dollars and federal dollars (using federal Title IV-E funds) by meeting one of the following eligibility categories: (1) the special needs child was eligible for Aid for Families With Dependent Children program (AFDC) benefits (as defined in 1996) during the month in which court proceedings for adoption were initiated, or was eligible for said benefits within 6 months prior to that time; or (2) the special needs child was eligible for Supplemental Security Income (“SSI”) programs under the Social Security Act before adoption; or (3) the special needs child’s parent was in foster care and receiving Title IV-E funds that covered both the parent and the child when the adoption was initiated; or (4) the special needs child previously received adoption assistance, and his or her adoptive parent died or the adoption was dissolved. The special needs child need only meet one of the above four eligibility prongs to claim a right to Title IV-E adoption assistance. (See 42 U.S.C. Sec. 673; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 5-6; trial testimony of Wiedemeier Bower) 32. The primary qualification for Title IV-E eligibility for adoption assistance subsidies is through AFDC eligibility. The other categories involve a relatively small group of children. The SSI eligible children are generally medically fragile
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or medically-oriented; the minor-child-of-a-foster-child eligibility allows infants in foster care to receive IV-E eligibility if the parent in custody is IV-E eligible and the minor-parent and minor-child live together; and the death/dissolution eligibility assumes that the child’s adoption is finalized and the child is coming back into the care of the department after the adoptive parents’ death or the legal dissolution of the adoption. (See 42 U.S.C. Sec. 673; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6.) 33. In general, an AFDC child is a child who is removed from a low-income birth family where only one parent is in the home such that there is a deprivation of parental support. To receive Title IV-E adoption assistance, the child must be removed from their biological home either through a voluntary placement agreement or as a result of a judicial determination that continuation in the home would be contrary to the welfare of the child. If the AFDC child is special needs and meets either of these removal qualifications, the child will receive a federalstate funded adoption assistance subsidy upon adoptive placement. (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2B.13; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6; trial testimony of Wiedemeier Bower.) 34. Eligibility for a federally subsidized adoption assistance agreement under IV-E is based upon 1996 AFDC income thresholds, which have not been adjusted for inflation. See 42 U.S.C. 673(a)(3). What was defined as “poor” ten years ago remains the standard today under the Title IV-E adoption assistance program. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6) 35. Special needs children not meeting one of the four Title IV-E eligibility prongs receive adoption assistance payments under the terms of the state-funded adoption subsidy program in Missouri. As stated in the Missouri Department of Social Services (“DSS”) Child Welfare Manual, “[a]n adoption subsidy is a service that may be used to assist in providing permanency for children who, because of
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special needs, might not otherwise be adopted, and for whom a family is not readily available.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1.) 36. Missouri has provided a single system for adoption assistance maintenance subsidies to both IV-E eligible and non IV-E eligible children continuously for over 25 years. (Simmens, Preliminary Injunction hearing, at 38-41.) 37. The DSS Child Welfare Manual states that an adoption subsidy agreement must be approved by the Division Director and executed on a Form CS-SA-2 contract document. “The CS-SA-2 … is a legally binding agreement.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.2.) The CS-SA-2 Adoption Subsidy Agreement is a pre-printed form contract prepared by DSS and presented to adoptive parents for signature on behalf of their special needs adopted child. (Form CS-SA-2, Ex. 99) 38. The Form CS-SA-2 Adoption Subsidy Agreement states the contractual obligations of the State to the adoptive parent and the adopted children. The State agrees to subsidize adoptive parents for “maintenance,” “recurring expenses for special services” and other “nonrecurring expenses.” (Form CS-SA-2, Ex. 99, at 2.) 39. Form CS-SA-2 Adoption Subsidy Agreement states the contractual obligation of the State “to provide the necessary authorization for participation [of the adopted child] in the Missouri Medicaid Plan….” (Form CS-SA-2, Ex. 99, at 2.) 40. The DSS Child Welfare Manual states: “[s]ubsidy agreements … are considered a contract, which must be reviewed annually and renewed prior to the end of the Missouri fiscal year (i.e., June 30, 2XXX). Contracts are automatically renewed unless changes are agreed to as a result of the annual review or requested by the adoptive parent(s) or legal guardian(s). However if approved services on the attachment (CS-SA-2 ATT/CS-LG-2 ATT) have expired, a new attachment must
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be developed between the family and the agency.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.G.) 41. In FY2006, which runs from July 1, 2005 through June 30, 2006, approximately 11,400 children formerly in the Missouri foster care system will be beneficiaries of adoption assistance subsidy contracts between Missouri and the children’s adoptive parent(s). (Defendant’s Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, at 2.) 42. All adoption subsidy agreements executed by the state of Missouri utilize state funds to meet the government’s monthly payment obligations. Title IV-E adoption subsidy agreements are funded 62% by federal matching dollars and 38% by state dollars. State-only adoption subsidy agreements are funded 100% by state dollars. (69 Fed. Reg. 68,372 (Federal Financial Participation in State Assistance Expenditures, FY2006), Ex. 92.) The Governmental Purpose Underlying Senate Bill 539 43. Missouri Governor Matt Blunt signed Senate Bill 539 into law on April 26, 2005. By its terms, Senate Bill 539 has an effective date of August 28, 2005. (Current Bill Summary, published at: www.senate.mo.gov, Ex. 34). 44. Governor Blunt and the Missouri legislature enacted Senate Bill 539 with the stated intent to “reform Missouri’s social welfare system to ensure that taxpayer funded assistance is getting to the most needy ….” (Press Release from the Office of Governor Matt Blunt, May 13, 2005, Ex. 54, at 1.) As stated in the accompanying emergency rule, the law was necessary “to achieve a balanced state budget for SFY 2006.” (Emergency Rule 13 CSR 35-38.020, Ex. 50.) Emergency Rule 13 CSR 35-38.020 became effective on August 28, 2005, and expired on February 23, 2006. 45. The State of Missouri and the Department of Social Services (“DSS”), through duly authorized and responsible state officials, have identified a single
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governmental purpose to be advanced by the means test provision of Senate Bill 539: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the state’s most needy families. (Renne Dep., Jan. 26, 2006, at 31-32; Boies Dep., Jan. 18, 2006, at 103; Kinkade Dep., Jan. 18, 2006, at 64; Martin Dep., Dec. 13, 2005, at 37; Martin, Preliminary Injunction hearing, at 164.) 46. William Boies, a Budget Analyst 2 in the Budget and Planning Division of the state Office of Administration (“OA”), testified at his deposition regarding the origin and development of the adoption subsidy means test provision during the FY2006 budget process in Missouri. Boies testified that following the November 2004 gubernatorial election, the FY2006 budget process (for the FY beginning July 1, 2005) was turned over to Governor-Elect Blunt’s transition team. Michael Keathley, who was later named Commissioner of OA by Governor Blunt, headed the transition team within OA. (Boies Dep., Jan. 18, 2006, at 2, 20-25.) 47. William Boies testified in his deposition that Keathley, upon joining OA in November or December 2004, took note of the historic rate of growth in the costs of the adoption subsidy program in Missouri when reviewing the FY2006 departmental budget submitted by DSS and inquired about the program. Mr. Keathley specifically inquired about methods that could be used to control further growth in the program and suggested means testing recipient adoptive families to reduce cost. (Boies Dep., Jan. 18, 2006, at 32-39.) 48. Thereafter, OA and DSS staff developed a means test scheme with the intended purpose of reducing costs within the Missouri adoption subsidy program by directing a decreased subsidy appropriation to low income adoptive families only, regardless of the needs of the adoptive child. The only governmental purpose to be served by the means test was cost reduction. (Boies Dep., Jan. 18, 2006, at 103.)
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49. William Boies testified at his deposition that he never heard discussion of any other governmental purpose or justification for the new eligibility scheme. (Boies Dep., Jan. 18, 2006, at 103.)
50. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, testified at her deposition that the only policy justification she heard discussed for the Senate Bill 539 means test was “cost savings.” (Martin Dep., Dec. 13, 2005, at 37.)
51. Amy Martin also testified at her deposition that she was not able to identify any way in which the Senate Bill 539 provisions regarding adoption subsidies would serve to benefit children, whether they were in adoptive or foster care. (Id. at 38.)
52. Steve Renne, Acting Director of DSS through April 1, 2005, now Deputy Director of DSS, also testified to his understanding that the Senate Bill 539 means test was designed simply to achieve cost reductions in the state’s adoption subsidy program. (Renne Dep., Jan. 26, 2006, at 31-32.)
53. Defendant K. Gary Sherman, the current Director of DSS, testified at his deposition that he played no role in the development of Senate Bill 539 and its adoption subsidy provisions due to the timing of his nomination for DSS Director by Governor Blunt and subsequent Senate confirmation, which occurred less than one month before the enactment of Senate Bill 539. (Sherman Dep., Jan. 26, 2006, at 5, 10, 11, 23.)
54. Boies participated in a final FY2006 DSS budget presentation to Governor Blunt in January 2005, conducted by means of a telephone conference that occurred shortly before the January “State of the State” address. During this conference, the means test and cost reduction scheme, later made law through Senate Bill 539, were presented to and discussed with Governor Blunt. Neither the Governor nor his staff identified additional policy bases for the means test. (Boies Dep., Jan. 18,
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2006, 98-102.) 55. On Jan 26, 2005, Governor Blunt submitted a budget that called for reductions in
the adoption subsidy program consistent with a means test set at 200% of the federal poverty level (“FPL”.) (Initial Summary of Missouri Governor’s Budget Proposal, Feb. 11, 2005, Ex. 51.) 56. The federal poverty guidelines, which include the FPL, are published annually by HHS for administrative purposes, including for use in determining financial eligibility for certain federal programs. (HHS Poverty Guidelines, 2005 Ex. 42.) 57. DSS staff, specifically Patrick Luebbering, Assistant Deputy Director of the Family Support and Children’s Division, prepared a memorandum in the course of researching the fiscal impact of the proposed changes in the adoption subsidy program, entitled, “Bullet Points for Means Testing Adoption Subsidy,” (“Bullet Points Memo”) that stated among other things:
(a) “By implementing a means test on only the state only adoptions, children who are not IV-E eligible will be put at a disadvantage to being adopted versus children that are IV-E eligible.” (b) “By reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy.” (c) “Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer.” (d) “Projecting an accurate amount for the savings is difficult.” (Bullet Points Memo, Ex. 93; Luebbering Dep., Dec. 13, 2005, at 50.) The Bullet Points Memo was distributed from DSS to OA, and from OA to the Office of the
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Governor in revised form. (Boies Dep., Jan. 18, 2006, at 84-87) Senate Bill 539, Section 453.073.3(4): Blanket Annual Renewal and Automatic Expiration Provision
58. Senate Bill 539 amends Section 453.073.3(4) of RSMo to provide: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) The text of Section 453.073.3(4), as amended by Senate Bill 539, makes no distinction between and applies to both federal/state funded and state-only funded adoption assistance agreements.
59. The HHS Child Welfare Policy Manual, Section 8.2D.2, states: “States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.” (HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.2)
60. Senate Bill 539 violates federal policy which prohibits the blanket limitation on duration or termination of all adoption assistance agreements. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 8-10; trial testimony of Wiedemeier Bower.)
61. The HHS Child Welfare Policy Manual, Section 8.2D.5, provides: “Once an adoption assistance agreement is signed and in effect, it can be terminated under three circumstances only: (1) the child has attained the age of 18 (or 21 if the state has determined that the child has a mental or physical disability which would warrant the continuation of assistance); (2) the State determines that the adoptive parents are no longer legally responsible for the support of the child; or (3) the State determines that the adoptive parents are no longer providing any support to 19
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the child.” ( HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.5.) 62. HHS Child Welfare Policy Manual, Sec. 8.2B.9 similarly states: “Once a child has
been determined eligible and is receiving adoption assistance, a State may terminate the assistance only under the circumstances specified at section 473(a)(4) of the Social Security Act.” (HHS Child Welfare Manual, Ex. 59, at Sec. 8.2B.9.) 63. The DSS Child Welfare Manual states that the Division may close an adoption subsidy upon one of the following events, “(a) The child reaches age 18 or age 21 (if child’s condition is extraordinary); or … (b) At the request of the family; or … (c) Upon determination that the child is no longer receiving any financial support from the adoptive family; or … (d) Upon determination that the adoptive parent(s) are no longer legally responsible for the support of the child (TPR has occurred); or … (e) In the event of death of the subsidized child; or … (f) In the event of the death of both adoptive parents or the death of a single adoptive parent if the subsidy was granted to a single adoptive parent ….” (See DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.11.) 6. 4. Fred Simmens, the DSS Director from August 2003 to October 2005, testified that he agreed that, apart from the exceptions set forth by the federal statutes, any changes to the subsidy contracts would have to be agreed to by the parents. (Preliminary Injunction hearing, at 57-58.) 65. Senate Bill 539 violates federal policy, DSS policy, and good and accepted subsidy practice, which prohibit the termination of adoption subsidy agreements in cases other than the categories proscribed, and allows only periodic readjustments of subsidies on a case by case basis, with the concurrence of the adoptive parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 8-10; trial testimony of Wiedemeier Bower.) 66. Specifically, Section 453.073.3(4) of Senate Bill 539 explicitly causes all existing
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adoption agreements to “expire” upon their one-year anniversary and, if implemented, would trigger the provision of Section 30.4.G of the DSS Child Welfare Manual requiring that if approved services in the subsidy agreement have “expired,” a new attachment must be renegotiated without automatic renewal. 67. An August 29, 2005 letter from Linda K. Lewis, Regional Administrator of the United States Department of Health and Human Services, to DSS Director K. Gary Sherman states, “The Administration for Children and Families has determined that Missouri is out of compliance with title IV-E requirements because SB 539 states that the period for which all subsidies will be granted will not exceed one year and the director has the discretion as to whether the agreement can be renewed for subsequent years.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) 68. The August 29, 2005 HHS letter further states, “Federal requirements state that once a child is determined eligible for title IV-E adoption assistance, he or she remains eligible and the subsidy continues for reasons specified in the Federal policy [Child Welfare Policy Manual, Section 8.2B.9 and Social Security Act – Section 473]. The Federal policy further states that States may not have a blanket policy which limits the duration of adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents … [Child Welfare Policy Manual, Section 8.2D.2 and Social Security Act – section 473]. The Missouri legislation, however, states that the period for which all subsidies will be granted will not exceed one year.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) 69. The August 29, 2005 letter also states, “Federal policy [Child Welfare Policy Manual Section 8.2D.5 and Social Security Act – section 473; and 45 CFR
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1356.40(b)] provides that once a child is determined eligible for adoption assistance under IV-E, he or she remains eligible and the subsidy continues unabated. Once an adoption assistance agreement is signed and in effect, it can only be terminated if 1) the child has reached the age of 18 (or the age of 21 if the State has determined that the child has a mental or physical disability which would warrant continuation of assistance), 2) the State determines that the adoptive parents are no longer legally responsible for the support of the child, or 3) the State determines that the adoptive parents are no longer providing any support to the child. Missouri’s legislation, however, states that the agreement can be renewed for subsequent years “at the discretion of the director” and therefore violates Federal policy.”(Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) Senate Bill 539, Section 453.073.4: Means Test 70. Senate Bill 539 amends Section 453.073.4 of RSMo to provide: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.4.) 71. The use of an income standard for adoptive parents to determine a child’s eligibility for adoption assistance subsidies is commonly referred to as a “means test.” 72. The means test established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards of the foster care system. The means test will be applied to deny adoption subsidy benefits to one group of children and not the other. Specifically, for one group in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the AFDC eligibility standard for Title IV-E purposes, the means test
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will be imposed on the income of the children’s existing or prospective adoptive parents to deny or terminate their adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes, no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; trial testimony of Wiedemeier Bower.) 73. HHS policy, reflected in Federal Policy Announcement, PIQ-90-02, October 2, 1990, states, “Congress at first considered the inclusion of a ‘means test’ as a requirement under the Title IV-E adoption assistance program … the restriction was later dropped after the Committee noted ‘we should not design a program to foster adoptions only in those families with the least financial capacity to care for these special needs children.’” (Federal Policy Announcement, PIQ-90-02, October 2, 1990, Ex. 41, at 1, citing Congressional Record – Senate – S11704, Aug. 3, 1979.) 74. The HHS Child Welfare Policy Manual, Section 8.2A.2, states: “The use of a means test is prohibited in the process of selecting a suitable adoptive family, or in negotiating an adoption assistance agreement, including the amount of the adoption assistance payment.” (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2A.2.) 75. Fred Simmens, the DSS Director from August 2003 to September 2005, testified that in his 26 years with the agency, he had never suggested a means test for people who adopt special needs children. (Preliminary Injunction hearing, at 38.) Mr. Simmens testified that he had concerns about the adoption subsidy revisions in Senate Bill 539 because they were changing longstanding policy in the state to treat all children the same, whether or not they were receiving federal funds through Title IV-E. (Id. at 39-40.) Mr. Simmens testified that this longstanding
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policy was a very fair system. (Id. at 41.) Mr. Simmens further testified that the adoption subsidy program was an important one, and was a factor that encouraged parents to adopt children with special needs. (Id. at 44, 41.) 76. Steve Renne, the Acting Director of DSS at all relevant times until April 1, 2005, and now Deputy Director of DSS, testified that in the 20-plus years he had worked for Missouri’s Department of Social Services, a means test had never before been proposed and that he had never before personally advocated such a test. (Renne Dep., Jan. 26, 2006, at 16.) He testified that a non-IV-E eligible child could have more significant needs than a IV-E eligible child, (id. at 52-53), and that the means test does not ensure that the most needy children receive subsidies due to the fact that the subsidy is based on the adoptive family’s income. (Id. at 52.) Renne testified that, as a “bureaucrat,” he would not recommend different treatment among the two groups of adoptive children that Senate Bill 539 creates. (Id. at 50-51.) 77. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, also agreed that from a policy standpoint, the natural birth parents’ income had “no relevance” in determining whether a child should get an adoption subsidy. (Martin Dep., Dec. 13, 2005, at 85.) 78. As a factual matter, an adoptive child’s special needs are in no way correlated with his or her birth family’s income. For example, if two brothers who suffered from fetal alcohol syndrome as well as other behavioral disabilities were removed separately from their biological mother’s home at times when her income differed, one boy might receive a subsidy jointly funded by state and federal dollars, and the other a purely state-funded subsidy. Adoptive parents would be faced with the situation of being financially able to adopt one brother and not the other, or face
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the prospect of not being able to meet both boys’ needs. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11-12; trial testimony of Wiedemeier Bower.) 79. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division, also testified that there could be families who had adopted more than one child, where one child might be Title IV-E eligible and the other not. Under the SB 539 scheme, the same family could possibly lose the adoption subsidy for one child, but keep it for the other. When asked if that made sense to her, she testified, “It’s difficult for me to get my head around.” (Preliminary Injunction hearing, at 188.) 80. If a family were moving ahead with the adoption of a IV-E eligible child, the state would never inquire of the income of the adoptive parents no matter how high the income. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 81. DSS cannot state the number of class member children currently receiving adoption assistance subsidies funded by state and federal funds and whose adoptive parents earn more than 200% of the federal poverty level. (Defendants’ First Supplemental Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 102, at 2-3.) 82. The Senate Bill 539 means test is an irrational mechanism for directing funds to the “most needy” because it uses the gross income of putative or existing adoptive families as an eligibility threshold and fails to account for actual family expenses and other pertinent circumstances that clearly impinge upon a family’s ability to adopt and provide for a special needs child. (Emergency Rule 13 CSR 35-38.020, Ex. 50, at (12)(C); Preliminary Injunction hearing, at 162-163.)
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The Challenged Provisions of Senate Bill 539, if Implemented, Will Serve to Increase the Cost of Child Welfare to the State of Missouri
83. The State of Missouri and the Department of Social Services (“DSS”), through duly authorized and responsible state officials, have identified a single governmental purpose to be advanced by the means test provision of Senate Bill 539: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the state’s most needy families. (Renne Dep., Jan. 26, 2006, at 31-32; Boies Dep., Jan. 18, 2006, at 103; Kinkade Dep., Jan. 18, 2006, at 64; Martin, Preliminary Injunction hearing, at 164.)
84. Prior to enactment of the Senate Bill 539 mean test provision, DSS prepared a fiscal impact analysis in order to project the cost savings to be generated by the new eligibility scheme in relation to state-only adoption subsidy agreements. Specifically, Patrick Luebbering, an Assistant Deputy Director within DSS, performed a fiscal impact analysis of the proposed means test at the request of the state’s Office of Administration, the agency charged with compiling the annual statewide budget for the Office of the Governor. This fiscal impact analysis concluded that the Senate Bill 539 means test provision would yield a projected annual cost savings of $9,716,863 in the state’s adoption subsidy program, assuming that the income threshold was set at 200% of FPL. (Luebbering Dep., Dec. 13, 2005, at 29-32; Fiscal Impact Analysis, Ex. 103, at Bates 1 PRP 28-7.)
85. The fiscal impact analysis prepared by Mr. Luebbering served as the sole basis for the later April 25, 2005 Fiscal Note authored by the Missouri legislature’s Committee on Legislative Research, Oversight Division for purposes of informing elected legislative members and the general public regarding, among other things, the anticipated fiscal implications of the Senate Bill 539 means test. (Luebbering Dep., Dec. 13, 2005, at 81-82; 134-136; Summary of Fiscal Impact, Ex. 104;
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Fiscal Note, Ex. 35; Kinkade Dep., Jan. 18, 2006, at 73-78.) 86. The April 25, 2005 Fiscal Note published by the Committee on Legislative
Research includes and adopts the fiscal analysis prepared by Mr. Luebbering. (Fiscal Note, Ex. 35.) 87. The fiscal analysis prepared by Mr. Luebbering erroneously and irrationally projected that cost savings would flow from the Senate Bill 539 means test. The means test, if implemented, actually will increase the overall cost to the state to finance its child welfare program. 88. First, the projected $9,716,863 reduction in adoption subsidy costs is overstated due to the subsequent decision by the Missouri legislature to fund the state’s adoption subsidy program in FY2006 at 250% of FPL, as opposed to 200% of FPL, as provided in Senate Bill 539. This legislative action, alone, served to reduce the annual cost savings to be generated by the means test from $9,716,863 to $5,886,654 (the savings figures derived by Mr. Luebbering’s fiscal impact analysis performed at 200% and 250% of FPL, respectively). (Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 89. Second, the fiscal impact analysis substantially over-counted the number of existing state-only adoption subsidy recipients to be effected by the Senate Bill 539 means test. The fiscal impact analysis assumed that 43% of all existing adoption subsidy recipients in Missouri received state-only funded benefits, as opposed to Title IV-E federally subsidized benefits. (Luebbering Dep., Dec. 13, 2005, at 62-68, 72, 78; Fiscal Impact Analysis, Ex. 103, at Bates 1 PRP 28-7.) 90. This assumption was erroneous for two reasons. First, DSS audited all existing state-only funded adoption subsidy files in the Spring of 2005 to confirm whether Title IV-E eligibility had been properly denied in the first instance. As a result of the audit process, DSS determined that over 1,000 existing state-only adoption subsidy agreements were actually eligible for Title IV-E federal funding and,
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therefore, retroactively re-designated those cases to Title IV-E status. (Morris Dep., Dec. 12, 2005, at 50-53; State-Only Adoption Subsidy Case Review, Ex. 107, at 1PRP 27-2.) Second, the state of Missouri reported a Title IV-E adoption subsidy penetration rate of 82% as of the summer of 2005, meaning that only 18% of adoption subsidy recipients in the state were then receiving state-only funded subsidy payments. Mr. Morris testified that the state of Missouri never has reported a Title IV-E adoption subsidy penetration rate below 70% to his knowledge. (Morris Dep., Dec. 12, 2005, at 27-31.) 91. The $5,886,654 in projected cost savings, as calculated by Mr. Luebbering at 250% of FPL, reflects the patently erroneous and irrational assumption that 43% of all adoption subsidy recipients in Missouri are state-only funded. This projected cost savings figure, when recalculated to reflect the fact that only 18% of all adoption subsidy recipients in Missouri are state-only funded, falls to $2,452,772. Put another way, Mr. Luebbering overstated the size of the relevant non-Title IV-E population by a factor of 2.4 (43% versus 18%), resulting in a projected cost savings figure that was also overstated by a factor of 2.4. 92. Moreover, the fiscal impact analysis substantially over-counted the number of prospective state-only adoption recipients to be affected by the Senate Bill 539 means test. The fiscal impact analysis simply carried forward to the population of prospective adoption subsidy recipients the assumption that 43% of the program’s recipients in Missouri receive state-only funded benefits. (Luebbering Dep., Dec. 13, 2005, at 76, 78.) 93. This assumption was erroneous for two reasons. First, as reflected above, the accurate figure for the current percentage of state-only adoption subsidy recipients within the overall adoption subsidy population in Missouri is 18%. Second, the fiscal impact analysis projected a total FY2006 adoption subsidy population in Missouri of 12,474, an estimate that assumed growth in the subject population of
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1300 new adoptive children per year. In reality, the state of Missouri experienced a steady decline in the annual number of finalized adoptions from FY2002 through the present as follows: 1,515 in FY2002, 1,429 in FY2003, 1,356 in FY2004, 1,123 in FY2005, and 1,008 projected for FY2006 based upon the actual number of finalized adoptions through the first three quarters of the year. (Table 28, February 2006 Children’s Services Management Report, Ex. 120.) 94. The fiscal impact analysis overstated the prospective effect of the means test by assuming too large a prospective recipient population to be means tested. (Renne Dep., Jan. 26, 2006, at 20-23; Martin Dep., Dec. 13, 2005, at 35-36.) Indeed, as of December 31, 2005, the total number of foster children who were adopted and receiving adoption assistance maintenance subsidies in Missouri was 11,450, fully 1,000 children lower than assumed by Mr. Luebbering. (Defendant’s Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, at 2.) 95. Additionally, as demonstrated below, the $2,452,772 adjusted figure must further be reduced to account for significant, additional governmental costs to flow from implementation of the mean test that were not adequately addressed, if at all, in Mr. Luebbering’s fiscal analysis. 96. First, the fiscal impact analysis adopted by the state of Missouri underestimated the cost implications of the Senate Bill 539 means test provision in terms of the additional expenses it would impose by causing disruption to existing and putative adoptions. The major component of this increased governmental cost relates to the continuing obligation of DSS to pay monthly foster care maintenance payments to that group of otherwise adoptable children who remain in temporary foster care longer because the means test prevented finalization of their adoptions. (Fiscal Impact Analysis, Ex. 103, at 1 PRP 28-4.) 97. As stated in the “Bullet Points” memorandum prepared by Mr. Leubbering, “[b]y reducing the resources available to parents to adopt special needs children, it is
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likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy … Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer … Projecting an accurate amount for savings is difficult.” (Bullet Points Memo, Ex. 93.) 98. Though the fiscal impact analysis properly assumed that the eligibility means test would serve to prevent or disrupt a number of adoptions due to the financial constraints it would impose on adoptive families, it arbitrarily and unreasonably assumed that these disruptions would result in additional foster care stays for displaced children of only six months duration on average. (Luebbering Dep., Dec. 13, 2005, at 98-99; Fiscal Impact Analysis, Ex. 103, at 1 PRP 28-4.) No state witness has provided an empirical or any other rational basis for this sixmonth figure. (Luebbering Dep., Dec. 13, 2005, at 98-99; Kinkade Dep., Jan. 18, 2006, at 96; Boies Dep., Jan. 18, 2006, at 80-83.) 99. The assumption of an average six-month additional stay in state foster care is arbitrary and demonstrably erroneous based upon DSS adoption policy and Missouri law. Specifically, Section 29.4 of the DSS Child Welfare Manual sets forth agency policy, consistent with RSMo. §453.077.1, that any adoption of a child from temporary state care may not be finalized by a court until the child has lived in the putative adoptive placement for a period of no less than six months. (DSS Child Welfare Manual, Sec. 4, Ch. 29.4, Ex. 80.) The pre-finalization period also must include vital pre-placement activities such as the completion of an adoptive home study, a thorough assessment of the child’s readiness and suitability for the adoptive placement facilitated by a series of supervised preplacement visits between the child and adoptive family, and a determination of the
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child’s eligibility for adoption subsidy assistance. (Id.) 100. Existing, and readily available, DSS data supports the conclusion that adoptive
disruptions will cause children to experience additional foster care stays of 24 months or longer as the state seeks to identify and qualify new adoptive parents. The state of Missouri has reported the following percentages of children exiting foster care into finalized adoptions within 24 months of removal from home: 33.10% in FFY2003, 33.70% in FFY 2004, and 38.6% in FFY2005. (DSS Adoption/Guardianship Subsidy Fact Sheet, February 2, 2006, Ex. 95, at 1.) Based upon these reported statistics by DSS, some 61.4% to 66.9% of the children in state legal custody who attain finalized adoptions only to do so after residing in temporary care for a period in excess of 24 months. 101. An October 2005 Yellow Sheet published by the Missouri State Auditor reported that the average length of stay in foster care for children exiting to adoption was 33 months in FY2003 and 31.7 months in FY2004. (Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1.) 102. The number of children awaiting adoption in Missouri whose biological parents already have lost their parental rights through court ordered termination has been increasing. This subgroup of children in temporary care has risen from 1,527 on September 30, 2000 to 1,660 on September 30, 2002 to 1,919 as of January 2006. (HHS AFCARS Performance Data, Missouri Context Data, Ex. 83, at VI-202; Caseload Counter, http://www.dss.mo.gov/mis/clcounter/history.htm., Ex. 53.) 103. Based upon the above readily available DSS adoption data, the state of Missouri should reasonably anticipate additional foster care stays of 24 months, or even longer, for difficult-to-place, special needs children whose adoptive placements disrupt as a result of the means test. Mr. Luebbering’s cost figure of $427,635, which assumes 6 month additional stays for children experiencing disrupted adoptions (with a means test at 250% of FPL), is understated by a factor of at least
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3, or by some $1.5 million. (Savings from Means Test, Ex. 106, at Bates 1 PRP 28-35.) 104. The fiscal impact analysis likewise failed to account for the increased administrative and caseworker costs directly attributable to adoptive disruptions occasioned by the Senate Bill 539 means test. As noted in the April 25, 2005 Fiscal Note published by the Committee on Legislative Research, Oversight Division, “additionally, there may be some additional cost in staff time due to children staying in care longer. However the impact is unknown.” (Fiscal Note, Ex. 35, at 9.) Though unknown in terms of its precise amount, this increased overhead is not inconsequential. Fred Simmens testified that he agreed that there were expenses to foster care outside the maintenance payment to foster parents, such as administrative costs for caseworkers, deputy juvenile officers, and court time (Preliminary Injunction hearing, at 46-47), and that this comment in the Fiscal Note essentially meant that “this fiscal note did not calculate what the added expense was going to be by kids being in foster care longer.” (Id. at 47, 6971.) 105. In a recent peer review publication of the University of Chicago, University of North Carolina Professor Richard Barth stated “the burgeoning numbers of children receiving adoption subsidies have led some states to be concerned about or even to curtail adoption subsidy levels … This study uses longitudinal adoption subsidy and foster care placement data to estimate the relative costs of foster care and adoption …” and concluded, “[o]n balance, adoption achieves substantial governmental savings.” (“A Comparison of the Governmental Costs of LongTerm Foster Care and Adoption,” Richard P. Barth, Chung Kwon Lee, Judith Wildfire, and Shenyang Guo, University of Chicago Social Service Review, March 2006, Ex. 105, at 1.)
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Senate Bill 539 Means Test: Elimination of a Threshold into Medicaid for Special Needs Children
106. The DSS Child Welfare Manual expressly recognizes that the “Adoption and Safe Families Act of 1997 requires that Medicaid is provided for children who have a state funded adoption assistance agreement.” (DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.3.)
107. The state of Missouri provides Medicaid coverage to children under a variety of programs including: (1) “MC+ for Children” which covers children under the age of one whose family income is at or less than 185% of the FPL, children between the ages of one and six whose family income is at or less than 133% of the FPL, and children from ages six to eighteen whose family income is at or less than 100% of the FPL; (2) “MC+ for Kids,” Missouri’s State Children’s Health Insurance Program (SCHIP), 1115 Demonstration Waiver which covers children whose family income is at or less than 300% of the FPL and who do not otherwise benefit from employer-subsidized health care insurance or other health care coverage; and (3) “Children’s Division Adoption Subsidy” which provides coverage to all children receiving state-funded adoption assistance payments. (DSS Missouri Medicaid Description, published at http://www.dss.mo.gov/dms/global/pages/about.htm, Ex. 55)
108. Prior to the implementation of the Senate Bill 539 means test, special needs children adopted by families with an income above 300% of the FPL remain eligible for Medicaid coverage under the “Children’s Division Adoption Subsidy” program because they receive adoption subsidies, though they are not qualified for Medicaid coverage under the means tests employed in Missouri’s alternative Medicaid programs. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.3)
109. Section 208.640.2 of Senate Bill 539 amends RSMo to provide that “[p]arents and guardians of uninsured children with incomes between one hundred fifty-one and 33
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three hundred percent of the federal poverty level who do not have access to affordable employer-sponsored health care insurance or other affordable health care coverage may obtain coverage pursuant to this section.” 110. Upon implementation of the Senate Bill 539 means test, special needs children adopted by families earning more than 300% of the FPL will lose their adoption subsidy eligibility and, therefore, their access into the state’s Medicaid program through the Children’s Division Adoption Subsidy program. (Senate Bill 539, Ex. 34, at 208.640.2, 453.073.) 111. Upon implementation of the Senate Bill 539 means test, special needs children adopted by families earning above 200% of the FPL and carrying available employer-sponsored health care coverage will be entitled to Medicaid coverage only if the family purchases such coverage under Section 208.640.2. Prior to the implementation of the Senate Bill 539 means test, these same special needs children qualify for Medicaid under the Children’s Division Adoption Subsidy program at no additional cost to the adoptive family. 112. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, testified that SB 539 includes “vague” language about the ability of families to keep Medicaid if they are means-tested out. She testified that the view she and the Children’s Division have taken, however, is that children whose subsidies are denied or terminated under the implementation of SB 539 will continue to keep their Medicaid. She further characterized Medicaid as an “essential” benefit under adoption agreements. (Martin Dep., Dec. 13, 2005, at 18-19.) 113. Counsel for defendant stipulated on the record that all children adopted from DSS temporary care must be and will be provided with Medicaid coverage, regardless of the income of their adoptive parent. Counsel for defendant further stipulated
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that the state intended to implement Senate Bill 539 consistent with this obligation. (Preliminary Injunction hearing, at 6-9.) Senate Bill 539: Threat of Irreparable Harm to Current Foster Children and Adopted Foster Children in Missouri 114. As of August 17, 2005, the Children’s Division projected that at least 1274 special needs children currently receiving an adoption subsidy under an existing contract with DSS will lose their benefit as a result of the Senate Bill 539 amendments. (Adoption Subsidy and Legal Guardianship, Ex. 121, at Bates 1 PRP 41-17.) 115. It is undisputed that the direct result of the adoption subsidy provisions of Senate Bill 539, if implemented, will be longer stays by special needs children in government foster care. (Bullet Points Memo, Ex. 93.) 116. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539, if implemented, also will create uncertainty in relation to the financial capacity of existing adoptive families and putative adoptive parents to meet the serious, and oftentimes expensive, medical, educational and emotional needs of the special needs children they adopt or wish to adopt. The essential bargain underlying an adoption assistance agreement is the promise by the adoptive parent(s) to accept legal custody, and the concurrent responsibilities and duties, of a special needs child until he or she reaches the age of majority in exchange for the state’s commitment to provide monthly assistance payments to make the adoption financially possible without causing undue economic burden on the adoptive family. Senate Bill 539 threatens to undermine or completely withdraw the state’s end of this vital bargain. The resulting uncertainty will cause a reduction in the number of adoptions and will prolong the stays of special needs children in temporary foster care placements much to their emotional detriment. (Trial testimony of Wiedemeier Bower.) 117. Fred Simmens, the DSS Director from August 2003 to October 2005, testified that he agreed that the means test in SB 539 could have a negative impact on the level
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of confidence that foster parents and prospective adoptive parents have in some portions of the child welfare system in Missouri, based on the “reasonable assumption” that parents might feel that the state broke its promise to them in the subsidy contracts. (Preliminary Injunction hearing, at 78.) 118. Steve Renne, Acting Director of DSS at all relevant times until April 1, 2005, now Deputy Director of DSS, agreed that Missouri’s adoption subsidy program helped to move children from foster care to adoptive families more quickly than if there were not a subsidy program. (Renne Dep., Jan. 26, 2006, at 9.) He also testified that an adoption subsidy can make the difference between adopting and not adopting for some families. (Id. at 39.) He testified that SB 539’s scheme regarding adoption subsidies provided no direct benefits to children. (Id. at 32.) 119. Martin testified that her department recognized that 1) some children may remain in foster care for longer periods of time under SB 539; 2) some children may come back into foster care due to the inability of families to support their needs; and 3) the bill was “unfair” to those children who are not eligible for IV-E federal funds. (Martin Dep., Dec. 13, 2005, at 14-17; DSS Bill Review, Ex. 97, at Bates 1 PRP 40-123.) Martin testified that if adoptive families were means tested out, but kept their child, the loss of the adoption subsidy could present a hardship to the family. (Martin Dep., Dec. 13, 2005, at 39.) 120. Martin testified that DSS had a fact sheet observing that children are less likely to be abused if they are adopted, as opposed to remaining in foster care. (Id. at 5254; DSS Fact Sheet, Ex. 98, at Bates 1 PRP 40-145.) Martin further testified that she was aware of and accepted studies that found it is harmful for children to stay in foster care longer, and that it is preferable to be in an adoptive family as opposed to staying in foster care longer. (Martin Dep., Dec. 13, 2005, at 29.) 121. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 will also deter foster parents from adopting special needs children placed into their temporary physical
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custody. These foster parents currently receive for the duration of the child’s foster care episode a dependable stream of foster care maintenance payments from the state to assist in the care of the child. If Senate Bill 539 takes effect, foster parents will become less inclined to adopt a special needs foster child and thereby exchange the certain stream of foster care maintenance payments for the, oftentimes, reduced flow of adoption assistance payments, particularly when the stream of adoption assistance benefits is rendered uncertain in duration and amount. (Trial testimony Weidemeier Bower.) 122. As children spend more time in foster care, they are likely to be subjected to multiple moves in custody, which is harmful. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 14; trial testimony Weidemeier Bower.) 123. Senate Bill 539 also threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the courtsupervised consent decree entered in G.L., An Infant, by and through his Next Friend, et al. v. Gary Stangler et al, No. 77-0242-CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. (July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al., Ex. 56.) Harm to Named Plaintiffs: Impact of Senate Bill 539 on Adoption Assistance Agreements E.C. 124. Named Plaintiff E.C., by her Next Friend Jill Katz, resides in the legal custody of the Children’s Division of the Missouri Department of Social Services in Jackson
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County, Missouri. E.C. is a member of the class of foster children privy to the consent decree entered in G.L., An Infant, by and through his Next Friend, et al. v. Stangler, et al., No. 77-0242-CV-W-1 (United States District Court for the Western District of Missouri). (Trial testimony of E.C.; Preliminary Injunction hearing, at 22.) 125. E.C. has lived in numerous foster homes since entering foster care at the age of seven and has tired of moving from one home to another. E.C. has lived in her current foster home for two years, has formed a bond with her current foster mother, and wishes to be adopted by her. She desperately wants to enjoy safety and stability in her life. (Trial testimony of E.C.; Preliminary Injunction hearing, at 23-26. 126. The Children’s Division had previously determined that E.C. was ineligible for Title IV-E adoption assistance, but in February 2006, the Children’s Division found that it had determined E.C.’s Title IV-E eligibility status in error, and that E.C. is in fact entitled to federally funded adoption assistance, if she is adopted. (Katz Dep., February 23, 2006, at 12-13.) This also means that a family who wishes to adopt E.C. will not be subjected to a means test as provided for in Missouri Revised Statute section 453.073.4, as amended by Senate Bill 539, nor will such a family risk losing adoption assistance in the future because their income has surpassed the level permitted by the amended statute. 127. E.C.'s foster mother, Niann Hines received monthly foster care maintenance payments from DSS to care for E.C. Though she wished to adopt E.C., Ms. Hines feared that loss of the foster care maintenance payments, coupled with E.C.’s nonIV-E adoption subsidy status, would impose an economic hardship and prevent her from fully providing for E.C.’s special needs. Upon learning that E.C. is actually eligible for a Title IV-E adoption subsidy, Ms. Hines shortly thereafter instituted proceedings to adopt E.C. (Trial testimony of Niann Hines.)
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A.C. 128. Named Plaintiff A.C., by his parent and Next Friend Lana Capps, is a six-year-old boy who was adopted from the Missouri foster care system in 2002. A.C. and Ms. Capps live in Boone County, Missouri. (Declaration of Lana Capps, Ex. 7; Capps Dep., February 28, 2006, at 6, 9, 10.) 129. A.C. suffers from a congenital heart disorder that has necessitated 14 hospitalizations and two open-heart surgeries during his young life. He will require additional heart surgeries. (Declaration of Lana Capps, Ex. 7.) 130. Ms. Capps earns approximately $3,600 a month. She currently receives a monthly adoption subsidy of $651 under an adoption assistance agreement she executed with the State of Missouri. The adoption subsidy is a significant portion of Ms. Capps’ monthly income, and without it Ms. Capps ability to meet A.C.’s necessary and regular medical, emotional, psychological, and educational needs will be severely and negatively affected. (Declaration of Lana Capps, Ex. 7.) 131. The Children’s Division determined that A.C. is not eligible for federally funded adoption assistance under Title IV-E because A.C.’s natural mother had income that exceeded Title IV-E guidelines at the time A.C. was removed from the home and placed into foster care. ((Declaration of Lana Capps, Ex. 7; Capps Dep., February 28, 2006, at 32; Letter to L. Capps from L. Cole, July 29, 2005, Ex. 119, PR 14-285.) 132. Because A.C. is ineligible for Title IV-E adoption assistance, the State of Missouri has subjected Ms. Capps’ income to a means test and has determined that her income exceeds the amount permitted by Missouri Revised Statute section 473.053.4, as amended by Senate Bill 539. If Senate Bill 539 is permitted to take effect, the state-funded monthly maintenance adoption subsidy of $651 that Ms. Capps has received since she adopted A.C. will terminate. (Declaration of Lana Capps, Ex. 7.)
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J.C. 133. Named Plaintiff J.C., by his Next Friend Jill Katz, is a 16-year-old now living in the legal custody of the Children’s Division, Missouri Department of Social Services, in Jackson County, Missouri. J.C. is a member of the G.L. v. Stangler, et al. class. (Preliminary Injunction hearing, at 31-32.) 134. J.C. has lived in foster care since 1997, following the death of his mother and a short stay with his legal guardian. J.C.’s father’s parental rights have been terminated. Since 1997, J.C. has been placed into more foster homes and group homes than he can recall, and he presently resides in a group home. (Preliminary Injunction hearing, at 32-33.) 135. J.C. wishes to be adopted and has experienced several adoptive placements that disrupted before finalization. After J.C.’s mother died and his legal guardian had relinquished custody, it was discovered that J.C. had been the victim of severe abuse while in his mother’s care. These experiences left J.C. physically and emotionally traumatized and have necessitated ongoing therapy and treatment. J.C.’s condition and prognosis have improved, but he continues to require therapy and medication. (Child Profile, January 28, 2000, Ex. 108, at Bates RP 3 – 20002007) 136. J.C. would like to have a family that he can count on and trust, and J.C. believes he could have a better life if he were adopted. In foster care, J.C. has not been able to do some of the things that other 16-year-olds do, such as go with friends to the mall or get a driver’s license, and J.C. has not been able to spend the Christmas holidays with a family since he has been in foster care. J.C. fears that the absence of an adoption subsidy will prevent his dream of having an adoptive family. (Preliminary Injunction hearing, at 32-34; Katz Dep., February 23, 2006, at 5-6; Judgment, TR02-00083, In the Interest of J.C., Ex. 74.)
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T.F., B.F. and A.F. 137. Named Plaintiffs T.F., B.F. and A.F., (formerly known as T.G., B.G., and A.G.), by their Next Friend Jill Katz are biological siblings, ages ten, seven, and five, living with their adoptive parents, Elizabeth W. Fischer and John S. Fischer, in Jackson County, Missouri. Prior to their adoption of T.F., B.F., and A.F., Mr. and Mrs. Fischer were foster parents to the three children through the Missouri foster care system. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 5-6.) 138. T.F., B.F, and A.F. were severely neglected by their biological parents with farreaching consequences for the children. T.F. is diagnosed with ADHD and has required residential treatment in the past. T.F. continues to be evaluated for other possible disorders. B.F., who was also subjected to abuse in her biological home, has long-term conditions, including bipolar and attachment disorders. B.F. has also required hospitalization for her disorders, including after the finalization of her adoption by Mr. and Mrs. Fischer. A.F. has been diagnosed with posttraumatic stress disorder for which she receives therapy and takes prescription medication. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 17-22.) 139.As foster parents for T.F., B.F., and A.F., Mr. and Mrs. Fischer received approximately $1,800 per month in foster care maintenance and subsidies, which included the behavioral rate for T.F. and B.F. Federal law prohibits the payment of Title IV-E adoption assistance benefits in amounts in excess of the pre-existing foster care maintenance payments. See 42 U.S.C. 673(a)(3). (Missouri Title IV-E State Plan, Ex. 45, at Sec. 4, Requirement 3(c).) Because of the preliminary injunction granted by the Court in this cause, the state now pays the Fischer’s approximately $1,500 per month in adoption assistance maintenance payments. T.F. and B.F. continue to be paid at the behavioral rate. (Affidavit of Elizabeth
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Fischer Ex. 3; Fischer Dep., February 21, 2006, at 10-11.) 140. All three siblings would have been eligible for federally-funded assistance under
Title IV-E but for errors in family court documents only detected by the state after the time frame for perfecting Title IV-E eligibility had expired. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 14-15.) 141. Because the three children do not qualify for Title IV-E adoption assistance, if the means test in Senate Bill 539 is enforced, the Fischer’s eligibility for state-funded adoption subsidies will depend upon their income. The Fischer’s monthly income is approximately $7,800 – well above the level permitted by Senate Bill 539. Thus, the Fischer’s will lose the adoption assistance they now receive for their three adopted children, which constitutes approximately 15% of their present family income. (Affidavit of Elizabeth Fischer Ex. 3.) W.S., M.S. and D.S. 142. Named Plaintiffs W.S., M.S., and D.S., by their parent and Next Friend Robert Brian Strange, are boys aged 10, 7 and 6, respectively, who were adopted from the Missouri foster care system in 2000 as a sibling group. The boys were all in the G.L. v. Stangler et al. class prior to their adoption. (Trial testimony of Robert Strange.) 143. W.S., M.S. and D.S. now live with their adoptive parents, Robert and Jennifer Strange, in Cass County, Missouri. The boys were initially removed from their biological home after M.S. sustained severe burns when held against a hot water heater by his mother. D.S. is developmentally disabled. (Trial testimony of Robert Strange.) 144. The Strange’s annual income is about $62,400. They currently receive three separate $275 adoption assistance payments each month under the adoption assistance agreements they executed with the state of Missouri on behalf of each of the boys. The Strange’s cannot support the medical, educational, emotional
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and physical needs of the boys absent the adoption assistance. (Trial testimony of Robert Strange.) 145. The state of Missouri sent a notice letter to the Strange’s stating that W.S.’s and M.S.’s adoption subsidies will terminate permanently if the family’s gross annual income exceeds the Senate Bill 539 means test. The letter further gave notice that should the family’s gross income meet the means test, all three boys’ adoption assistance agreements will, by operation of Senate Bill 539, permanently expire within the year. (Trial testimony of Robert Strange.) M.P. 146. Named Plaintiff M.P., by adoptive parent and Next Friend Michael Patterson, is a 16-year-old adopted child who currently reside with his father in Jackson County, Missouri. M.P. was a member of the G.L. v. Stangler et al. class prior to his adoption. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 4-7.) 147. M..P. was placed in Michael Patterson’s home as a foster child. Mr. Patterson has been a foster parent to over 20 children in the past eight years. In addition to M.P., Mr. Patterson has adopted four other children from foster care, three of whom are now adults and living on their own. Mr. Patterson is proud that all of his three grown children graduated from high school, and the youngest was offered a college scholarship. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 7-8, 18-19.) 148. M.P. was removed from his home and placed in foster care in 1992 because of neglect and his mother’s drug abuse. He was placed in Mr. Patterson’s foster home in December 2002 after having lived in over 15 foster homes and children’s shelters. Mr. Patterson received the behavioral rate for M.P.’s foster care because of problems that M.P. was experiencing both at home and at school. Mr. Patterson has adopted M.P. and continues to receive the behavioral rate as
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maintenance under an adoption subsidy agreement executed with DSS. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 16-18; Psychological Evaluation, July 15, 2003, Ex. 109, at Bates PR12 / 43-47.) 149. Mr. Patterson has been informed that M.P. is not eligible for federal adoption assistance under Title IV-E, and that therefore, under Senate Bill 539, M.P.’s adoption assistance for maintenance will terminate permanently if Mr. Patterson’s gross annual income fails the bill’s means test. Mr. Patterson expects that his income will exceed the level permitted by Senate Bill 539. Mr. Patterson has been further informed that even if his gross income passes the means test, M.P.’s adoption assistance agreement will, by operation of Senate Bill 539, permanently expire at the end of one year. (Affidavit of Michael Patterson Ex. 5; Letter to M. Patterson from F. Simmens of DSS, May 25, 2005, Ex. 63; Letter to M. Patterson from F. Simmens of DSS, July 25, 2005, Ex. 64, at 1.) J.A. 150. Named Plaintiff J.A., by his parent and Next Friend John Antonich, is a 15 yearold boy. He was adopted from the Missouri foster care system in 2004 after some 6 years in foster care. J.A. lives with his adoptive parents in Jefferson County, Missouri. (Trial testimony of J.A..) 151. While in foster care, J.A. lived in 23 different foster homes between the ages of 8 and 10. He later was placed into group care after a suicide attempt. J.A. suffers from severe anxiety, attention deficit hyperactive disorder (“ADHD”), oppositional defiant behavior, and depression. The depression condition has required hospitalization. J.A. also has required intensive tutoring to improve his challenged educational growth. (Testimony of John Antonich at preliminary injunction hearing.) 152. Mr. Antonich earns approximately $4,580 a month. The Antonich’s currently receive a monthly $651 adoption subsidy under an adoption assistance agreement
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they executed with the state of Missouri. The Antonich’s cannot afford the considerable educational, psychiatric and behavioral care necessary to address J.A.’s special needs absent the adoption subsidy. (Testimony of John Antonich at preliminary injunction hearing.) 153. The state of Missouri has sent a notice letter to the Antonich’s stating that their adoption subsidies will be terminated permanently if their annual income exceeds the Senate Bill 539 means test – 200% of the FPL for a family of 3 is $32,180 under current federal guidelines. Mr. Antonich earns approximately $54,960 per year, and his income will, therefore, surpass the Senate Bill 539 means test. The letter further gave notice that should the family’s gross income meet the means test, J.A.’s adoption assistance agreement will, by operation of Senate Bill 539, permanently expire within the year. (Testimony of John Antonich at preliminary injunction hearing.) T.J. and A.J. 154. Named Plaintiffs T.J. and A.J., by their parent and Next Friend Lavada Johnson, are 7 and 5 years old, respectively. They were adopted from the Missouri foster care system. Ms. Johnson, who is 60 years old, also supports two children in therapeutic foster care. (Trial testimony of Lavada Johnson.) 155. T.J. suffers from severe asthma, sinus disease, ADHD and hypoglycemia and requires daily medication. A.J. suffers from chronic lung disease, chronic and persistent asthma and ADHD and also requires daily medication. (Trial testimony of Lavada Johnson.) 156. Ms. Johnson earns approximately $1,160 a month. She currently receives monthly $651 adoption subsidy payments under the adoption assistance agreements she executed with the state of Missouri. Ms. Johnson cannot afford the considerable medical, psychiatric, educational and emotional care necessary to address T.J.’s and A.J.’s special needs absent the adoption subsidy. (Trial
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testimony of Lavada Johnson.) 157. The state of Missouri has sent a notice letter to Ms. Johnson stating that the
children are Title IV-E eligible, but that her adoption assistance agreements will automatically expire in 2006. (Trial testimony of Lavada Johnson.) N.S. 158. Named Plaintiff N.S., by his parent and Next Friend Tammy Smith, is a four-yearold boy who was adopted from the Missouri foster care system in 2002 by Mrs. Smith and her husband, Harold Smith. N.S. lives with his adoptive parents in St. Charles County, Missouri. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 6-7.) 159. N.S.’s natural mother consented to the termination of her parental rights shortly after N.S. was born. The parental rights of N.S.’s natural father were terminated by default. (Order, Judgment and Decree of Court, St. Louis County, June 12, 2002, Ex. 111, at Bates PR 20 / 9-11.) 160. At the time of N.S.’s adoption, Mr. and Mrs. Smith executed an adoption subsidy agreement with the Division of Family Services (now Children’s Division) that provides a monthly adoption assistance maintenance payment at the standard rate until the year 2020 when N.S. will be eighteen years old. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 6-7.) 161. N.S. suffers from severe asthma and takes four different medications daily to control the condition. N.S. also requires two breathing treatments twice daily. The asthma condition occasionally results in asthmatic crises and has required as many as 11 visits to the hospital in one 13-month span. (Declaration of Tammy Smith Ex. 10.) 162. Because of N.S.’s severe asthma and allergies, Mr. and Mrs. Smith requested that N.S.’s adoption assistance maintenance payment be increased to the medical rate of $651 per month, and that request was granted by the Division of Family
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Services in 2004. Mr. and Mrs. Smith use the additional money to pay for daycare services not provided by the state, co-pays for N.S.’s medical care, and N.S.’s medications not covered by insurance. Because of N.S.’s condition and special needs, the Smith’s have had to modify their home, including, but not limited to, the removal of carpeting and the installation of special flooring and bedding, and the increased payment helps to cover that expense. Utility costs are higher for the Smith’s because windows in the home must be kept closed. Finally, N.S.’s frequent illnesses have required Mrs. Smith to be absent from her job, so much that she uses her allowable time off as quickly as she earns it, and thus the maintenance payment helps to make up for income lost when Mrs. Smith is forced to take unpaid leave in order to care for N.S. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 14-15.) 163. N.S. is eligible for federally funded adoption assistance under Title IV-E. The state, however, has informed Mr. and Mrs. Smith that their subsidy agreement will expire within one year and have to be renegotiated. (Declaration of Tammy Smith Ex. 10.) 164. The Smith’s have obtained approval to adopt a second child, but they are concerned that the changes in the adoption subsidy program will make adoption a financial hardship, and they have lost confidence that the state will adhere to its agreements in these matters. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 21.)
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II. CONCLUSIONS OF LAW: Elements of Proof for Permanent Injunctive Relief
1. Entry of an injunction is proper where (1) there is a threat of irreparable harm to the movant, (2) the threatened irreparable harm outweighs the injury that granting the injunction will inflict on other litigants, (3) the movant has a probability or likelihood of success on the merits, and (4) the public interest will be served by granting an injunction. Dataphase Systems v C L Systems, Inc., 640 F.2d 109, 114 (8th Cir. 1980) (en banc). The standard for granting a permanent injunction is essentially the same as for a preliminary injunction, except that to obtain a permanent injunction the movant must attain success on the merits. Bank One v. Guttau, 190 F.3d 844, 847 (8th Cir. 1999) (citing Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n.12 (1987)). The grant of a permanent injunction lies within the discretion of the trial court and is subject to review for abuse of that discretion. Randolph v. Rogers, 170 F.3d 850, 856 (8th Cir. 1999).
2. This Court entered a preliminary injunction on September 9, 2005. By order dated September 29, 2005, this Court certified a plaintiff class in this action comprised of “all future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a court-ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.”
Federal and State Statutory and Regulatory Scheme for Missouri Adoption Subsidy Program
3. Defendant, K. Gary Sherman, is the Director of DSS and, in that capacity, oversees and is legally responsible for the administration and management of the Children’s Division and the implementation of its child welfare programs and services, including adoption services. (RSMo Section 660.010.1; Sherman Dep., Jan. 26, 2006, at 4, 19-21.)
4. The federal Title IV-E adoption assistance program provides federal matching 48
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funds to states that establish HHS-approved “qualifying plans” to provide adoption assistance for children with special needs. 42 U.S.C. §671. 5. The state of Missouri has a qualifying “State Plan for Title IV-E of the Social Security Act Foster Care, Independent Living and Adoption Assistance” (“Missouri State Plan”) and receives federal funding for adoption assistance purposes. (Missouri Title IV-E State Plan, Ex. 45.) 6. Missouri state law, § 453.074.1, states that “the division of family services shall have the following duties in the administration of the subsidy program: . . . Comply with all federal laws relating to adoption subsidies in order to maintain the eligibility of the state of Missouri for federal funds.” § 453.074.1 RSMo. As a matter of law, DSS is required to operate its entire adoption subsidy program in compliance with federal law. 7. Additionally, the Missouri State Plan requires that “[a]s a condition of the receipt of Federal funds under title IV-E of the Social Security Act … the [state agency] … hereby agrees to administer the program in accordance with the provisions of this State plan, title IV-E of the Act, and all applicable Federal regulations and other official issuances of the Department.” (Missouri Title IV-E State Plan, Ex. 45, at 2.) As a matter of law, DSS is required to operate its entire adoption subsidy program in compliance with federal law. 8. As held by the Eighth Circuit Court of Appeals, “The state of Missouri has availed itself of the funds offered by Congress through the [Adoption Assistance Act]. Although Congress may not require a state to participate in a program created pursuant to the Spending Clause, once a state agrees to take the funds offered through such programs the state is bound to comply with federally imposed conditions . . . . The [Adoption Assistance Act] requires Missouri to submit to the Secretary of Health and Human Services (HHS) a state plan for providing foster care and adoption assistance that meets the standards enacted by
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Congress. 42 U.S.C. § 671. In Missouri, the Department of Social Services, through its Division of Family Services, has been designated to administer the state plan and assure compliance with the [federal] Act. Mo.Rev.Stat. §§ 207.010, 207.060, 660.010 (2000).” Missouri Child Care Ass’n v. Cross, 294 F.3d 1034, 1036 (8th Cir. 2002) (internal quotation marks and citation omitted). 9. As a matter of law, the state of Missouri has agreed through its State Plan to comply with federal regulations and official HHS issuances in administering its entire adoption subsidy program to Title IV-E eligible and state-only recipients. (Missouri Title IV-E State Plan, Ex. 45.) 10. Available to the public on-line since September of 2001, the federal Child Welfare Policy Manual provides official issuances of the U.S. Department of Health and Human Services (HHS) on the interpretation of federal law and federal regulations in the area of child welfare, including adoption subsidies. (Federal Child Welfare Policy Manual, Ex. 113; http://www.acf.hhs.gov/j2ee/programs/cb/laws_policies/laws/cwpm/index.jsp; trial testimony of Jeanette Wiedemeier Bower.) 11. Children with “special needs” are those whom the State has “determined . . . cannot be returned to the home of his parents” and for whom “there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance under this section or medical assistance under title XIX.” See 42 U.S.C. § 673(c). 12. Missouri law and Missouri DSS policy include all foster children in the custody of the Children’s Division of DSS as “special needs” children for purposes of adoption assistance subsidies. See Mo.Rev.Stat. § 453.073.2.
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13. As a matter of law, all class members are thus “special needs” children under federal and state law.
14. The federal Adoption Assistance Act, Section 673(a)(3), requires, in part: “[t]he amount of the payments [adoption subsidies] to be made in any case under clauses (i) and (ii) of paragraph (1)(B) shall be determined though agreement between the adoptive parents and the State or local agency administering the program under this section, which shall take into consideration the circumstances of the adopting parents and the needs of the child to be adopted, and may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.”
15. Section 673(a)(21) of the Adoption Assistance Act requires that a state’s Title IVE plan must: “provide for health insurance coverage … for any child who has been determined to be a child with special needs, for whom there is in effect an adoption assistance agreement (other than an agreement under this part [42 USCS §§670 et seq.] between the state and an adoptive parent or parents, and who the state has determined cannot be placed with an adoptive parent or parents without medical assistance ….”
16. As a matter of law, all current or former DSS foster children are entitled to full medical benefits upon adoption regardless of the income of their adoptive parents. See Section 673(a)(21).
17. Federal law prohibits the payment of Title IV-E adoption assistance benefits in amounts in excess of the pre-existing foster care maintenance payments. (Missouri Title IV-E State Plan, Ex. 45, at Sec. 4, Requirement 3(c).) See 42 U.S.C. 673(a)(3).
18. The federal Adoption Assistance Act, Section 675(3), requires that “[t]he term “adoption assistance agreement” means a written agreement, binding on the
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parties to the agreement, between the State agency, other relevant agencies, and the prospective adoptive parents of a minor child which at a minimum (A) specifies the nature and amount of any payments, services, and assistance to be provided under such agreement, and (B) stipulates that the agreement shall remain in effect regardless of the State of which the adoptive parents are residents at any given time.” See 42 U.S.C. §675(3). 19. Section 453.073 RSMo requires: “a written agreement shall be entered into by the division and the parents. The agreement shall set forth the following terms and conditions: (1) The type of allotment; (2) The amount of assistance payments; (3) The services to be provided; (4) The time period for which the subsidy is granted.” 20. Senate Bill 539 amends Section 453.073.3(4) of RSMo to require: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) Section 453.073.3(4) of Senate Bill 539, on its face, applies to both Title IV-E eligible (federal/state funded) and non-Title IV-E eligible (stateonly funded) adoption assistance agreements. 21. Senate Bill 539 amends Section 453.073.4 of RSMo to require: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) Section 453.073.4, on its face, applies to non-Title IV-E eligible adoption assistance agreements. 22. HHS regulations require that “there must be no income eligibility requirement (means test) for the prospective adoptive parent(s) in determining eligibility for
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adoption assistance payments.” 45 CFR 1356.40(c). (1) Plaintiffs’ Success on the Merits Plaintiffs have succeeded on the merits of the statutory and constitutional causes averred in Counts I, II and III of their complaint.
COUNT I: Violation of Adoption Assistance Act 23. Under 42 U.S.C. § 1983, a federal cause of action exists against anyone acting
pursuant to state authority that violates any “rights, privileges or immunities secured by the Constitution and laws of the United States.” Pediatric Specialty Care, Inc. v. Arkansas Dep’t of Human Services, 293 F.3d 472, 477 (8th Cir. 2002) (quoting 42 U.S.C. § 1983). Section 1983 provides a federal claim for violations of both federal constitutional and statutory law. Id. (citing Maine v. Thiboutot, 448 U.S. 1, 4 (1980). 24. The Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. §§ 620-629(i) and 670679(b), constitutes controlling federal statutory law under the Supremacy Clause of the United States Constitution. See Blum v. Bacon, 457 U.S. 132, 145-56 (1986)(holding that, under the Supremacy Clause, federal Spending Clause legislation, such as the Adoption Assistance Act, supercedes conflicting state statutes and regulations). See also Missouri Child Care Association v. Cross, 294 F.3d 1034 (8th Cir. 2002)(the Adoption Assistance Act constitutes the supreme law of the land). 25. Moreover, Section 673(a)(3) of the Adoption Assistance Act is privately enforceable. See Pediatric Specialty Care, supra,, 293 F.3d 472, 477-78 (8th Cir. 2002) (setting forth private right of action standard); ASW v. Oregon, 424 F.3d 970, 975-78 (9th Cir. 2005) (§ 673(a)(3) creates private right of action); Missouri Child Care Ass’n v. Martin, 241 F. Supp. 2d 1032, 1041-42 (W.D. Mo. 2003) (on remand) (§§ 672 and 675 confer enforceable private rights of action).
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26. Three factors determine whether a particular statute creates a private right of action: (1) whether the provision in question was “intend[ed] to benefit the putative plaintiff”; (2) whether the interest the plaintiff asserts is not so “vague and amorphous” that it is beyond the competence of the judiciary to enforce; and (3) whether the provision in question creates a binding obligation on the governmental unit. Pediatric Specialty, 293 F.3d 472, 477 (8th Cir. 2002)(citing Blessing v. Freestone, 520 U.S. 329, 340 (1997)).
27. Section 673(a)(3) meets the first prong of the private right of action test, as Plaintiffs are the intended recipients and beneficiaries of the adoption assistance benefits conferred under the federal statute. Missouri Child Care, 241 F. Supp. 2d 1032, 1041 (W.D.Mo. 2003)(the beneficiaries of Section 672 foster care maintenance payments are the foster children though their benefits may be paid indirectly through licensed providers); ASW, 424 F.3d 970, 975-78 (9th Cir. 2005). Section 673(a)(3) contains “rights creating language” that demonstrates a statutory intent to confer a private right of action. See Gonzaga University v. Doe, 536 U.S. 273 (2002)(where the Court clarified the three-pronged standard in Blessing. Id at 283); see also Masterman v. Goodno, 2004 U.S. Dist. LEXIS 354 at *20-24 (D.Minn. Jan. 8, 2004).
28. Section 673(a)(3) additionally satisfies the second prong of the private right of action test requiring that plaintiff assert an interest that is not so “vague and amorphous” as to be beyond the competence of the judiciary to enforce. Pediatric Specialty Care, 293 F.3d at 477 (citing Blessing, 520 U.S. at 340). See also Missouri Child Care, 241 F. Supp. 2d 1032, 1041 (W.D.Mo. 2003); ASW, 424 F.3d 970, 975-78 (9th Cir. 2005) Section 673(a)(3) explicitly provides that the amount of any adoption assistance payments may be adjusted only with the “concurrence” of the adopting parents, and in consideration of specific factors, including the “the needs of the child being adopted.” 42 U.S.C § 673. As a matter
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of law, this statutory provision is well suited to court enforcement. 29. The final prong of the test, “whether the provision in question creates a binding
obligation on the governmental unit,” is also satisfied by § 673(a)(3). Pediatric Specialty Care, 293 F.3d at 477 (citing Blessing, 520 U.S. at 340)(the statutory provision to be enforced must be couched in mandatory rather than precatory terms.”). Section 673(a)(3) states that the adoption subsidy “shall be determined through agreement between the adoptive parents and the state or local agency” and that the only circumstance where the subsidy may be “adjusted periodically” is “with the concurrence of the adopting parents.” (emphasis added). See also ASW, 424 F.3d 970, 975-78 (9th Cir. 2005) (concluding § 673(a)(3) creates a private right of action). 30. Section 453.073.3(4) places within the discretion of the DSS Director the unilateral authority to renew adoption subsidy agreements executed by the state of Missouri for both IV-E eligible and non-IV-E eligible subsidies. On its face, this provision conflicts with, violates, and is preempted by the express language of 42 U.S.C. 673(a)(3) which states that adoption subsidy agreements “may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.” (emphasis added.) 31. Section 453.073.3(4) further imposes a blanket one-year limitation upon the duration of all adoption subsidy agreements and causes all existing adoption subsidy agreements to expire automatically upon their one-year anniversary. On its face, this provision likewise conflicts with, violates, and is preempted by the express language of 42 U.S.C. 673(a)(3) which states that adoption subsidy agreements “may be readjusted periodically with the concurrence of the adopting parents …” 32. In evaluating an alleged statutory violation or conflict, courts first look to the
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plain meaning of the subject statutory provisions. Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984); See also Camacho v. Texas Workforce Comm’n, 408 F.3d 229, 236-37 (5th Cir. 2005). Additionally, official policy issuances of HHS, the federal agency charged with implementing the Title IV-E program, are to be given deference. See id. at 844 (“a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of any agency”). 33. Here, the plain language of Section 673(a)(3) is dispositive; however, even if the Court were to look beyond this plain statutory language, Section 453.073.3(4), in imposing a blanket limitation on duration and automatic expiration, conflicts with and is preempted by the controlling official HHS issuance in the HHS Child Welfare Policy Manual, Section 8.2D.2, which states: “States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.” 34. Moreover, the blanket limitation on duration provision also conflicts with and is preempted by the controlling official HHS issuance in the HHS Child Welfare Policy Manual, Section 8.2D.5, requiring that adoption assistance payments must continue until (1) the child has attained the age of 18 (or 21 if the state has determined that the child has a mental or physical disability which would warrant the continuation of assistance); (2) the State determines that the adoptive parents are no longer legally responsible for the support of the child; or (3) the State determines that the adoptive parents are no longer providing any support to the child. ( HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.5.) 35. As a matter of law, under the challenged amendments to 473.073.3(4), all existing adoption subsidy contracts expire on June 30, 2006, and all new subsidy contracts
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will expire on their one-year anniversary. DSS policy, unchanged by the challenged provision, expressly distinguishes between review and automatic renewal on the one hand, and renegotiation upon expiration on the other hand. (Plaintiffs' Ex. 48; Defendant's Post Trial Proposed Findings of Fact para. 39; Plaintiffs' Post Trial Proposed Findings of Fact para. 77.) Defendant's assertion of an "intent" not to do what the challenged provision and DSS policy both say to the contrary -- taken as a litigation position and never reduced in writing within even a DSS policy -- is without merit. See, e.g., Idaho Dep’t of Health and Welfare v. United States Dep’t of Energy, 959 F.2d 149, 153 (9th Cir. 1992) (“We grant no deference to [a regulatory] interpretation put forth merely as a litigation position.”) 36. Finally, the Court has received into the evidentiary record an August 29, 2005 letter from Linda K. Lewis, Regional Administrator of the United States Department of Health and Human Services to DSS Director K. Gary Sherman. This letter sets forth the following official position of HHS: “[t]he Administration for Children and Families has determined that Missouri is out of compliance with title IV-E requirements because SB 539 states that the period for which all subsidies will be granted will not exceed one year and the director has the discretion as to whether the agreement can be renewed for subsequent years.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 37. The August 29, 2005 HHS letter further states, “Federal requirements state that once a child is determined eligible for title IV-E adoption assistance, he or she remains eligible and the subsidy continues for reasons specified in the Federal policy [Child Welfare Policy Manual, Section 8.2B.9 and Social Security Act – Section 473]. The Federal policy further states that States may not have a blanket policy which limits the duration of adoption assistance payments to a date earlier
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than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents … [Child Welfare Policy Manual, Section 8.2D.2 and Social Security Act – section 473]. The Missouri legislation, however, states that the period for which all subsidies will be granted will not exceed one year.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 38. The August 29, 2005 letter also states, “Federal policy [Child Welfare Policy Manual Section 8.2D.5 and Social Security Act – section 473; and 45 CFR 1356.40(b)] provides that once a child is determined eligible for adoption assistance under IV-E, he or she remains eligible and the subsidy continues unabated. Once an adoption assistance agreement is signed and in effect, it can only be terminated if 1) the child has reached the age of 18 (or the age of 21 if the State has determined that the child has a mental or physical disability which would warrant continuation of assistance), 2) the State determines that the adoptive parents are no longer legally responsible for the support of the child, or 3) the State determines that the adoptive parents are no longer providing any support to the child. Missouri’s legislation, however, states that the agreement can be renewed for subsequent years “at the discretion of the director” and therefore violates Federal policy.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 39. The Court gives due deference to this letter as well as official HHS policy issuances in construing of 42 U.S.C. Section 673(a)(3). Section 453.073.3(4) conflicts with and is preempted by the plain meaning of 673(a)(3) of the Adoption Assistance Act, the reasonable official HHS issuances under that Act, and as specifically construed and applied by HHS in the Lewis letter in administering the Title IV-E federal program.
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COUNT II: Equal Protection 40. Missouri Senate Bill 539 amends the state’s adoption subsidy law to include a
new Mo.Rev.Stat. § 453.073.4. The “means test” established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards of the Missouri foster care system. The means test will be applied both retroactively and prospectively to initially deny or terminate existing adoption subsidy benefits to one group of children and not the other. 41. Specifically, for one group, in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the 1996 Aid for Families With Dependent Children (AFDC) eligibility standard for Title IV-E purposes (also referred to as “non IV-E eligible” children), the new means test will be imposed on the income of the children’s existing or prospective adoptive parents to initially deny or terminate their existing adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes (“IV-E eligible” children), no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. Mo.Rev.Stat. § 453.073.4 creates an unlawful discriminatory classification under the Equal Protection Clause. 42. A single governmental purpose has been advanced for § 453.073.4 and its means test: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the most needy. 43. First, this classification infringes on the fundamental right of foster children -their liberty interest in avoiding unnecessary government confinement -- and cannot survive strict scrutiny review. A discriminatory classification implicating a suspect class or a fundamental right triggers strict scrutiny. Plyler v. Doe, 457
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U.S. 202, 216-218 (1982); Lubin v. Panish, 415 U.S. 709, 721-22 (1974). Under strict scrutiny, a statute’s classification must be narrowly tailored to achieve a compelling state purpose. Plyler v. Doe, 457 U.S. at 216-218. 44. “Liberty from bodily restraint always has been recognized as the core of the liberty protected by the Due Process Clause from arbitrary governmental action.” Youngberg v. Romeo, 457 U.S. 307, 316 (1982) (citing Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1, 18 (1979) (Powell, J., concurring in part and dissenting in part). See also DeShaney v. Winnebago, 489 U.S. 189, 200 (1989); Ingraham v. Wright, 430 U.S. 651, 673-674 (1977); Collins v. Bellinghausen, 153 F.3d 591, 596 (8th Cir. 1998). 45. Unnecessarily prolonged confinement in government foster care invokes the substantive due process liberty interests of foster children. See DeShaney, 489 U.S. at 201 n.9; Taylor v. Ledbetter, 818 F.2d 791, 796-97 (11th Cir. 1987) (recognizing due process liberty interest of foster child in state custody in a damages action under § 1983); Kenny A. v. Perdue, 356 F.Supp.2d 1353, 1360-61 (N.D.Ga., 2005) (finding that “the evidence shows that foster children in state custody are subject to placement in a wide array of different types of foster care placements, including institutional facilities where their physical liberty is greatly restricted”). See also Norfleet ex rel. Norfleet v. Arkansas Dep’t of Human Servs., 989 F.2d 289, 293 (8th Cir. 1993) (foster children have constitutional right to “adequate medical care, protection and supervision”). See also Foucha v. Louisiana, 504 U.S. 71, 85-86 (1992) (plurality opinion) (four justices acknowledged that restraint on liberty is a fundamental right and violative of equal protection where the State had not provided a “particularly convincing reason.”) The asserted purpose of cost savings here fails to meet this articulation of heightened scrutiny. 46. Defendant in this case concedes that Mo.Rev.Stat. § 453.073.4 will result in foster
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children staying in foster care for at least six months longer. This impingement of foster children’s substantive due process rights constitutes a violation of their fundamental rights, triggering strict scrutiny review. Section 453.073.4 must be enjoined because it is not narrowly tailored to serve a compelling state interest. The state’s asserted government purpose, cost savings, is not sufficient to withstanding this rigorous standard of review. See Shapiro v. Thompson, 394 U.S. 618, 632 (1969). The means test is not narrowly tailored, as it selectively tests some adoptive parents’ gross income without consideration of actual expenditures or even the child’s needs. 47. Second, even assuming arguendo that rational basis review applies, the means test in RsMo 453.073.4 is not rationally related to a legitimate government interest. 48. The means test established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards. The means test will be applied to deny adoption subsidy benefits to one group of children and not the other. Specifically, for one group in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the AFDC eligibility standard for Title IV-E purposes, the means test will be imposed on the income of the children’s existing or prospective adoptive parents to deny or abrogate their adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes, no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. In the area of economics and social welfare, equal protection analysis requires that the state establish that the challenged classification is rationally related to some legitimate governmental purpose. Ranschburg, 709 F.2d 1207, 1209 (8th Cir. 1983) (citing United States Dep’t of Agric. v. Moreno, 413 U.S. 528, 533 (1973); Dandridge v. Williams, 397
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U.S. 471, 485 (1970); Medora v. Colautti, 602 F.2d 1149, 1152 (3d Cir. 1979); Alcala v. Burns, 545 F.2d 1101, 1104 (8th Cir. 1976)). 49. A virtually identical social welfare classification in Missouri failed to withstand Equal Protection scrutiny in Ranschburg, 709 F.2d 1207 (8th Cir. 1983). In Ranschburg, plaintiffs challenged on Equal Protection grounds a utility subsidy program in Missouri that granted financial assistance to multiple classifications of disabled citizens, whose eligibility for a statutory utility program under state law was determined solely by their additional participation in other statutorily enumerated public assistance programs. Id. at 1208-09. Plaintiffs, deemed “disabled” under the purview of the Missouri Medical Assistance Program, were nonetheless denied utility subsidy benefits because they did not participate in any of the public assistance programs specifically enumerated in the challenged statute. Id. 50. Plaintiffs contended that because they were equally situated in terms of need and disability with those receiving the utility subsidy, the state had acted unconstitutionally in excluding them from the program benefits. See Id. at 120911. The state of Missouri defended its statutory scheme in the District Court, arguing that it rationally promoted the state’s legitimate interest in allocating limited public funds among the state’s most needy citizens. Id. The Court struck down the challenged statute finding that no legitimate governmental interest was served by the subject classification. 51. Upon review, the Eighth Circuit Court affirmed the District Court’s judgment striking down the utility subsidy law on Equal Protection grounds. The Circuit agreed that the state of Missouri generally possesses a legitimate interest in directing limited public funds to the most needy; however, it concluded that the challenged program’s eligibility classifications were irrational as they assured no greater need on the part of program recipients than was demonstrated by the non-
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recipient plaintiffs. Id. at 1210. 52. The Eighth Circuit held: “[a]lthough states may have great discretion in the area
of social welfare, they do not have unbridled discretion. They must still explain why they chose to favor one group of recipients over another. Thus, it is untenable to suggest that a state’s decision to favor one group of recipients over another by itself qualifies as a legitimate state interest.” Id. at 1211. 53. The classification imposed by Senate Bill 539 is as irrational as the classification struck down in Ranschburg. The means test in Senate Bill 539 is not rationally related to a legitimate governmental interest, and is arbitrary and harmfully unfair. No conceivable thread ties means testing a child’s adoptive parents’ gross income because that same child’s biological parents’ income exceeded an income standard, to the governmental interest in directing state funds to the most needy. Undisputedly needy children will be denied the benefit -- the children whose adoption assistance subsidies are selectively denied or terminated under the new law are, by definition, at least equally in need of the benefit as those who will receive the subsidies. 54. The challenged law is also unfair and not rationally related to saving money by directing state funds to the most needy because it will never apply a means test to the income of the adoptive parents of IV-E eligible children, no matter how high their gross income may be. Moreover, the state will continue to fund all IV-E eligible children, regardless of their adoptive parents’ gross income, with 38% state dollars. See 69 Fed. Reg. 68,372 (Nov. 24, 2004) (Federal Financial Participation in State Assistance Expenditures, FY 2006). At the same time, the law will deny or terminate adoption assistance subsidies completely to only certain special needs children whose adoptive parents’ gross income exceeds 200% of the federal poverty level or “FPL” ($32,180 for a family of three) solely because their biological parents’ income exceeded the 1996 AFDC standard.
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State dollars will thus fund subsidies for children in adoptive homes with higher gross incomes than the homes where the state will deny or terminate subsidies for equally needy children. Adoptive parents with more than one adoptive child could arbitrarily lose the subsidy for one child, but retain it for another. (Preliminary Injunction hearing, at 188.) 55. Finally, the asserted governmental purpose underlying the means test is wholly illusory and non-existent because the means test will not save taxpayer money, but will increase the overall cost of child welfare in the State of Missouri. The State irrationally projected fiscal savings to flow from Senate Bill 539 based upon (1) the clearly erroneous assumption that 43% of all existing adoption subsidy beneficiaries in Missouri were non-IV-E eligible when, in actuality, only 18% were non-IV-E eligible, (2) the clearly erroneous assumption that the adoption subsidy population in Missouri would grow at the flat rate of 1300 per year when, in actuality, adoptions in Missouri had steadily declined from 1,515 in FY2002 to 1,123 in FY2005 according to readily available DSS adoption program data, (3) the arbitrary and false assumption that children whose adoptive placements are disrupted as a result of the means test will experience, on average, a six month additional stay in foster care, even though readily available state foster care performance data demonstrated that additional stays of 24 months or longer should be expected, (4) a complete failure to account for the significant administrative and caseworker costs required to serve the increased foster care population resulting from Senate Bill 539, even though these cost impacts were fully recognized and anticipated by DSS officials, and (5) a failure to properly account for the legislature’s FY2006 adoption subsidy program appropriation at 250% of FPL, instead of 200% of FPL. (Morris Dep., Dec. 12, 2005, at 27-31; Table 28, February 2006 Children’s Services Management Report, Ex. 120; Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex.
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96, at 1; Preliminary Injunction hearing, at 46-47; Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 56. As a matter of law, the Court holds that the asserted governmental purpose for the adoption subsidy provisions of Senate Bill 539 is arbitrary and clearly erroneous. State of Minnesota v. Clover Leaf Creamery, 449 U.S. 456, 464 (1981). In the face of readily available DSS adoption data and the recognized additional foster care costs to flow from the means test, the budgetary savings asserted by the state could not reasonably be conceived to be valid by any reasonable governmental decision-maker.
COUNT III: Contracts Clause 57. The Contracts Clause of the United States Constitution prohibits the states from
enacting legislation that “impair[s] the Obligation of Contracts . . .” on a retroactive basis. United States Constitution, Art. I, Sec. 10, cl. 1. In adjudicating the legality of a statute under the Contracts Clause, the court must determine “whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.” Energy Reserves Group, Inc. v. Kansas Power and Light Co., 459 U.S. 400, 411 (1983) (citing Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244 (1978)). See also, Koster v. City of Davenport, Iowa, 183 F.3d 762, 766 (8th Cir. 1999). 58. The United States Supreme Court has established a three-part analysis for a constitutional inquiry under the Contracts Clause: “(1) does a contractual relationship exist, (2) does the change in the law impair that contractual relationship, and, if so, (3) is the impairment substantial.” Koster, 183 F.3d at 766 (quoting Honeywell, Inc. v. Minnesota Life and Health Ins. Guar. Assoc., 110 F.3d 547, 551 (8th Cir. 1997)). 59. Significantly, when the State is a party to the subject contract, the Court does not grant the customary level of deference it affords a state legislature when
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“reviewing economic and social regulation[.]” Energy Reserves Group, 459 U.S. at 412-413 (quoting United States Trust v. New Jersey, 431 U.S. 1, 22 (1977)). “Impairment of a State’s own contract … faces[s] more stringent examination under the Contract Clause than would laws regulating contractual relations between private parties.” Allied Structural Steel Company v. Spannaus, 438 U.S. 234, 245 n. 15 (1978)(citing United States Trust, 431 U.S. at 22-23). “When a State itself enters into a contract, it cannot simply walk away from its financial obligations.” Energy Reserves Group, 459 U.S. at 413 n.14. “Complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake.” Id. (quoting United States Trust, 431 U.S. at 26). 60. The Form CS-SA-2 Adoption Subsidy Agreements executed between the state of Missouri and adoptive parents, on behalf of their adopted children, constitute binding and enforceable contracts. 61. The Form CS-SA-2 Adoption Subsidy Agreement, Part 1, A, 1-5 obligates the State to “subsidize adoptive parents” for expenses which are categorized in the contracts as “maintenance,” “recurring expenses” and “non-recurring expenses.” 62. The Form CS-SA-2 Adoption Subsidy Agreement, Part I, C obligates the State “to provide the necessary authorization for participation [of the adopted child] in the Missouri Medicaid Plan….” 63. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 on their face impair the obligation of the state to subsidize the expenses of adopted parents through maintenance payments as stated in the Form CS-SA-2 Adoption Subsidy Agreement and the Form CS-SA-2 Attachments. 64. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 on their face impair the State’s contractual obligation to “provide necessary authorization for participation [of adopted children] in the Missouri Medicaid Plan” as stated in the Form CS-
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SA-2 Adoption Subsidy Agreement, Part I Sec. C. 65. The impairment of contractual rights caused by Sections 453.073.3(4) and
453.073.4 of Senate Bill 539 is substantial. Section 453.073.3(4) abrogates all existing agreements (“all existing agreements will have been deemed to have expired ….”). Section 453.073.3(4) transforms what were binding contractual obligations for adoption assistance into payments made “at the discretion” of the State and reviewable by the State alone on a yearly basis. 66. By making all pre-existing contracts expire after one year, Section 453.073.3(4) fundamentally alters the duration of existing contracts. Significantly, the State’s obligation to authorize the participation of adopted children in the Missouri Medicaid Plan becomes an item subject to a yearly review for eligibility under Sections 453.073.3(4) and 453.073.4. 67. Finally, Section 453.073.4 adds requirements and conditions for adoption assistance and Medicaid participation which were not part of the original contracts. 68. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 are unconstitutional under the Contracts Clause of Article I, Section 10 of the United States Constitution. Under the heightened scrutiny standard set forth in U.S. Trust, Allied Structural Steel and Energy Reserves, the subject statutory revisions are not reasonable as they are intended solely to further an asserted governmental interest in saving money. (See e.g. U.S. Trust, 431 U.S. at 26: “If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”) 69. As a matter of law, the Court finds that the state may not lawfully use the preprinted termination clause of Form CS-SA-2 Adoption Subsidy Agreement, Sec. V.C, to terminate existing adoption assistance agreements. This provision states,
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“(f)urther, either party at any time may, upon thirty (30) days written notice, terminate this agreement without the necessity of showing good cause for this termination. The Division does not intend to terminate this Agreement unless legal, fiscal, or other circumstances necessitate some adjustment in the Missouri Adoption Subsidy Program expenditures or procedures.” (Form CS-SA-2, Ex. 99, at V.C.) 70. First, the V.B. termination clause undermines the federal and state statutory schemes providing for the existence of the contracts in the first place. Missouri contract law requires the severance of clauses that violate public policy. See Swain v. Auto Services, Inc., 128 S.W.3d 103 (Mo. Ct. App. 2003) and High Life Sales Company v. Brown-Forman Corp., 823 S.W.2d 493 (Mo. 1992) (forum selection clauses voided for reasons of public policy; remainder of arbitration agreements held valid). 71. Where a party terminates a contract according to its provisions, the contract and all rights thereunder are wholly abandoned. After termination of a contract, all of the parties' unperformed undertakings are ended. HGS Homes, Inc. v. Kelly Residential Group, Inc. 948 S.W.2d 251, 255 (Mo. Ct. App. 1997); Thumm v. Lohr, 306 S.W.2d 604, 609 (Mo. Ct. App.1957). Such a result is clearly against public policy and unenforceable. The Adoption Assistance and Child Welfare Act of 1980, 42 U.S.C. Sec. 620-629(i), the Adoption and Safe Families Act of 1997, 42 U.S.C. Sec 670-679(b) and RSMO Chapter 453 were all enacted to help provide permanent homes for adopted children. 72. Second, operation of the termination clause would violate the principle that a party seeking to rescind or terminate a contract must act before the other party is placed in a position where it would be prejudiced by a rescission or termination. See e.g., Jetz Service Company, Inc. v. KC Citadel Apartments, L.L.C. Coinmach Corporation, 59 S.W.3d 527, 530 (Mo. Ct. App. 2001); Gilmartin Bros., Inc. v.
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Kern, 916 S.W.2d 324, 330 (Mo. Ct. App. 1995). While the parents did not adopt children solely because of the availability of financial assistance from the State, the parents relied upon the State to fulfill its contractual obligation to defray the considerable financial expenses required to raise and support special needs children. Adoptive parents, regardless of income, relied upon the State to provide financial assistance to special needs children until their eighteenth birthday. The State’s abandonment of the contracts is too late. Once the children were adopted, the parents became legally and morally obligated to raise their adopted children. 73. Finally, under Missouri law, specific contractual terms control over inconsistent general provisions. See e.g. A&L Holding Company v. Southern Pacific Bank, 34 S.W.3d 415, 418 (Mo. Ct. App. 2000); Tri-County Retreading, Inc. v. Bandag Inc., 851 S.W.2d 780 (Mo.Ct. App.1993). It is a well-accepted rule in Missouri that where one contract clause is general, and another is more limited and specific, the more specific clause acts to modify and nullify the more general clause. Id. at 784; In re Marriage of Buchmiller, 566 S.W.2d 256, 259 (Mo. Ct. App. 1978); Surface v. Ranger Insurance Company, 526 S.W.2d 44, 48 (Mo. Ct. App. 1975). 74. The purpose of the Form CS-SA-2 Adoption Subsidy Agreement is to make possible the permanent placement of special needs children in adoptive households. The general termination upon 30 days notice language in Part V., Paragraph B conflicts with the more specific contractual language contained in Part V. A(1)-(6) which identify particular events in the lives of the adoptive child and parent(s) that will terminate the agreement:
Assistance as agreed upon in this Agreement shall continue until: (1) The child’s 18th birthday or the age of 21 years … or; (2) The parent’s rights to the child have been terminated; (3) The parent is no longer financially responsible for the child; or (4) The child is no longer in the legal custody of the parent … or; (5) Child moved out of the home; or (6) Death of the child or both adoptive parents. 75. Use of the term “shall” demonstrates that the contract guarantees that assistance will continue until one of the specifically defined events occurs. Viewed in
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consideration of V.A and B and the overall purpose of the contract, Sec. V.B. provides the mechanism by which parents or the State would stop the receipt or payment of assistance following the occurrence of one of the events in V.A. Generalized terms in a contract are limited and restricted by the specific provisions. Surface v. Ranger Ins. Co., 526 S.W.2d 44, 48 (Mo. Ct. App. 1975). (2) Irreparable Harm to Plaintiffs 76. Absent the entry of a permanent injunction, the plaintiff children will suffer irreparable harm and the continuing threat of irreparable harm to the stability of their existing adoptive relationships and home settings. For children still in foster care, they will suffer irreparable harm to their prospects for finding a permanent home through adoption. It is undisputed that children will remain in government custody in foster care for longer periods of time as a direct result of the Senate Bill 539 adoption subsidy provisions. (Bullet Points Memo, Ex. 93.) 77. The Section 453.073.4 means test of Senate Bill 539, if permitted to take effect, will likely reduce the overall number of adoptions of special needs children in Missouri by reducing the pool of financially capable adoptive parents. This will cause irreparable harm to those foster children who, as a result, will not achieve permanency. (Trial testimony of Jeanette Wiedemeier Bower.) 78. The Section 453.073.4 means test of Senate Bill 539, if permitted to take effect, would substantially interfere with the financial ability of existing adoptive parents to care for and meet the unique needs of their adopted special needs children. This will cause harm to the adopted children in the form of either inadequate care or disrupted adoptions. (Trial testimony of Jeanette Wiedemeier Bower.) 79. For example, Named Plaintiff A.C., a 5 year-old boy, is an adopted special needs child with a congenital heart disorder. A.C. has already undergone 14 hospitalizations and requires additional heart surgeries for his serious medical condition. A.C.’s parent and Next Friend, Lana Capps, now earns an annual
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income of approximately $43,200, an amount that exceeds the Senate Bill 539 means test. Without the monthly $651 adoption subsidy provided by Missouri pursuant to the long-term adoption subsidy agreement executed at the time of A.C.’s adoption, however, Ms. Capps cannot sustain her household and financially meet the special needs of A.C. and his medical, psychiatric and educational care. 80. Similarly, Named Plaintiff J.A., another 5 year-old boy, is an adopted special needs child who suffers from severe anxiety, ADHD, oppositional defiant behavior disorder, depression and delayed learning. J.A. lived in some 23 different DSS foster homes from ages 8 through 10 and later resided in a group foster home following a failed suicide attempt. J.A’s special needs are quite substantial; and his parent and Next Friend, John Antonich, along with his spouse, Sharon, relies upon J.A.’s long-term $651 monthly adoption subsidy to provide special professional care. Mr. Antonich earns an annual income that also surpasses the Senate Bill 539 means test. (Testimony of John H. Antonich at the preliminary injunction hearing.) 81. On a prospective basis, the annual renewal provision of Senate Bill 539 will deter putative adoptive parents from choosing special needs children for adoption, as these otherwise interested parents will quite rationally worry about their long-term financial ability to support the adopted child. (Trial testimony of Jeanette Wiedemeier Bower.) 82. On a retroactive basis, the annual renewal provision threatens to negate the benefits now provided under the numerous existing adoption assistance agreements in Missouri. This basic threat to the viability of adoption assistance agreements creates an increased likelihood that numerous finalized adoptions will disrupt due to changed circumstances resulting in financial hardship within effected adoptive families and the risk that children’s special needs will go
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unaddressed. (Trial testimony of Jeanette Wiedemeier Bower.) 83. Affected special needs children, including the Named Plaintiffs, will suffer
irreparable harm in the form of lost permanency, lost services to meet their special needs, and lost stability. (Declarations of Next Friends, John Fischer, Robert Strange, Michael Patterson, Lana Capps, John Antonich, Lavada Johnson and Tammy Smith.) 84. Moreover, Senate Bill 539 threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the courtsupervised consent decree entered in G.L. et al. v. Gary Stangler et al, No. 770242-CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. (July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al., Ex. 56.) 85. In enacting Senate Bill 539, the state of Missouri and DSS were aware that the new eligibility scheme would undermine the essential purpose underlying the state’s adoption subsidy program: the achievement of timely permanency with adoptive families for special needs children. Thus, DSS staff prepared a memorandum entitled, “Bullet Points for Means Testing Adoption Subsidy,” (“Bullet Points Memo”) that provided as follows:
(a) “By implementing a means test on only the state only adoptions, children who are not IV-E eligible will be put at a disadvantage to being adopted versus children that are IV-E eligible.” (b) “By reducing the resources available to parents to adopt special needs
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children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy.” (c) “Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer.” (Bullet Points Memo, Ex. 93.) (3) Balancing the Equities 86. The irreparable harm to be suffered by plaintiffs absent injunctive relief substantially outweighs any threat of prejudice to defendant. 87. The only possible “harm” to the State is the loss of asserted “savings” to be generated by the new law; however, these purported savings are not only dwarfed by the undisputed harm to occur to the plaintiff children, they are false. 88. The state irrationally projected fiscal savings to flow from Senate Bill 539 based upon (1) the clearly erroneous assumption that 43% of all existing adoption subsidy beneficiaries in Missouri were non-IV-E eligible when, in actuality, only 18% were non-IV-E eligible, (2) the clearly erroneous assumption that the adoption subsidy population in Missouri would grow at the flat rate of 1300 per year when, in actuality, adoptions in Missouri had steadily declined from 1,515 in FY2002 to 1,123 in FY2005 according to readily available DSS adoption program data, (3) the demonstrably false assumption that children whose adoptive placements disrupt as a result of the means test will experience, on average, a six month additional stay in foster care, even though readily available state foster care performance data demonstrated that additional stays of 24 months or longer should be expected, (4) a complete failure to account for the significant administrative and caseworker costs required to serve the increased foster care
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population resulting from Senate Bill 539, even though these cost impacts were fully recognized and anticipated by DSS officials and (5) a failure to properly account for the legislature’s FY2006 adoption subsidy program appropriation at 250% of FPL, instead of 200% of FPL. (Morris Dep., Dec. 12, 2005, at 27-31; Table 28, February 2006 Children’s Services Management Report, Ex. 120; Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1; Preliminary Injunction hearing, at 46-47; Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 89. The costs of disrupting the lives of special needs children, diminishing their opportunities for adoption, and maintaining them in state custody for longer periods of time – the likely results of the SB 539 provisions – far surpass the false, and, even if true, comparably insignificant, cost savings asserted by the state. (4) The Public Interest 90. The public interest will be served by the entry of permanent injunctive relief. Public policy strongly favors the efficient and expeditious provision of permanency for abused and neglected children taken into the temporary custody of the state and its child welfare agency. Moreover, the public has a strong interest in the sanctity and enforceability of contracts entered into between the state of Missouri and its citizens. Missouri Senate Bill 539, if allowed to take effect, will undermine these vital interests. 91. There is immense value to society and to individual foster children to have those children move from the foster care system into permanent, adoptive homes when reunification is not possible. (CWLA, Adoption Standards, Ex. 85, at 5; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 92. The Senate Bill 539 means test will cause emotional and developmental harm to those children who fail to achieve permanency through adoption. It is widely
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recognized that there is a higher incidence of poverty, emotional and mental disability, and criminal behavior among foster youth who have attained adulthood, particularly among those foster youth who aged out of the foster care system without ever knowing a permanent family. (Trial testimony of Wiedemeier Bower.) 93. The challenged provisions will serve to undermine the core purpose of the federal/state adoption subsidy program: to promote permanent homes for special needs foster children. The public interest in furthering the purpose of the federal/state adoption subsidy program will thus be served by issuing a permanent injunction. Accordingly, the Court has previously signed an Order granting plaintiffs’ Motion for Permanent Injunction in this matter for the reasons stated in these Findings of Fact and Conclusions of Law.

Date: 5/9/2006

/s/Scott O. Wright SCOTT O. WRIGHT Senior United States District Judge

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 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION

E.C., J.L.,J.C.,T.G.,B.G., and A.G. by

)

Next Friend, Jill Katz, et al.,

)

)

Plaintiffs,

)

)

v.

)

No. 05-0726-CV-W-SOW

)

K. GARY SHERMAN, in his official

)

capacity as Director of the Missouri

)

Department of Social Services,

)

)

Defendants.

)

ORDER

Before the Court are plaintiffs’ Proposed Notice of Order Granting Injunctive Relief and

defendant’s Objections. The Court has reviewed the Proposed Notice as well as defendant’s

objections. The Court finds that defendant’s objections are well-taken.

Accordingly, it is hereby

ORDERED that the Court will not enter the Proposed Notice of Order Granting

Injunctive Relief submitted by plaintiffs. There is no need for such a Notice.

Dated: May 9, 2006

/s/Scott O. Wright SCOTT O. WRIGHT Senior United States District Judge

Case 2:05-cv-00726-SOW Document 105 Filed 05/09/06 Page 1 of 1

 
 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION

E.C., J.L.,J.C.,T.G.,B.G., and A.G. by

)

Next Friend, Jill Katz, et al.,

)

)

Plaintiffs,

)

)

v.

)

No. 05-0726-CV-W-SOW

)

K. GARY SHERMAN, in his official

)

capacity as Director of the Missouri

)

Department of Social Services, et al.,

)

)

Defendants.

)

ORDER

Before the Court is plaintiffs’ Second Unopposed Motion for Court to Set Aside Deadline

for Filing Motion for Attorney Fees (Doc. #114). Plaintiffs seek an additional thirty days within

which to file their Motion for Attorney Fees. Plaintiffs state that fee negotiations are continuing

with counsel for defendant. Defendant does not object to the requested extension of time.

Accordingly, for good cause shown, it is hereby

ORDERED that plaintiffs’ Second Unopposed Motion for Court to Set Aside Deadline

for Filing Motion for Attorney Fees (Doc. #114) is granted and plaintiffs shall have through July

20, 2006 to file a Motion for Attorney Fees.

Dated: June 19, 2006

/s/Scott O. Wright SCOTT O. WRIGHT Senior United States District Judge

Case 2:05-cv-00726-SOW Document 116 Filed 06/19/06 Page 1 of 1

 
 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G., each

)

a Minor by Next Friend, Jill Katz;

)

W.S., M.S., and D.S., each a minor by Next

)

Friend, Robert Strange;

)

M.P., a minor by Next Friend, Michael

)

Patterson;

)

A.C., a minor by Next Friend, Lana Capps; )

J.A., a minor by Next Friend, John Antonich; )

T.J. and A.J., each a minor by Next Friend, )

Lavada Johnson; and

)

N.S., a minor by Next Friend, Tammy Smith, )

)

Plaintiffs,

)

vs.

)

)

K. Gary Sherman, in his official capacity as )

Director of the Missouri Department of

)

Social Services,

)

)

Defendant.

)

)

Case No. 05-0726-CV-C-SOW Senior District Court Judge Scott O. Wright

ORDER Before the Court is Defendant’s Rule 60(a) Motion for Relief from Judgment (Doc. #121), on which the Plaintiffs take no position. Having duly considered defendant’s Motion, it is hereby ORDERED that Defendant’s Rule 60(a) Motion for Relief from Judgment (Doc. #121) is granted. It is further ORDERED that the Order Granting Permanent Injunctive Relief entered May 1, 2006 is vacated. It is further

1 Case 2:05-cv-00726-SOW Document 122 Filed 08/04/06 Page 1 of 2

ORDERED that the May 9, 2006 Findings of Fact and Conclusions of Law in Support of said May 1, 2006 Order are vacated. It is further
ORDERED that the Court will separately enter an Amended Order and Final Judgment Granting Permanent Injunctive Relief and an Amended Findings of Fact and Conclusions of Law in Support of the Court’s Amended Order and Final Judgment Granting Permanent Injunctive Relief as of today’s date.

Date: 8/4/06

/s/Scott O. Wright Scott O. Wright Senior United States District Court Judge

2 Case 2:05-cv-00726-SOW Document 122 Filed 08/04/06 Page 2 of 2

 
 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G., each )

a Minor by Next Friend, Jill Katz;

)

W.S., M.S., and D.S., each a minor by Next )

Friend, Robert Strange;

)

M.P., a minor by Next Friend, Michael

)

Patterson;

)

A.C., a minor by Next Friend, Lana Capps; )

J.A., a minor by Next Friend, John Antonich;)

T.J. and A.J., each a minor by Next Friend, )

Lavada Johnson; and

)

N.S., a minor by Next Friend, Tammy Smith, )

)

Plaintiffs,

)

)

vs.

)

)

K. Gary Sherman, in his official capacity as )

Director of the Missouri Department of

)

Social Services,

)

)

Defendant.

)

Case No. 05-0726-CV-C-SOW Senior District Court Judge Scott O. Wright

AMENDED ORDER AND FINAL JUDGMENT GRANTING PERMANENT INJUNCTIVE RELIEF
This cause coming to be heard on Plaintiffs’ Complaint and Defendant’s Answer thereto, the Court having conducted a trial on the merits on April 27, 2006, all parties having been present through and represented by counsel, the Court having considered and weighed the evidence introduced into the trial record, and having made certain factual and legal determinations reflected in the Court’s separate findings of fact and conclusions of law, the Court also having read the proposed findings of fact, conclusions of law and legal memoranda

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submitted by the parties and having heard oral argument by counsel, IT IS HEREBY PROVIDED: THE COURT FINDS: 1. Plaintiffs have prevailed on the merits of the statutory and constitutional causes averred in Counts I, II and III of their complaint. 2005 Missouri Senate Bill 539’s proposed amendments to Missouri Revised Statutes Section 453.073.3(4) and Section 453.073.4 violate federal law. 2. Plaintiffs have demonstrated that they will suffer irreparable harm absent the entry of permanent injunctive relief, 3. The irreparable harm to be suffered by Plaintiffs absent injunctive relief substantially outweighs any threat of harm to Defendants flowing from this permanent injunction order, and 4. The public interest is and will be served by the entry of permanent injunctive relief. THE COURT FURTHER ORDERS:
1. The preliminary injunction order previously entered by this Court in this cause is vacated and replaced by this order. 2. Defendant, K. Gary Sherman, in his official capacity as the Director of the Missouri Department of Social Services, along with DSS’s officers, agents, employees and attorneys, are permanently enjoined from implementing the provisions of Missouri Senate Bill 539, that amend Missouri Revised Statutes § 453.073, as well as any rules or regulations promulgated in furtherance of the challenged provisions of Missouri Senate Bill 539. No act may be taken to put into operation or otherwise give any effect to the intent of the provisions of Missouri Senate Bill 539 that amend Missouri Revised Statutes § 453.073.
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3. Plaintiffs are entitled to recover their expenses of litigation, including reasonable attorneys fees and nontaxable costs, pursuant to 42 U.S.C. § 1988 and Fed. R. Civ. P. 23(h). 4. The Court today issues amended findings of fact and conclusions of law consistent with this order.

Date: 8/4/06

/s/Scott O. Wright Scott O. Wright Senior United States District Judge

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 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

E.C., J.L., J.C., T.G., B.G., and A.G.,

)

each a minor by Next Friend, Jill Katz;

)

W.S., M.S., and D.S., each a minor by Next )

Friend, Robert Strange;

)

M.P., a minor by Next Friend, Michael

)

Patterson;

)

A.C., a minor by Next Friend, Lana Capps; )

J.A., a minor by Next Friend, John Antonich;)

T.J. and A.J., each a minor by Next Friend, )

Lavada Johnson; and

)

N.S., a minor by Next Friend, Tammy Smith, )

)

Plaintiffs,

)

)

vs.

)

)

K. Gary Sherman, in his official capacity as )

Director of the Missouri Department of

)

Social Services,

)

)

Defendant.

)

)

No. 05-726-CV-W-SOW

AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF THE COURT’S
AMENDED ORDER AND FINAL JUDGMENT GRANTING PERMANENT INJUNCTIVE RELIEF
Plaintiffs seek to permanently enjoin harmful and unlawful changes to Missouri’s
adoption subsidy program in Missouri Senate Bill 539.1 Specifically, plaintiffs challenge (1)

1 The certified class includes “all future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a court-ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.” (September 29, 2005 Order of Judge Scott O. Wright.) Following a full evidentiary hearing, a preliminary injunction was issued on September 8, 2005. After a trial on the merits conducted on April 27, 2006, on May 1, 2006, this Court issued an Order Granting Permanent Injunctive Relief with a further order to be entered including findings of fact and conclusions of law. This Court entered an Amended Order and Final Judgment Granting Permanent Injunctive Relief as of today’s date.
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changes to Missouri Revised Statutes Section 453.073.3(4) concerning the imposition of a blanket policy that retroactively makes all existing adoption subsidy contracts expire on their one year anniversary, makes all new contracts automatically expire annually, with renewals in all circumstances at the sole discretion of the DSS Director2; and (2) the creation of a new Section 453.073.4 concerning the imposition of a means test on the income of existing or prospective adoptive parents of a targeted group of foster children.3
Plaintiffs assert (1) that the automatic expiration, blanket one year duration and discretionary renewal provisions violate and are preempted by the Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. §§ 620-629(i) and 670-679(b) (collectively “AACWA”); (2) that the means test in Senate Bill 539 violates the Equal Protection Clause of the Fourteenth amendment to the U.S. Constitution; and (3) that both challenged provisions, as they pertain to those children with existing subsidy contracts, violate the Contracts Clause of the U.S. Constitution.
Plaintiffs’ showing of a significant risk of irreparable harm if the law is not permanently enjoined has not been rebutted by any contrary facts in the record. Plaintiffs have adduced evidence showing that (1) hundreds, if not thousands, of children who already have contracts entitling them to adoption assistance maintenance subsidies until they turn 18 will have those subsidies permanently terminated as a result of the challenged law; (2) children still in state custody in foster care who are targeted by the challenged law will be disadvantaged in relation to other foster children in their chances of ever getting adopted; (3) children still in state custody in foster care who are targeted by the challenged law will be
2 Senate Bill 539 amends Section 453.073.3(4) of RSMo to require: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will be deemed to have expired one year after they were initially entered into.” (Senate Bill 539 at 453.073.3(4).) 3 Senate Bill 539 amends Section 453.073.4 of RSMo to require: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.3(4).)
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forced to stay in custody longer as a direct result of the challenged law; (4) the new law will have the likely effect of deterring parents from adopting special needs foster children and will likely shrink the pool of available adoptive parents for such children - even without implementation of Senate Bill 539, there are currently almost 2,000 children in foster care awaiting adoption; and (5) even Title IV-E eligible children who currently hold contracts for subsidies will at best continue to receive payments until June 30, 2006, after which renegotiation is solely at the discretion of the DSS Director.
While the risk of harm to plaintiffs is considerable, no harm will befall defendant from a permanent injunction. The evidence presented in the record shows that defendant made obvious and questionable assumptions in projecting savings from the challenged law. Additionally, it is undisputed that foster care is significantly more expensive than adoption assistance subsidies, and defendant concedes that the law will directly result in children spending longer time in foster care. The State will not save money under Senate Bill 539; it will lose money.
Plaintiffs have firmly established success on the merits of their claims. Section 453.073.3(4) plainly applies to all subsidy contracts, both “IV-E eligible” children and “non IV-E eligible” children. The automatic expiration, blanket one year duration and discretionary renewal policy violates, and are preempted by, the plain language of 42 U.S.C. 673(a)(3), which prohibits any change in the amount of the subsidy (including shrinking the amount to zero by automatically terminating the contract) without the concurrence of the adoptive parents. The challenged provision also violates several explicit official issuances of the federal Department of Health and Human Services (HHS). The Court was presented at trial with an undisputed and unrebutted letter from HHS to defendant Sherman, outlining the very same violations of federal law and official HHS issuances.
Defendant’s only defense to preemption under the statute is that all contracts (even those for IV-E eligible children) expire in one year, but that DSS “intends” at present not to
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do what their own statute allows for the IV-E eligible children. This supposed “intent” – never reduced to even a written policy and included solely as a position in litigation – is belied by Senate Bill 539 and current DSS policies unchanged by the new law. DSS policy makes an explicit distinction between contracts that are reviewed and may be “renewed” and those that “expire” and must be “renegotiated.” See Plaintiffs’ Exh. 48, at 30.4.G. Since Senate Bill 539 deems every contract to “expire” on its one-year anniversary, defendant’s position is logically inconsistent and easily rejected. Defendant would remain free to change the “intent” next month.
Plaintiffs have established success on their Equal Protection claim. Defendant’s argument that the two groups -- those targeted for the means test and those not targeted – are not similarly situated because of the different funding streams misses the point entirely: the federal AACWA is silent on means testing non-IV-E eligible children, but does not require defendant to target that group for discriminatory treatment – the federal law actually bans means testing, as does accepted adoption subsidy policy and practice standards. Missouri has chosen to target the non-IV-E eligible children for affirmative discriminatory treatment. The only way to equally apply the Senate Bill 539's means test would have been to means test all adoptive parents, but the federal statute expressly bans that practice.
The means test triggers strict scrutiny because it infringes on plaintiffs’ fundamental right to be free from unnecessarily prolonged government confinement, and the law is not narrowly tailored to a compelling state interest. Even if the Court were to evaluate the means test using rational basis scrutiny, it would not survive. Senate Bill 539's means test is not rationally related to directing money to the most needy children and families because: (1) the income of the biological parents of the targeted group is not rationally related to these children’s adoptive parents’ income; (2) the adoptive parents’ gross income test imposed by the new law is not rationally related to the child’s needs or the family’s actual expenses; (3) all of the children excluded are by definition as needy as those not excluded under the new
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law; and (4) the state expends 40% of state dollars on subsidies for all IV-E eligible children without regard to the adoptive parents’ income. Finally, the means test is not rationally related to saving the state money because the evidence shows that the state will lose money under the new law.
Plaintiffs have also established success on their Contracts Clause claim. It is not disputed that the subsidy agreements are legal contracts and that the State is a party to the contracts, triggering heightened scrutiny. Nor is it disputed that the retroactive termination impairs children’s rights under the contracts – indeed the impairment is total since children will permanently lose their subsidies and Medicaid benefits. Defendant’s false cost savings argument fails to provide a sufficient governmental justification for the substantial impairment. Defendant points only to a “termination without cause” provision in the individual contracts, which is plainly void under both applicable contract law and public policy.
Finally, a permanent injunction will further the public interest. The parties do not dispute that the central premise of the entire federal-state adoption subsidy program, accepted good subsidy policy and practice, and the State’s own policies, is to increase opportunities for the adoption of special needs foster children so they do not grow up as state wards. The challenged provisions run directly counter to this important public policy; the permanent injunction promotes this critical public interest.
For all these reasons, as set forth in the findings of fact and conclusions of law presented below, the Court is entering a permanent injunction in this case.
I. FINDINGS OF FACT Adoption Assistance Subsidies: Promotion of Permanency for Special Needs Foster Children
1. The state of Missouri, through the Department of Social Services (“DSS”), Children’s Division, acts to remove children who are subject to abuse and/or neglect at home into the temporary custody of the state and to provide care and services to those 5
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vulnerable children until a permanent placement can be secured, either through reunification with their biological parent(s) or through adoption by a new family when reunification is not in the child’s best interests. Such services are referred to as “permanency” services. (DSS Child Welfare Manual, Sec. 1, Ch. 1, Ex. 77, at 1.1, 1.2.) 2. DSS has statutory responsibility and authority for accepting and investigating all reports of child abuse or neglect within the state under RSMo Ch. 210 and for serving the needs of Missouri’s abused and neglected children through temporary foster care and permanency services under RSMo Ch. 207 and 211. (See DSS Child Welfare Manual, Philosophical Base of Child Welfare Practice, Ex. 76.) 3. Defendant, K. Gary Sherman, is the Director of DSS and, in that capacity, oversees the administration and management of the Children’s Division and the implementation of its child welfare programs and services, including adoption services. (RSMo Section 660.010.1; Sherman Dep., Jan 26, 2006, at 4-5.) 4. The DSS Children’s Division serves the citizens of Missouri and is charged with advancing the public’s interest in the safety and well being of Missouri’s children, including all special needs foster children residing in state custody. (DSS Child Welfare Manual, Sec. 1, Ch. 1, Ex. 77, at 1.2.) 5. As of December 31, 2005, there were 10,772 foster children in the custody of DSS’s Children Division. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 1.) 6. For all children adopted from DSS custody in FY2003 and FY2004, the average length of stay in foster care was 33 and 31.7 months, respectively, which is longer than the national standard of 24 months promulgated by the U.S. Department of Health and Human Services. (Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1.)
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7. As of December 31, 2005, a total of 1891 foster children in DSS custody had been assigned a permanency plan or goal of adoption. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 1.) As of January 31, 2006, a total of 1919 foster children in DSS custody had been assigned a permanency plan or goal of adoption. (Caseload Counter, http://www.dss.mo.gov/mis/clcounter/history.htm., Ex. 53.)
8. As of December 31, 2005, the total number of foster children who were adopted and receiving adoption assistance maintenance subsidies was 11,450. (Defendants’ Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 100, at 2.)
9. As of December 31, 2005, 8,845 of 11,450 former foster children who were adopted and receiving adoption assistance maintenance subsidies, received subsidies funded by a combination of federal and state funds, also known as Title IV-E subsidies. (Id. at 2.)
10. For those children receiving adoption assistance maintenance subsidies paid with a combination of federal and state funds, the allocation is 62% federal funding and 38% state funding. (69 Fed. Reg. 68,372 (Federal Financial Participation in State Assistance Expenditures, FY2006), Ex. 92.)
11. As of December 31, 2005, 2,605 of 11,450 former foster children who were adopted and receiving adoption assistance maintenance subsidies received subsidies funded by solely state funds.
12. Children enter state foster care systems because they are abused and/or neglected, and for some reason their biological parent(s) could not keep them safe. The goal of the foster care system is to attempt reunification with biological parent(s) and to create a plan to help parents make the necessary changes in their lives or living conditions so that their child or children can be returned to their care. Foster care is intended to be a short-term, temporary stay for children. (CWLA, Family Foster Care Standards, Ex.
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114, at 0.13; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3; trial testimony Wiedemeier Bower.) 13. Nationally, approximately 55 percent of children are returned to their biological homes. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3, citing to AFCARS data, 2005, Ex. 82; trial testimony of Wiedemeier Bower.) 14. In some cases, however, where children cannot be safely returned to their birth parents, their permanent case plan will be identified as adoption, and social workers working on behalf of these children will begin to look for permanent adoptive homes for them. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3-4; trial testimony of Wiedemeier Bower.) 15. A majority of children in foster care who need permanent adoptive homes require additional services to meet their special needs, often due to the circumstances of their abuse or neglect. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 3-4; trial testimony of Wiedemeier Bower.) The array of services they need to address their special needs is both extensive and varied, and can include, without limitation, specialized medical care, dental care, mental health care, physical therapy, occupational therapy, play or talk therapy, or educational tutoring. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115 at 4; trial testimony of Wiedemeier Bower.) 16. Missouri state policy, as stated in the DSS Child Welfare Manual, provides, “[i]n keeping with the philosophical base that every child is entitled to a safe, secure and permanent home, the Children’s Division is obligated to make a diligent search for appropriate adoptive placements for those children for whom adoption has become the permanent plan.” (DSS Child Welfare Manual, Sec. 4, Ch. 27, Ex. 78, at 27.1.) 17. Congress enacted the Title IV-E Adoption Assistance Act to “establish a program of federal support to encourage adoptions of children with special needs.” (1980 U.S. Code Cong. and Admin. News, Ex. 36, at 1448, 1460.)
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18. The State of Missouri has a qualifying “State Plan for Title IV-E of the Social Security Act Foster Care, Independent Living and Adoption Assistance” (“Missouri State Plan”) and receives federal funding for adoption assistance. Missouri’s DSS is the state agency responsible for submitting the Missouri State Plan to the Secretary of Health and Human Services for approval and for administering the plan. (Missouri Title IV-E State Plan, Ex. 45.)
19. The Missouri Title IV-E State Plan states “As a condition of the receipt of Federal funds under title IV-E of the Social Security Act … the [state agency] … hereby agrees to administer the program in accordance with the provisions of this State plan, title IV-E of the Act, and all applicable Federal regulations and other official issuances of the Department.” ( Missouri Title IV-E State Plan, Ex. 45, at 2.) (emphasis added)
20. The state of Missouri, through DSS, is to provide basic shelter, food and care to all foster children in its legal custody. To meets this obligation, DSS remits foster care maintenance payments to all foster families, group homes and child-placing agencies licensed by the state to provide day-to-day care to the foster child population. (DSS Child Welfare Manual, Sec. 4, Ch. 11, Atmt. A, Ex. 101; Missouri State Plan, Ex. 45, at Sec. 2.) The obligation of the state to remit these foster care maintenance payments continues until a child exits from state legal custody by virtue of reunification, adoption or attainment of adulthood. (See generally, HHS Child Welfare Policy Manual, Section 8.3 (foster care maintenance payment programs.)) (DSS Child Welfare Manual, Sec. 4, Ch. 11, at 11.12, Ex. 123; trial testimony of Wiedemeier Bower.)
21. The Federal Child Welfare Policy Manual of the United States Department of Health and Human Services (“HHS”), Administration for Children and Families, states: … “the legislative history [of the Adoption Assistance Act] indicates that Congress was
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concerned primarily with moving children in State foster care systems into permanent adoptive homes when appropriate. The Title IV-E adoption assistance program, therefore, was developed to provide permanency for children with special needs in public foster care by assisting States in providing ongoing financial and medical assistance on their behalf to the families who adopt them.” (Federal Child Welfare Policy Manual, ACYF-CB-PA-01-01, Jan. 23, 2001, Ex. 40; expert report of Jeanette Wiedemeier Bower, Ex. 115, at 3, 4; trial testimony of Wiedemeier Bower.) 22. Missouri State DSS policy defines a special needs child as “any child in the custody of the Children’s Division, Division of Youth Services, Department of Mental Health or a Missouri licensed child-placing agency and who meets one of the following conditions: minority parentage; handicapping condition – mental, physical or emotional; member of a sibling group …; guarded prognosis …; is over five years of age, without any of the above characteristics. Children who meet the criteria for special needs may qualify for adoption subsidy.” (DSS Child Welfare Manual, Sec. 4, Ch. 27, Ex. 47, at 27.4.2.) 23. Missouri State DSS policy states: “[c]hildren placed in the custody of the Division with a history of abuse and/or neglect may be defined as children having special needs and are, therefore, eligible for subsidy.” All current or former foster children are designated as “special needs” for purposes of an adoption assistance subsidy in Missouri. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.C; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 5; trial testimony of Wiedemeier Bower.) 24. Adoptive children meeting the definition of “special needs” in Missouri receive adoption assistance subsidies funded by either a combination of federal and state dollars or solely by state dollars. Children with adoption subsidies funded by a combination of federal and state dollars are also referred to as Title IV-E eligible
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children. (Trial testimony of Jeanette Wiedemeier Bower.) Children with adoption subsidies funded by state dollars only are referred to as non-Title IV-E eligible children. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1; testimony of Weidemeier Bower.) 25. There is significant value to society and to an individual foster child to have that specific child move from the foster care system into a permanent, adoptive home when reunification is not possible. (CWLA, Adoption Standards, Ex. 85, at 5; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 26. CWLA standards state that “. . . subsidies may make possible the adoption of children who have special medical needs or are a part of a special population for whom these benefits are intended.” (CWLA, Family Foster Care Standards, Ex. 114, at 2.100; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 27. The federal adoption assistance program has been credited with significantly decreasing the number of children languishing in foster care by finding them permanent adoptive families. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4, citing Bussiere, in Segal, 1985, Ex. 87; trial testimony of Wiedemeier Bower.) With adoption subsidies, more children find permanent loving homes and fewer graduate or “age out” of the foster care system. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 28. A widely accepted policy reason behind the provision of adoption subsidies for children is that it eliminates financial barriers to adoption for parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6-7; trial testimony of Wiedemeier Bower.) 29. The Missouri Child Welfare Manual states: “[s]ignificant to the use of an
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adoption/legal guardianship subsidy, is the realization that without this resource a family would not otherwise have the resources to provide permanency to a special needs child.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1.) 30. The federal Child Welfare Policy Manual states that the intended beneficiaries of adoption assistance payments are the special needs children themselves, not their adoptive parents. (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.4.) ("Unlike other public assistance programs in the Social Security Act, the IV-E adoption assistance program is intended to encourage an action that will be a lifelong social benefit to certain children and not to meet short term monetary needs during a crisis. Further, the adoptive parents' income is not relevant to the child's eligiblity for the program.") (Expert report of Jeanette Wiedemeier Bower, Ex. 115, at 4-5; trial testimony of Wiedemeier Bower.) Federal and State Adoption Assistance Subsidies 31. Special needs children qualify for adoption subsidies funded with a combination of state dollars and federal dollars (using federal Title IV-E funds) by meeting one of the following eligibility categories: (1) the special needs child was eligible for Aid for Families With Dependent Children program (AFDC) benefits (as defined in 1996) during the month in which court proceedings for adoption were initiated, or was eligible for said benefits within 6 months prior to that time; or (2) the special needs child was eligible for Supplemental Security Income (“SSI”) programs under the Social Security Act before adoption; or (3) the special needs child’s parent was in foster care and receiving Title IV-E funds that covered both the parent and the child when the adoption was initiated; or (4) the special needs child previously received adoption assistance, and his or her adoptive parent died or the adoption was dissolved. The special needs child need only meet one of the above four eligibility prongs to claim a right to Title IV-E adoption assistance. (See 42 U.S.C. Sec. 673; Expert
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Report of Jeanette Wiedemeier Bower, Ex. 115, at 5-6; trial testimony of Wiedemeier Bower) 32. The primary qualification for Title IV-E eligibility for adoption assistance subsidies is through AFDC eligibility. The other categories involve a relatively small group of children. The SSI eligible children are generally medically fragile or medicallyoriented; the minor-child-of-a-foster-child eligibility allows infants in foster care to receive IV-E eligibility if the parent in custody is IV-E eligible and the minor-parent and minor-child live together; and the death/dissolution eligibility assumes that the child’s adoption is finalized and the child is coming back into the care of the department after the adoptive parents’ death or the legal dissolution of the adoption. (See 42 U.S.C. Sec. 673; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6.) 33. In general, an AFDC child is a child who is removed from a low-income birth family where only one parent is in the home such that there is a deprivation of parental support. To receive Title IV-E adoption assistance, the child must be removed from their biological home either through a voluntary placement agreement or as a result of a judicial determination that continuation in the home would be contrary to the welfare of the child. If the AFDC child is special needs and meets either of these removal qualifications, the child will receive a federal-state funded adoption assistance subsidy upon adoptive placement. (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2B.13; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 6; trial testimony of Wiedemeier Bower.) 34. Eligibility for a federally subsidized adoption assistance agreement under IV-E is based upon 1996 AFDC income thresholds, which have not been adjusted for inflation. See 42 U.S.C. 673(a)(3). What was defined as “poor” ten years ago remains the standard today under the Title IV-E adoption assistance program. (Expert Report
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of Jeanette Wiedemeier Bower, Ex. 115, at 6) 35. Special needs children not meeting one of the four Title IV-E eligibility prongs
receive adoption assistance payments under the terms of the state-funded adoption subsidy program in Missouri. As stated in the Missouri Department of Social Services (“DSS”) Child Welfare Manual, “[a]n adoption subsidy is a service that may be used to assist in providing permanency for children who, because of special needs, might not otherwise be adopted, and for whom a family is not readily available.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.1.) 36. Missouri has provided a single system for adoption assistance maintenance subsidies to both IV-E eligible and non IV-E eligible children continuously for over 25 years. (Simmens, Preliminary Injunction hearing, at 38-41.) 37. The DSS Child Welfare Manual states that an adoption subsidy agreement must be approved by the Division Director and executed on a Form CS-SA-2 contract document. “The CS-SA-2 … is a legally binding agreement.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.2.) The CS-SA-2 Adoption Subsidy Agreement is a pre-printed form contract prepared by DSS and presented to adoptive parents for signature on behalf of their special needs adopted child. (Form CS-SA-2, Ex. 99) 38. The Form CS-SA-2 Adoption Subsidy Agreement states the contractual obligations of the State to the adoptive parent and the adopted children. The State agrees to subsidize adoptive parents for “maintenance,” “recurring expenses for special services” and other “nonrecurring expenses.” (Form CS-SA-2, Ex. 99, at 2.) 39. Form CS-SA-2 Adoption Subsidy Agreement states the contractual obligation of the State “to provide the necessary authorization for participation [of the adopted child] in the Missouri Medicaid Plan….” (Form CS-SA-2, Ex. 99, at 2.) 40. The DSS Child Welfare Manual states: “[s]ubsidy agreements … are considered a
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contract, which must be reviewed annually and renewed prior to the end of the Missouri fiscal year (i.e., June 30, 2XXX). Contracts are automatically renewed unless changes are agreed to as a result of the annual review or requested by the adoptive parent(s) or legal guardian(s). However if approved services on the attachment (CS-SA-2 ATT/CS-LG-2 ATT) have expired, a new attachment must be developed between the family and the agency.” (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.4.G.) 41. In FY2006, which runs from July 1, 2005 through June 30, 2006, approximately 11,400 children formerly in the Missouri foster care system will be beneficiaries of adoption assistance subsidy contracts between Missouri and the children’s adoptive parent(s). (Defendant’s Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, at 2.) 42. All adoption subsidy agreements executed by the state of Missouri utilize state funds to meet the government’s monthly payment obligations. Title IV-E adoption subsidy agreements are funded 62% by federal matching dollars and 38% by state dollars. State-only adoption subsidy agreements are funded 100% by state dollars. (69 Fed. Reg. 68,372 (Federal Financial Participation in State Assistance Expenditures, FY2006), Ex. 92.) The Governmental Purpose Underlying Senate Bill 539 43. Missouri Governor Matt Blunt signed Senate Bill 539 into law on April 26, 2005. By its terms, Senate Bill 539 has an effective date of August 28, 2005. (Current Bill Summary, published at: www.senate.mo.gov, Ex. 34). 44. Governor Blunt and the Missouri legislature enacted Senate Bill 539 with the stated intent to “reform Missouri’s social welfare system to ensure that taxpayer funded assistance is getting to the most needy ….” (Press Release from the Office of Governor Matt Blunt, May 13, 2005, Ex. 54, at 1.) As stated in the accompanying
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emergency rule, the law was necessary “to achieve a balanced state budget for SFY 2006.” (Emergency Rule 13 CSR 35-38.020, Ex. 50.) Emergency Rule 13 CSR 3538.020 became effective on August 28, 2005, and expired on February 23, 2006. 45. The State of Missouri and the Department of Social Services (“DSS”), through duly authorized and responsible state officials, have identified a single governmental purpose to be advanced by the means test provision of Senate Bill 539: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the state’s most needy families. (Renne Dep., Jan. 26, 2006, at 31-32; Boies Dep., Jan. 18, 2006, at 103; Kinkade Dep., Jan. 18, 2006, at 64; Martin Dep., Dec. 13, 2005, at 37; Martin, Preliminary Injunction hearing, at 164.) 46. William Boies, a Budget Analyst 2 in the Budget and Planning Division of the state Office of Administration (“OA”), testified at his deposition regarding the origin and development of the adoption subsidy means test provision during the FY2006 budget process in Missouri. Boies testified that following the November 2004 gubernatorial election, the FY2006 budget process (for the FY beginning July 1, 2005) was turned over to Governor-Elect Blunt’s transition team. Michael Keathley, who was later named Commissioner of OA by Governor Blunt, headed the transition team within OA. (Boies Dep., Jan. 18, 2006, at 2, 20-25.) 47. William Boies testified in his deposition that Keathley, upon joining OA in November or December 2004, took note of the historic rate of growth in the costs of the adoption subsidy program in Missouri when reviewing the FY2006 departmental budget submitted by DSS and inquired about the program. Mr. Keathley specifically inquired about methods that could be used to control further growth in the program and suggested means testing recipient adoptive families to reduce cost. (Boies Dep., Jan. 18, 2006, at 32-39.)
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48. Thereafter, OA and DSS staff developed a means test scheme with the intended purpose of reducing costs within the Missouri adoption subsidy program by directing a decreased subsidy appropriation to low income adoptive families only, regardless of the needs of the adoptive child. The only governmental purpose to be served by the means test was cost reduction. (Boies Dep., Jan. 18, 2006, at 103.)
49. William Boies testified at his deposition that he never heard discussion of any other governmental purpose or justification for the new eligibility scheme. (Boies Dep., Jan. 18, 2006, at 103.)
50. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, testified at her deposition that the only policy justification she heard discussed for the Senate Bill 539 means test was “cost savings.” (Martin Dep., Dec. 13, 2005, at 37.)
51. Amy Martin also testified at her deposition that she was not able to identify any way in which the Senate Bill 539 provisions regarding adoption subsidies would serve to benefit children, whether they were in adoptive or foster care. (Id. at 38.)
52. Steve Renne, Acting Director of DSS through April 1, 2005, now Deputy Director of DSS, also testified to his understanding that the Senate Bill 539 means test was designed simply to achieve cost reductions in the state’s adoption subsidy program. (Renne Dep., Jan. 26, 2006, at 31-32.)
53. Defendant K. Gary Sherman, the current Director of DSS, testified at his deposition that he played no role in the development of Senate Bill 539 and its adoption subsidy provisions due to the timing of his nomination for DSS Director by Governor Blunt and subsequent Senate confirmation, which occurred less than one month before the enactment of Senate Bill 539. (Sherman Dep., Jan. 26, 2006, at 5, 10, 11, 23.)
54. Boies participated in a final FY2006 DSS budget presentation to Governor Blunt in
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January 2005, conducted by means of a telephone conference that occurred shortly before the January “State of the State” address. During this conference, the means test and cost reduction scheme, later made law through Senate Bill 539, were presented to and discussed with Governor Blunt. Neither the Governor nor his staff identified additional policy bases for the means test. (Boies Dep., Jan. 18, 2006, 98102.) 55. On Jan 26, 2005, Governor Blunt submitted a budget that called for reductions in the adoption subsidy program consistent with a means test set at 200% of the federal poverty level (“FPL”.) (Initial Summary of Missouri Governor’s Budget Proposal, Feb. 11, 2005, Ex. 51.) 56. The federal poverty guidelines, which include the FPL, are published annually by HHS for administrative purposes, including for use in determining financial eligibility for certain federal programs. (HHS Poverty Guidelines, 2005 Ex. 42.) 57. DSS staff, specifically Patrick Luebbering, Assistant Deputy Director of the Family Support and Children’s Division, prepared a memorandum in the course of researching the fiscal impact of the proposed changes in the adoption subsidy program, entitled, “Bullet Points for Means Testing Adoption Subsidy,” (“Bullet Points Memo”) that stated among other things:
(a) “By implementing a means test on only the state only adoptions, children who are not IV-E eligible will be put at a disadvantage to being adopted versus children that are IV-E eligible.” (b) “By reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy.”
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(c) “Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer.” (d) “Projecting an accurate amount for the savings is difficult.” (Bullet Points Memo, Ex. 93; Luebbering Dep., Dec. 13, 2005, at 50.) The Bullet Points Memo was distributed from DSS to OA, and from OA to the Office of the Governor in revised form. (Boies Dep., Jan. 18, 2006, at 84-87) Senate Bill 539, Section 453.073.3(4): Blanket Annual Renewal and Automatic Expiration Provision 58. Senate Bill 539 amends Section 453.073.3(4) of RSMo to provide: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) The text of Section 453.073.3(4), as amended by Senate Bill 539, makes no distinction between and applies to both federal/state funded and state-only funded adoption assistance agreements. 59. The HHS Child Welfare Policy Manual, Section 8.2D.2, states: “States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.” (HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.2) 60. Senate Bill 539 violates federal policy which prohibits the blanket limitation on duration or termination of all adoption assistance agreements. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 8-10; trial testimony of Wiedemeier Bower.) 61. The HHS Child Welfare Policy Manual, Section 8.2D.5, provides: “Once an adoption assistance agreement is signed and in effect, it can be terminated under three
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circumstances only: (1) the child has attained the age of 18 (or 21 if the state has determined that the child has a mental or physical disability which would warrant the continuation of assistance); (2) the State determines that the adoptive parents are no longer legally responsible for the support of the child; or (3) the State determines that the adoptive parents are no longer providing any support to the child.” ( HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.5.) 62. HHS Child Welfare Policy Manual, Sec. 8.2B.9 similarly states: “Once a child has been determined eligible and is receiving adoption assistance, a State may terminate the assistance only under the circumstances specified at section 473(a)(4) of the Social Security Act.” (HHS Child Welfare Manual, Ex. 59, at Sec. 8.2B.9.) 63. The DSS Child Welfare Manual states that the Division may close an adoption subsidy upon one of the following events, “(a) The child reaches age 18 or age 21 (if child’s condition is extraordinary); or … (b) At the request of the family; or … (c) Upon determination that the child is no longer receiving any financial support from the adoptive family; or … (d) Upon determination that the adoptive parent(s) are no longer legally responsible for the support of the child (TPR has occurred); or … (e) In the event of death of the subsidized child; or … (f) In the event of the death of both adoptive parents or the death of a single adoptive parent if the subsidy was granted to a single adoptive parent ….” (See DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.11.) 6. 4. Fred Simmens, the DSS Director from August 2003 to October 2005, testified that he agreed that, apart from the exceptions set forth by the federal statutes, any changes to the subsidy contracts would have to be agreed to by the parents. (Preliminary Injunction hearing, at 57-58.) 65. Senate Bill 539 violates federal policy, DSS policy, and good and accepted subsidy practice, which prohibit the termination of adoption subsidy agreements in cases other
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than the categories proscribed, and allows only periodic readjustments of subsidies on a case by case basis, with the concurrence of the adoptive parents. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 8-10; trial testimony of Wiedemeier Bower.) 66. Specifically, Section 453.073.3(4) of Senate Bill 539 explicitly causes all existing adoption agreements to “expire” upon their one-year anniversary and, if implemented, would trigger the provision of Section 30.4.G of the DSS Child Welfare Manual requiring that if approved services in the subsidy agreement have “expired,” a new attachment must be renegotiated without automatic renewal. 67. An August 29, 2005 letter from Linda K. Lewis, Regional Administrator of the United States Department of Health and Human Services, to DSS Director K. Gary Sherman states, “The Administration for Children and Families has determined that Missouri is out of compliance with title IV-E requirements because SB 539 states that the period for which all subsidies will be granted will not exceed one year and the director has the discretion as to whether the agreement can be renewed for subsequent years.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) 68. The August 29, 2005 HHS letter further states, “Federal requirements state that once a child is determined eligible for title IV-E adoption assistance, he or she remains eligible and the subsidy continues for reasons specified in the Federal policy [Child Welfare Policy Manual, Section 8.2B.9 and Social Security Act – Section 473]. The Federal policy further states that States may not have a blanket policy which limits the duration of adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents … [Child Welfare Policy Manual, Section 8.2D.2 and Social Security Act – section 473]. The Missouri legislation, however, states that the period for which all subsidies will be granted will not exceed one year.”
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(Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) 69. The August 29, 2005 letter also states, “Federal policy [Child Welfare Policy Manual Section 8.2D.5 and Social Security Act – section 473; and 45 CFR 1356.40(b)] provides that once a child is determined eligible for adoption assistance under IV-E, he or she remains eligible and the subsidy continues unabated. Once an adoption assistance agreement is signed and in effect, it can only be terminated if 1) the child has reached the age of 18 (or the age of 21 if the State has determined that the child has a mental or physical disability which would warrant continuation of assistance), 2) the State determines that the adoptive parents are no longer legally responsible for the support of the child, or 3) the State determines that the adoptive parents are no longer providing any support to the child. Missouri’s legislation, however, states that the agreement can be renewed for subsequent years “at the discretion of the director” and therefore violates Federal policy.”(Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates No. 1 PRP 38-4 to 38-6.) Senate Bill 539, Section 453.073.4: Means Test 70. Senate Bill 539 amends Section 453.073.4 of RSMo to provide: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.4.) 71. The use of an income standard for adoptive parents to determine a child’s eligibility for adoption assistance subsidies is commonly referred to as a “means test.” 72. The means test established in Section 453.073.4, on its face, creates two classifications of otherwise similarly situated abused and neglected, special needs children, all current or former state wards of the foster care system. The means test will be applied to deny adoption subsidy benefits to one group of children and not the
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other. Specifically, for one group in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the AFDC eligibility standard for Title IV-E purposes, the means test will be imposed on the income of the children’s existing or prospective adoptive parents to deny or terminate their adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes, no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11; trial testimony of Wiedemeier Bower.) 73. HHS policy, reflected in Federal Policy Announcement, PIQ-90-02, October 2, 1990, states, “Congress at first considered the inclusion of a ‘means test’ as a requirement under the Title IV-E adoption assistance program … the restriction was later dropped after the Committee noted ‘we should not design a program to foster adoptions only in those families with the least financial capacity to care for these special needs children.’” (Federal Policy Announcement, PIQ-90-02, October 2, 1990, Ex. 41, at 1, citing Congressional Record – Senate – S11704, Aug. 3, 1979.) 74. The HHS Child Welfare Policy Manual, Section 8.2A.2, states: “The use of a means test is prohibited in the process of selecting a suitable adoptive family, or in negotiating an adoption assistance agreement, including the amount of the adoption assistance payment.” (Federal Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2A.2.) 75. Fred Simmens, the DSS Director from August 2003 to September 2005, testified that in his 26 years with the agency, he had never suggested a means test for people who adopt special needs children. (Preliminary Injunction hearing, at 38.) Mr. Simmens testified that he had concerns about the adoption subsidy revisions in Senate Bill 539 because they were changing longstanding policy in the state to treat all children the
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same, whether or not they were receiving federal funds through Title IV-E. (Id. at 3940.) Mr. Simmens testified that this longstanding policy was a very fair system. (Id. at 41.) Mr. Simmens further testified that the adoption subsidy program was an important one, and was a factor that encouraged parents to adopt children with special needs. (Id. at 44, 41.) 76. Steve Renne, the Acting Director of DSS at all relevant times until April 1, 2005, and now Deputy Director of DSS, testified that in the 20-plus years he had worked for Missouri’s Department of Social Services, a means test had never before been proposed and that he had never before personally advocated such a test. (Renne Dep., Jan. 26, 2006, at 16.) He testified that a non-IV-E eligible child could have more significant needs than a IV-E eligible child, (id. at 52-53), and that the means test does not ensure that the most needy children receive subsidies due to the fact that the subsidy is based on the adoptive family’s income. (Id. at 52.) Renne testified that, as a “bureaucrat,” he would not recommend different treatment among the two groups of adoptive children that Senate Bill 539 creates. (Id. at 50-51.) 77. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, also agreed that from a policy standpoint, the natural birth parents’ income had “no relevance” in determining whether a child should get an adoption subsidy. (Martin Dep., Dec. 13, 2005, at 85.) 78. As a factual matter, an adoptive child’s special needs are in no way correlated with his or her birth family’s income. For example, if two brothers who suffered from fetal alcohol syndrome as well as other behavioral disabilities were removed separately from their biological mother’s home at times when her income differed, one boy might receive a subsidy jointly funded by state and federal dollars, and the other a purely state-funded subsidy. Adoptive parents would be faced with the situation of
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being financially able to adopt one brother and not the other, or face the prospect of not being able to meet both boys’ needs. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 11-12; trial testimony of Wiedemeier Bower.) 79. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division, also testified that there could be families who had adopted more than one child, where one child might be Title IV-E eligible and the other not. Under the SB 539 scheme, the same family could possibly lose the adoption subsidy for one child, but keep it for the other. When asked if that made sense to her, she testified, “It’s difficult for me to get my head around.” (Preliminary Injunction hearing, at 188.) 80. If a family were moving ahead with the adoption of a IV-E eligible child, the state would never inquire of the income of the adoptive parents no matter how high the income. (Trial testimony of Plaintiffs’ adoption subsidy policy and practice expert, Jeanette Wiedemeier Bower.) 81. DSS cannot state the number of class member children currently receiving adoption assistance subsidies funded by state and federal funds and whose adoptive parents earn more than 200% of the federal poverty level. (Defendants’ First Supplemental Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, Ex. 102, at 2-3.) 82. The Senate Bill 539 means test is an irrational mechanism for directing funds to the “most needy” because it uses the gross income of putative or existing adoptive families as an eligibility threshold and fails to account for actual family expenses and other pertinent circumstances that clearly impinge upon a family’s ability to adopt and provide for a special needs child. (Emergency Rule 13 CSR 35-38.020, Ex. 50, at (12)(C); Preliminary Injunction hearing, at 162-163.)
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The Challenged Provisions of Senate Bill 539, if Implemented, Will Serve to Increase the Cost of Child Welfare to the State of Missouri
83. The State of Missouri and the Department of Social Services (“DSS”), through duly authorized and responsible state officials, have identified a single governmental purpose to be advanced by the means test provision of Senate Bill 539: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the state’s most needy families. (Renne Dep., Jan. 26, 2006, at 31-32; Boies Dep., Jan. 18, 2006, at 103; Kinkade Dep., Jan. 18, 2006, at 64; Martin, Preliminary Injunction hearing, at 164.)
84. Prior to enactment of the Senate Bill 539 mean test provision, DSS prepared a fiscal impact analysis in order to project the cost savings to be generated by the new eligibility scheme in relation to state-only adoption subsidy agreements. Specifically, Patrick Luebbering, an Assistant Deputy Director within DSS, performed a fiscal impact analysis of the proposed means test at the request of the state’s Office of Administration, the agency charged with compiling the annual statewide budget for the Office of the Governor. This fiscal impact analysis concluded that the Senate Bill 539 means test provision would yield a projected annual cost savings of $9,716,863 in the state’s adoption subsidy program, assuming that the income threshold was set at 200% of FPL. (Luebbering Dep., Dec. 13, 2005, at 29-32; Fiscal Impact Analysis, Ex. 103, at Bates 1 PRP 28-7.)
85. The fiscal impact analysis prepared by Mr. Luebbering served as the sole basis for the later April 25, 2005 Fiscal Note authored by the Missouri legislature’s Committee on Legislative Research, Oversight Division for purposes of informing elected legislative members and the general public regarding, among other things, the anticipated fiscal implications of the Senate Bill 539 means test. (Luebbering Dep., Dec. 13, 2005, at 81-82; 134-136; Summary of Fiscal Impact, Ex. 104; Fiscal Note, Ex. 35; Kinkade
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Dep., Jan. 18, 2006, at 73-78.) 86. The April 25, 2005 Fiscal Note published by the Committee on Legislative Research
includes and adopts the fiscal analysis prepared by Mr. Luebbering. (Fiscal Note, Ex. 35.) 87. The fiscal analysis prepared by Mr. Luebbering erroneously and irrationally projected that cost savings would flow from the Senate Bill 539 means test. The means test, if implemented, actually will increase the overall cost to the state to finance its child welfare program. 88. First, the projected $9,716,863 reduction in adoption subsidy costs is overstated due to the subsequent decision by the Missouri legislature to fund the state’s adoption subsidy program in FY2006 at 250% of FPL, as opposed to 200% of FPL, as provided in Senate Bill 539. This legislative action, alone, served to reduce the annual cost savings to be generated by the means test from $9,716,863 to $5,886,654 (the savings figures derived by Mr. Luebbering’s fiscal impact analysis performed at 200% and 250% of FPL, respectively). (Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 89. Second, the fiscal impact analysis substantially over-counted the number of existing state-only adoption subsidy recipients to be effected by the Senate Bill 539 means test. The fiscal impact analysis assumed that 43% of all existing adoption subsidy recipients in Missouri received state-only funded benefits, as opposed to Title IV-E federally subsidized benefits. (Luebbering Dep., Dec. 13, 2005, at 62-68, 72, 78; Fiscal Impact Analysis, Ex. 103, at Bates 1 PRP 28-7.) 90. This assumption was erroneous for two reasons. First, DSS audited all existing stateonly funded adoption subsidy files in the Spring of 2005 to confirm whether Title IVE eligibility had been properly denied in the first instance. As a result of the audit process, DSS determined that over 1,000 existing state-only adoption subsidy agreements were actually eligible for Title IV-E federal funding and, therefore,
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retroactively re-designated those cases to Title IV-E status. (Morris Dep., Dec. 12, 2005, at 50-53; State-Only Adoption Subsidy Case Review, Ex. 107, at 1PRP 27-2.) Second, the state of Missouri reported a Title IV-E adoption subsidy penetration rate of 82% as of the summer of 2005, meaning that only 18% of adoption subsidy recipients in the state were then receiving state-only funded subsidy payments. Mr. Morris testified that the state of Missouri never has reported a Title IV-E adoption subsidy penetration rate below 70% to his knowledge. (Morris Dep., Dec. 12, 2005, at 27-31.) 91. The $5,886,654 in projected cost savings, as calculated by Mr. Luebbering at 250% of FPL, reflects the patently erroneous and irrational assumption that 43% of all adoption subsidy recipients in Missouri are state-only funded. This projected cost savings figure, when recalculated to reflect the fact that only 18% of all adoption subsidy recipients in Missouri are state-only funded, falls to $2,452,772. Put another way, Mr. Luebbering overstated the size of the relevant non-Title IV-E population by a factor of 2.4 (43% versus 18%), resulting in a projected cost savings figure that was also overstated by a factor of 2.4. 92. Moreover, the fiscal impact analysis substantially over-counted the number of prospective state-only adoption recipients to be affected by the Senate Bill 539 means test. The fiscal impact analysis simply carried forward to the population of prospective adoption subsidy recipients the assumption that 43% of the program’s recipients in Missouri receive state-only funded benefits. (Luebbering Dep., Dec. 13, 2005, at 76, 78.) 93. This assumption was erroneous for two reasons. First, as reflected above, the accurate figure for the current percentage of state-only adoption subsidy recipients within the overall adoption subsidy population in Missouri is 18%. Second, the fiscal impact analysis projected a total FY2006 adoption subsidy population in Missouri of 12,474,
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an estimate that assumed growth in the subject population of 1300 new adoptive children per year. In reality, the state of Missouri experienced a steady decline in the annual number of finalized adoptions from FY2002 through the present as follows: 1,515 in FY2002, 1,429 in FY2003, 1,356 in FY2004, 1,123 in FY2005, and 1,008 projected for FY2006 based upon the actual number of finalized adoptions through the first three quarters of the year. (Table 28, February 2006 Children’s Services Management Report, Ex. 120.) 94. The fiscal impact analysis overstated the prospective effect of the means test by assuming too large a prospective recipient population to be means tested. (Renne Dep., Jan. 26, 2006, at 20-23; Martin Dep., Dec. 13, 2005, at 35-36.) Indeed, as of December 31, 2005, the total number of foster children who were adopted and receiving adoption assistance maintenance subsidies in Missouri was 11,450, fully 1,000 children lower than assumed by Mr. Luebbering. (Defendant’s Response to Plaintiffs’ Second Set of Rule 33 Interrogatories, at 2.) 95. Additionally, as demonstrated below, the $2,452,772 adjusted figure must further be reduced to account for significant, additional governmental costs to flow from implementation of the mean test that were not adequately addressed, if at all, in Mr. Luebbering’s fiscal analysis. 96. First, the fiscal impact analysis adopted by the state of Missouri underestimated the cost implications of the Senate Bill 539 means test provision in terms of the additional expenses it would impose by causing disruption to existing and putative adoptions. The major component of this increased governmental cost relates to the continuing obligation of DSS to pay monthly foster care maintenance payments to that group of otherwise adoptable children who remain in temporary foster care longer because the means test prevented finalization of their adoptions. (Fiscal Impact Analysis, Ex. 103, at 1 PRP 28-4.)
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97. As stated in the “Bullet Points” memorandum prepared by Mr. Leubbering, “[b]y reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster Care as opposed to children [in] who are in Adoption Subsidy … Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer … Projecting an accurate amount for savings is difficult.” (Bullet Points Memo, Ex. 93.)
98. Though the fiscal impact analysis properly assumed that the eligibility means test would serve to prevent or disrupt a number of adoptions due to the financial constraints it would impose on adoptive families, it arbitrarily and unreasonably assumed that these disruptions would result in additional foster care stays for displaced children of only six months duration on average. (Luebbering Dep., Dec. 13, 2005, at 98-99; Fiscal Impact Analysis, Ex. 103, at 1 PRP 28-4.) No state witness has provided an empirical or any other rational basis for this six-month figure. (Luebbering Dep., Dec. 13, 2005, at 98-99; Kinkade Dep., Jan. 18, 2006, at 96; Boies Dep., Jan. 18, 2006, at 80-83.)
99. The assumption of an average six-month additional stay in state foster care is arbitrary and demonstrably erroneous based upon DSS adoption policy and Missouri law. Specifically, Section 29.4 of the DSS Child Welfare Manual sets forth agency policy, consistent with RSMo. §453.077.1, that any adoption of a child from temporary state care may not be finalized by a court until the child has lived in the putative adoptive placement for a period of no less than six months. (DSS Child Welfare Manual, Sec. 4, Ch. 29.4, Ex. 80.) The pre-finalization period also must include vital pre-placement activities such as the completion of an adoptive home study, a thorough assessment of the child’s readiness and suitability for the adoptive placement facilitated by a series
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of supervised pre-placement visits between the child and adoptive family, and a determination of the child’s eligibility for adoption subsidy assistance. (Id.) 100. Existing, and readily available, DSS data supports the conclusion that adoptive disruptions will cause children to experience additional foster care stays of 24 months or longer as the state seeks to identify and qualify new adoptive parents. The state of Missouri has reported the following percentages of children exiting foster care into finalized adoptions within 24 months of removal from home: 33.10% in FFY2003, 33.70% in FFY 2004, and 38.6% in FFY2005. (DSS Adoption/Guardianship Subsidy Fact Sheet, February 2, 2006, Ex. 95, at 1.) Based upon these reported statistics by DSS, some 61.4% to 66.9% of the children in state legal custody who attain finalized adoptions only to do so after residing in temporary care for a period in excess of 24 months. 101. An October 2005 Yellow Sheet published by the Missouri State Auditor reported that the average length of stay in foster care for children exiting to adoption was 33 months in FY2003 and 31.7 months in FY2004. (Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1.) 102. The number of children awaiting adoption in Missouri whose biological parents already have lost their parental rights through court ordered termination has been increasing. This subgroup of children in temporary care has risen from 1,527 on September 30, 2000 to 1,660 on September 30, 2002 to 1,919 as of January 2006. (HHS AFCARS Performance Data, Missouri Context Data, Ex. 83, at VI-202; Caseload Counter, http://www.dss.mo.gov/mis/clcounter/history.htm., Ex. 53.) 103. Based upon the above readily available DSS adoption data, the state of Missouri should reasonably anticipate additional foster care stays of 24 months, or even longer, for difficult-to-place, special needs children whose adoptive placements disrupt as a result of the means test. Mr. Luebbering’s cost figure of $427,635, which assumes 6
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month additional stays for children experiencing disrupted adoptions (with a means test at 250% of FPL), is understated by a factor of at least 3, or by some $1.5 million. (Savings from Means Test, Ex. 106, at Bates 1 PRP 28-35.) 104. The fiscal impact analysis likewise failed to account for the increased administrative and caseworker costs directly attributable to adoptive disruptions occasioned by the Senate Bill 539 means test. As noted in the April 25, 2005 Fiscal Note published by the Committee on Legislative Research, Oversight Division, “additionally, there may be some additional cost in staff time due to children staying in care longer. However the impact is unknown.” (Fiscal Note, Ex. 35, at 9.) Though unknown in terms of its precise amount, this increased overhead is not inconsequential. Fred Simmens testified that he agreed that there were expenses to foster care outside the maintenance payment to foster parents, such as administrative costs for caseworkers, deputy juvenile officers, and court time (Preliminary Injunction hearing, at 46-47), and that this comment in the Fiscal Note essentially meant that “this fiscal note did not calculate what the added expense was going to be by kids being in foster care longer.” (Id. at 47, 69-71.) 105. In a recent peer review publication of the University of Chicago, University of North Carolina Professor Richard Barth stated “the burgeoning numbers of children receiving adoption subsidies have led some states to be concerned about or even to curtail adoption subsidy levels … This study uses longitudinal adoption subsidy and foster care placement data to estimate the relative costs of foster care and adoption …” and concluded, “[o]n balance, adoption achieves substantial governmental savings.” (“A Comparison of the Governmental Costs of Long-Term Foster Care and Adoption,” Richard P. Barth, Chung Kwon Lee, Judith Wildfire, and Shenyang Guo, University of Chicago Social Service Review, March 2006, Ex. 105, at 1.)
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Senate Bill 539 Means Test: Elimination of a Threshold into Medicaid for Special Needs Children
106. The DSS Child Welfare Manual expressly recognizes that the “Adoption and Safe Families Act of 1997 requires that Medicaid is provided for children who have a state funded adoption assistance agreement.” (DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.3.)
107. The state of Missouri provides Medicaid coverage to children under a variety of programs including: (1) “MC+ for Children” which covers children under the age of one whose family income is at or less than 185% of the FPL, children between the ages of one and six whose family income is at or less than 133% of the FPL, and children from ages six to eighteen whose family income is at or less than 100% of the FPL; (2) “MC+ for Kids,” Missouri’s State Children’s Health Insurance Program (SCHIP), 1115 Demonstration Waiver which covers children whose family income is at or less than 300% of the FPL and who do not otherwise benefit from employersubsidized health care insurance or other health care coverage; and (3) “Children’s Division Adoption Subsidy” which provides coverage to all children receiving statefunded adoption assistance payments. (DSS Missouri Medicaid Description, published at http://www.dss.mo.gov/dms/global/pages/about.htm, Ex. 55)
108. Prior to the implementation of the Senate Bill 539 means test, special needs children adopted by families with an income above 300% of the FPL remain eligible for Medicaid coverage under the “Children’s Division Adoption Subsidy” program because they receive adoption subsidies, though they are not qualified for Medicaid coverage under the means tests employed in Missouri’s alternative Medicaid programs. (Missouri DSS Child Welfare Manual, Sec. 4, Ch. 30, Ex. 48, at 30.3)
109. Section 208.640.2 of Senate Bill 539 amends RSMo to provide that “[p]arents and guardians of uninsured children with incomes between one hundred fifty-one and three hundred percent of the federal poverty level who do not have access to 33
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affordable employer-sponsored health care insurance or other affordable health care coverage may obtain coverage pursuant to this section.” 110. Upon implementation of the Senate Bill 539 means test, special needs children adopted by families earning more than 300% of the FPL will lose their adoption subsidy eligibility and, therefore, their access into the state’s Medicaid program through the Children’s Division Adoption Subsidy program. (Senate Bill 539, Ex. 34, at 208.640.2, 453.073.) 111. Upon implementation of the Senate Bill 539 means test, special needs children adopted by families earning above 200% of the FPL and carrying available employersponsored health care coverage will be entitled to Medicaid coverage only if the family purchases such coverage under Section 208.640.2. Prior to the implementation of the Senate Bill 539 means test, these same special needs children qualify for Medicaid under the Children’s Division Adoption Subsidy program at no additional cost to the adoptive family. 112. Amy Martin, a Program Development Specialist at the Department of Social Services in the Children’s Division who is responsible for the development of policy and procedures relating to the adoption program, testified that SB 539 includes “vague” language about the ability of families to keep Medicaid if they are means-tested out. She testified that the view she and the Children’s Division have taken, however, is that children whose subsidies are denied or terminated under the implementation of SB 539 will continue to keep their Medicaid. She further characterized Medicaid as an “essential” benefit under adoption agreements. (Martin Dep., Dec. 13, 2005, at 1819.) 113. Counsel for defendant stipulated on the record that all children adopted from DSS temporary care must be and will be provided with Medicaid coverage, regardless of the income of their adoptive parent. Counsel for defendant further stipulated that the
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state intended to implement Senate Bill 539 consistent with this obligation. (Preliminary Injunction hearing, at 6-9.) Senate Bill 539: Threat of Irreparable Harm to Current Foster Children and Adopted Foster Children in Missouri 114. As of August 17, 2005, the Children’s Division projected that at least 1274 special needs children currently receiving an adoption subsidy under an existing contract with DSS will lose their benefit as a result of the Senate Bill 539 amendments. (Adoption Subsidy and Legal Guardianship, Ex. 121, at Bates 1 PRP 41-17.) 115. It is undisputed that the direct result of the adoption subsidy provisions of Senate Bill 539, if implemented, will be longer stays by special needs children in government foster care. (Bullet Points Memo, Ex. 93.) 116. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539, if implemented, also will create uncertainty in relation to the financial capacity of existing adoptive families and putative adoptive parents to meet the serious, and oftentimes expensive, medical, educational and emotional needs of the special needs children they adopt or wish to adopt. The essential bargain underlying an adoption assistance agreement is the promise by the adoptive parent(s) to accept legal custody, and the concurrent responsibilities and duties, of a special needs child until he or she reaches the age of majority in exchange for the state’s commitment to provide monthly assistance payments to make the adoption financially possible without causing undue economic burden on the adoptive family. Senate Bill 539 threatens to undermine or completely withdraw the state’s end of this vital bargain. The resulting uncertainty will cause a reduction in the number of adoptions and will prolong the stays of special needs children in temporary foster care placements much to their emotional detriment. (Trial testimony of Wiedemeier Bower.) 117. Fred Simmens, the DSS Director from August 2003 to October 2005, testified that he
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agreed that the means test in SB 539 could have a negative impact on the level of confidence that foster parents and prospective adoptive parents have in some portions of the child welfare system in Missouri, based on the “reasonable assumption” that parents might feel that the state broke its promise to them in the subsidy contracts. (Preliminary Injunction hearing, at 78.) 118. Steve Renne, Acting Director of DSS at all relevant times until April 1, 2005, now Deputy Director of DSS, agreed that Missouri’s adoption subsidy program helped to move children from foster care to adoptive families more quickly than if there were not a subsidy program. (Renne Dep., Jan. 26, 2006, at 9.) He also testified that an adoption subsidy can make the difference between adopting and not adopting for some families. (Id. at 39.) He testified that SB 539’s scheme regarding adoption subsidies provided no direct benefits to children. (Id. at 32.) 119. Martin testified that her department recognized that 1) some children may remain in foster care for longer periods of time under SB 539; 2) some children may come back into foster care due to the inability of families to support their needs; and 3) the bill was “unfair” to those children who are not eligible for IV-E federal funds. (Martin Dep., Dec. 13, 2005, at 14-17; DSS Bill Review, Ex. 97, at Bates 1 PRP 40-123.) Martin testified that if adoptive families were means tested out, but kept their child, the loss of the adoption subsidy could present a hardship to the family. (Martin Dep., Dec. 13, 2005, at 39.) 120. Martin testified that DSS had a fact sheet observing that children are less likely to be abused if they are adopted, as opposed to remaining in foster care. (Id. at 52-54; DSS Fact Sheet, Ex. 98, at Bates 1 PRP 40-145.) Martin further testified that she was aware of and accepted studies that found it is harmful for children to stay in foster care longer, and that it is preferable to be in an adoptive family as opposed to staying in foster care longer. (Martin Dep., Dec. 13, 2005, at 29.)
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121. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 will also deter foster parents from adopting special needs children placed into their temporary physical custody. These foster parents currently receive for the duration of the child’s foster care episode a dependable stream of foster care maintenance payments from the state to assist in the care of the child. If Senate Bill 539 takes effect, foster parents will become less inclined to adopt a special needs foster child and thereby exchange the certain stream of foster care maintenance payments for the, oftentimes, reduced flow of adoption assistance payments, particularly when the stream of adoption assistance benefits is rendered uncertain in duration and amount. (Trial testimony Weidemeier Bower.)
122. As children spend more time in foster care, they are likely to be subjected to multiple moves in custody, which is harmful. (Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 14; trial testimony Weidemeier Bower.)
123. Senate Bill 539 also threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the court-supervised consent decree entered in G.L., An Infant, by and through his Next Friend, et al. v. Gary Stangler et al, No. 77-0242-CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. (July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al., Ex. 56.)
Harm to Named Plaintiffs: Impact of Senate Bill 539 on Adoption Assistance Agreements E.C.
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124. Named Plaintiff E.C., by her Next Friend Jill Katz, resides in the legal custody of the Children’s Division of the Missouri Department of Social Services in Jackson County, Missouri. E.C. is a member of the class of foster children privy to the consent decree entered in G.L., An Infant, by and through his Next Friend, et al. v. Stangler, et al., No. 77-0242-CV-W-1 (United States District Court for the Western District of Missouri). (Trial testimony of E.C.; Preliminary Injunction hearing, at 22.)
125. E.C. has lived in numerous foster homes since entering foster care at the age of seven and has tired of moving from one home to another. E.C. has lived in her current foster home for two years, has formed a bond with her current foster mother, and wishes to be adopted by her. She desperately wants to enjoy safety and stability in her life. (Trial testimony of E.C.; Preliminary Injunction hearing, at 23-26.
126. The Children’s Division had previously determined that E.C. was ineligible for Title IV-E adoption assistance, but in February 2006, the Children’s Division found that it had determined E.C.’s Title IV-E eligibility status in error, and that E.C. is in fact entitled to federally funded adoption assistance, if she is adopted. (Katz Dep., February 23, 2006, at 12-13.) This also means that a family who wishes to adopt E.C. will not be subjected to a means test as provided for in Missouri Revised Statute section 453.073.4, as amended by Senate Bill 539, nor will such a family risk losing adoption assistance in the future because their income has surpassed the level permitted by the amended statute.
127. E.C.'s foster mother, Niann Hines received monthly foster care maintenance payments from DSS to care for E.C. Though she wished to adopt E.C., Ms. Hines feared that loss of the foster care maintenance payments, coupled with E.C.’s non-IV-E adoption subsidy status, would impose an economic hardship and prevent her from fully providing for E.C.’s special needs. Upon learning that E.C. is actually eligible for a Title IV-E adoption subsidy, Ms. Hines shortly thereafter instituted proceedings to
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adopt E.C. (Trial testimony of Niann Hines.) A.C.
128. Named Plaintiff A.C., by his parent and Next Friend Lana Capps, is a six-year-old boy who was adopted from the Missouri foster care system in 2002. A.C. and Ms. Capps live in Boone County, Missouri. (Declaration of Lana Capps, Ex. 7; Capps Dep., February 28, 2006, at 6, 9, 10.)
129. A.C. suffers from a congenital heart disorder that has necessitated 14 hospitalizations and two open-heart surgeries during his young life. He will require additional heart surgeries. (Declaration of Lana Capps, Ex. 7.)
130. Ms. Capps earns approximately $3,600 a month. She currently receives a monthly adoption subsidy of $651 under an adoption assistance agreement she executed with the State of Missouri. The adoption subsidy is a significant portion of Ms. Capps’ monthly income, and without it Ms. Capps ability to meet A.C.’s necessary and regular medical, emotional, psychological, and educational needs will be severely and negatively affected. (Declaration of Lana Capps, Ex. 7.)
131. The Children’s Division determined that A.C. is not eligible for federally funded adoption assistance under Title IV-E because A.C.’s natural mother had income that exceeded Title IV-E guidelines at the time A.C. was removed from the home and placed into foster care. ((Declaration of Lana Capps, Ex. 7; Capps Dep., February 28, 2006, at 32; Letter to L. Capps from L. Cole, July 29, 2005, Ex. 119, PR 14-285.)
132. Because A.C. is ineligible for Title IV-E adoption assistance, the State of Missouri has subjected Ms. Capps’ income to a means test and has determined that her income exceeds the amount permitted by Missouri Revised Statute section 473.053.4, as amended by Senate Bill 539. If Senate Bill 539 is permitted to take effect, the statefunded monthly maintenance adoption subsidy of $651 that Ms. Capps has received since she adopted A.C. will terminate. (Declaration of Lana Capps, Ex. 7.)
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J.C. 133. Named Plaintiff J.C., by his Next Friend Jill Katz, is a 16-year-old now living in the legal custody of the Children’s Division, Missouri Department of Social Services, in Jackson County, Missouri. J.C. is a member of the G.L. v. Stangler, et al. class. (Preliminary Injunction hearing, at 31-32.) 134. J.C. has lived in foster care since 1997, following the death of his mother and a short stay with his legal guardian. J.C.’s father’s parental rights have been terminated. Since 1997, J.C. has been placed into more foster homes and group homes than he can recall, and he presently resides in a group home. (Preliminary Injunction hearing, at 32-33.) 135. J.C. wishes to be adopted and has experienced several adoptive placements that disrupted before finalization. After J.C.’s mother died and his legal guardian had relinquished custody, it was discovered that J.C. had been the victim of severe abuse while in his mother’s care. These experiences left J.C. physically and emotionally traumatized and have necessitated ongoing therapy and treatment. J.C.’s condition and prognosis have improved, but he continues to require therapy and medication. (Child Profile, January 28, 2000, Ex. 108, at Bates RP 3 – 2000-2007) 136. J.C. would like to have a family that he can count on and trust, and J.C. believes he could have a better life if he were adopted. In foster care, J.C. has not been able to do some of the things that other 16-year-olds do, such as go with friends to the mall or get a driver’s license, and J.C. has not been able to spend the Christmas holidays with a family since he has been in foster care. J.C. fears that the absence of an adoption subsidy will prevent his dream of having an adoptive family. (Preliminary Injunction hearing, at 32-34; Katz Dep., February 23, 2006, at 5-6; Judgment, TR02-00083, In the Interest of J.C., Ex. 74.)
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T.F., B.F. and A.F. 137. Named Plaintiffs T.F., B.F. and A.F., (formerly known as T.G., B.G., and A.G.), by their Next Friend Jill Katz are biological siblings, ages ten, seven, and five, living with their adoptive parents, Elizabeth W. Fischer and John S. Fischer, in Jackson County, Missouri. Prior to their adoption of T.F., B.F., and A.F., Mr. and Mrs. Fischer were foster parents to the three children through the Missouri foster care system. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 56.) 138. T.F., B.F, and A.F. were severely neglected by their biological parents with farreaching consequences for the children. T.F. is diagnosed with ADHD and has required residential treatment in the past. T.F. continues to be evaluated for other possible disorders. B.F., who was also subjected to abuse in her biological home, has long-term conditions, including bipolar and attachment disorders. B.F. has also required hospitalization for her disorders, including after the finalization of her adoption by Mr. and Mrs. Fischer. A.F. has been diagnosed with post-traumatic stress disorder for which she receives therapy and takes prescription medication. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 17-22.) 139.As foster parents for T.F., B.F., and A.F., Mr. and Mrs. Fischer received approximately $1,800 per month in foster care maintenance and subsidies, which included the behavioral rate for T.F. and B.F. Federal law prohibits the payment of Title IV-E adoption assistance benefits in amounts in excess of the pre-existing foster care maintenance payments. See 42 U.S.C. 673(a)(3). (Missouri Title IV-E State Plan, Ex. 45, at Sec. 4, Requirement 3(c).) Because of the preliminary injunction granted by the Court in this cause, the state now pays the Fischer’s approximately $1,500 per month in adoption assistance maintenance payments. T.F. and B.F. continue to be paid at the behavioral rate. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep.,
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February 21, 2006, at 10-11.) 140. All three siblings would have been eligible for federally-funded assistance under Title
IV-E but for errors in family court documents only detected by the state after the time frame for perfecting Title IV-E eligibility had expired. (Affidavit of Elizabeth Fischer Ex. 3; Fischer Dep., February 21, 2006, at 14-15.) 141. Because the three children do not qualify for Title IV-E adoption assistance, if the means test in Senate Bill 539 is enforced, the Fischer’s eligibility for state-funded adoption subsidies will depend upon their income. The Fischer’s monthly income is approximately $7,800 – well above the level permitted by Senate Bill 539. Thus, the Fischer’s will lose the adoption assistance they now receive for their three adopted children, which constitutes approximately 15% of their present family income. (Affidavit of Elizabeth Fischer Ex. 3.) W.S., M.S. and D.S. 142. Named Plaintiffs W.S., M.S., and D.S., by their parent and Next Friend Robert Brian Strange, are boys aged 10, 7 and 6, respectively, who were adopted from the Missouri foster care system in 2000 as a sibling group. The boys were all in the G.L. v. Stangler et al. class prior to their adoption. (Trial testimony of Robert Strange.) 143. W.S., M.S. and D.S. now live with their adoptive parents, Robert and Jennifer Strange, in Cass County, Missouri. The boys were initially removed from their biological home after M.S. sustained severe burns when held against a hot water heater by his mother. D.S. is developmentally disabled. (Trial testimony of Robert Strange.) 144. The Strange’s annual income is about $62,400. They currently receive three separate $275 adoption assistance payments each month under the adoption assistance agreements they executed with the state of Missouri on behalf of each of the boys. The Strange’s cannot support the medical, educational, emotional and physical needs
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of the boys absent the adoption assistance. (Trial testimony of Robert Strange.) 145. The state of Missouri sent a notice letter to the Strange’s stating that W.S.’s and
M.S.’s adoption subsidies will terminate permanently if the family’s gross annual income exceeds the Senate Bill 539 means test. The letter further gave notice that should the family’s gross income meet the means test, all three boys’ adoption assistance agreements will, by operation of Senate Bill 539, permanently expire within the year. (Trial testimony of Robert Strange.) M.P. 146. Named Plaintiff M.P., by adoptive parent and Next Friend Michael Patterson, is a 16year-old adopted child who currently reside with his father in Jackson County, Missouri. M.P. was a member of the G.L. v. Stangler et al. class prior to his adoption. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 4-7.) 147. M..P. was placed in Michael Patterson’s home as a foster child. Mr. Patterson has been a foster parent to over 20 children in the past eight years. In addition to M.P., Mr. Patterson has adopted four other children from foster care, three of whom are now adults and living on their own. Mr. Patterson is proud that all of his three grown children graduated from high school, and the youngest was offered a college scholarship. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 7-8, 18-19.) 148. M.P. was removed from his home and placed in foster care in 1992 because of neglect and his mother’s drug abuse. He was placed in Mr. Patterson’s foster home in December 2002 after having lived in over 15 foster homes and children’s shelters. Mr. Patterson received the behavioral rate for M.P.’s foster care because of problems that M.P. was experiencing both at home and at school. Mr. Patterson has adopted M.P. and continues to receive the behavioral rate as maintenance under an adoption
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subsidy agreement executed with DSS. (Affidavit of Michael Patterson Ex. 5; Patterson Dep., February 21, 2006, at 16-18; Psychological Evaluation, July 15, 2003, Ex. 109, at Bates PR12 / 43-47.) 149. Mr. Patterson has been informed that M.P. is not eligible for federal adoption assistance under Title IV-E, and that therefore, under Senate Bill 539, M.P.’s adoption assistance for maintenance will terminate permanently if Mr. Patterson’s gross annual income fails the bill’s means test. Mr. Patterson expects that his income will exceed the level permitted by Senate Bill 539. Mr. Patterson has been further informed that even if his gross income passes the means test, M.P.’s adoption assistance agreement will, by operation of Senate Bill 539, permanently expire at the end of one year. (Affidavit of Michael Patterson Ex. 5; Letter to M. Patterson from F. Simmens of DSS, May 25, 2005, Ex. 63; Letter to M. Patterson from F. Simmens of DSS, July 25, 2005, Ex. 64, at 1.) J.A. 150. Named Plaintiff J.A., by his parent and Next Friend John Antonich, is a 15 year-old boy. He was adopted from the Missouri foster care system in 2004 after some 6 years in foster care. J.A. lives with his adoptive parents in Jefferson County, Missouri. (Trial testimony of J.A..) 151. While in foster care, J.A. lived in 23 different foster homes between the ages of 8 and 10. He later was placed into group care after a suicide attempt. J.A. suffers from severe anxiety, attention deficit hyperactive disorder (“ADHD”), oppositional defiant behavior, and depression. The depression condition has required hospitalization. J.A. also has required intensive tutoring to improve his challenged educational growth. (Testimony of John Antonich at preliminary injunction hearing.) 152. Mr. Antonich earns approximately $4,580 a month. The Antonich’s currently receive a monthly $651 adoption subsidy under an adoption assistance agreement they
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executed with the state of Missouri. The Antonich’s cannot afford the considerable educational, psychiatric and behavioral care necessary to address J.A.’s special needs absent the adoption subsidy. (Testimony of John Antonich at preliminary injunction hearing.) 153. The state of Missouri has sent a notice letter to the Antonich’s stating that their adoption subsidies will be terminated permanently if their annual income exceeds the Senate Bill 539 means test – 200% of the FPL for a family of 3 is $32,180 under current federal guidelines. Mr. Antonich earns approximately $54,960 per year, and his income will, therefore, surpass the Senate Bill 539 means test. The letter further gave notice that should the family’s gross income meet the means test, J.A.’s adoption assistance agreement will, by operation of Senate Bill 539, permanently expire within the year. (Testimony of John Antonich at preliminary injunction hearing.) T.J. and A.J. 154. Named Plaintiffs T.J. and A.J., by their parent and Next Friend Lavada Johnson, are 7 and 5 years old, respectively. They were adopted from the Missouri foster care system. Ms. Johnson, who is 60 years old, also supports two children in therapeutic foster care. (Trial testimony of Lavada Johnson.) 155. T.J. suffers from severe asthma, sinus disease, ADHD and hypoglycemia and requires daily medication. A.J. suffers from chronic lung disease, chronic and persistent asthma and ADHD and also requires daily medication. (Trial testimony of Lavada Johnson.) 156. Ms. Johnson earns approximately $1,160 a month. She currently receives monthly $651 adoption subsidy payments under the adoption assistance agreements she executed with the state of Missouri. Ms. Johnson cannot afford the considerable medical, psychiatric, educational and emotional care necessary to address T.J.’s and A.J.’s special needs absent the adoption subsidy. (Trial testimony of Lavada Johnson.)
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157. The state of Missouri has sent a notice letter to Ms. Johnson stating that the children are Title IV-E eligible, but that her adoption assistance agreements will automatically expire in 2006. (Trial testimony of Lavada Johnson.)
N.S. 158. Named Plaintiff N.S., by his parent and Next Friend Tammy Smith, is a four-year-old boy who was adopted from the Missouri foster care system in 2002 by Mrs. Smith and her husband, Harold Smith. N.S. lives with his adoptive parents in St. Charles County, Missouri. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 6-7.) 159. N.S.’s natural mother consented to the termination of her parental rights shortly after N.S. was born. The parental rights of N.S.’s natural father were terminated by default. (Order, Judgment and Decree of Court, St. Louis County, June 12, 2002, Ex. 111, at Bates PR 20 / 9-11.) 160. At the time of N.S.’s adoption, Mr. and Mrs. Smith executed an adoption subsidy agreement with the Division of Family Services (now Children’s Division) that provides a monthly adoption assistance maintenance payment at the standard rate until the year 2020 when N.S. will be eighteen years old. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 6-7.) 161. N.S. suffers from severe asthma and takes four different medications daily to control the condition. N.S. also requires two breathing treatments twice daily. The asthma condition occasionally results in asthmatic crises and has required as many as 11 visits to the hospital in one 13-month span. (Declaration of Tammy Smith Ex. 10.) 162. Because of N.S.’s severe asthma and allergies, Mr. and Mrs. Smith requested that N.S.’s adoption assistance maintenance payment be increased to the medical rate of $651 per month, and that request was granted by the Division of Family Services in 2004. Mr. and Mrs. Smith use the additional money to pay for daycare services not
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provided by the state, co-pays for N.S.’s medical care, and N.S.’s medications not covered by insurance. Because of N.S.’s condition and special needs, the Smith’s have had to modify their home, including, but not limited to, the removal of carpeting and the installation of special flooring and bedding, and the increased payment helps to cover that expense. Utility costs are higher for the Smith’s because windows in the home must be kept closed. Finally, N.S.’s frequent illnesses have required Mrs. Smith to be absent from her job, so much that she uses her allowable time off as quickly as she earns it, and thus the maintenance payment helps to make up for income lost when Mrs. Smith is forced to take unpaid leave in order to care for N.S. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 14-15.) 163. N.S. is eligible for federally funded adoption assistance under Title IV-E. The state, however, has informed Mr. and Mrs. Smith that their subsidy agreement will expire within one year and have to be renegotiated. (Declaration of Tammy Smith Ex. 10.) 164. The Smith’s have obtained approval to adopt a second child, but they are concerned that the changes in the adoption subsidy program will make adoption a financial hardship, and they have lost confidence that the state will adhere to its agreements in these matters. (Declaration of Tammy Smith Ex. 10; Smith Dep., February 28, 2006, at 21.)
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II. CONCLUSIONS OF LAW: Elements of Proof for Permanent Injunctive Relief
1. Entry of an injunction is proper where (1) there is a threat of irreparable harm to the movant, (2) the threatened irreparable harm outweighs the injury that granting the injunction will inflict on other litigants, (3) the movant has a probability or likelihood of success on the merits, and (4) the public interest will be served by granting an injunction. Dataphase Systems v C L Systems, Inc., 640 F.2d 109, 114 (8th Cir. 1980) (en banc). The standard for granting a permanent injunction is essentially the same as for a preliminary injunction, except that to obtain a permanent injunction the movant must attain success on the merits. Bank One v. Guttau, 190 F.3d 844, 847 (8th Cir. 1999) (citing Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n.12 (1987)). The grant of a permanent injunction lies within the discretion of the trial court and is subject to review for abuse of that discretion. Randolph v. Rogers, 170 F.3d 850, 856 (8th Cir. 1999).
2. This Court entered a preliminary injunction on September 9, 2005. By order dated September 29, 2005, this Court certified a plaintiff class in this action comprised of “all future, current and former foster children in the Missouri foster care system, for whom adoption was, is or will be a court-ordered permanent placement goal, and who are or would be beneficiaries of adoption assistance subsidies under Missouri law as unchanged by Senate Bill 539.”
Federal and State Statutory and Regulatory Scheme for Missouri Adoption Subsidy Program
3. Defendant, K. Gary Sherman, is the Director of DSS and, in that capacity, oversees and is legally responsible for the administration and management of the Children’s Division and the implementation of its child welfare programs and services, including adoption services. (RSMo Section 660.010.1; Sherman Dep., Jan. 26, 2006, at 4, 1921.) 48
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4. The federal Title IV-E adoption assistance program provides federal matching funds to states that establish HHS-approved “qualifying plans” to provide adoption assistance for children with special needs. 42 U.S.C. §671.
5. The state of Missouri has a qualifying “State Plan for Title IV-E of the Social Security Act Foster Care, Independent Living and Adoption Assistance” (“Missouri State Plan”) and receives federal funding for adoption assistance purposes. (Missouri Title IV-E State Plan, Ex. 45.)
6. Missouri state law, § 453.074.1, states that “the division of family services shall have the following duties in the administration of the subsidy program: . . . Comply with all federal laws relating to adoption subsidies in order to maintain the eligibility of the state of Missouri for federal funds.” § 453.074.1 RSMo. As a matter of law, DSS is required to operate its entire adoption subsidy program in compliance with federal law.
7. Additionally, the Missouri State Plan requires that “[a]s a condition of the receipt of Federal funds under title IV-E of the Social Security Act … the [state agency] … hereby agrees to administer the program in accordance with the provisions of this State plan, title IV-E of the Act, and all applicable Federal regulations and other official issuances of the Department.” (Missouri Title IV-E State Plan, Ex. 45, at 2.) As a matter of law, DSS is required to operate its entire adoption subsidy program in compliance with federal law.
8. As held by the Eighth Circuit Court of Appeals, “The state of Missouri has availed itself of the funds offered by Congress through the [Adoption Assistance Act]. Although Congress may not require a state to participate in a program created pursuant to the Spending Clause, once a state agrees to take the funds offered through such programs the state is bound to comply with federally imposed conditions . . . . The [Adoption Assistance Act] requires Missouri to submit to the Secretary of Health
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and Human Services (HHS) a state plan for providing foster care and adoption assistance that meets the standards enacted by Congress. 42 U.S.C. § 671. In Missouri, the Department of Social Services, through its Division of Family Services, has been designated to administer the state plan and assure compliance with the [federal] Act. Mo.Rev.Stat. §§ 207.010, 207.060, 660.010 (2000).” Missouri Child Care Ass’n v. Cross, 294 F.3d 1034, 1036 (8th Cir. 2002) (internal quotation marks and citation omitted). 9. As a matter of law, the state of Missouri has agreed through its State Plan to comply with federal regulations and official HHS issuances in administering its entire adoption subsidy program to Title IV-E eligible and state-only recipients. (Missouri Title IV-E State Plan, Ex. 45.) 10. Available to the public on-line since September of 2001, the federal Child Welfare Policy Manual provides official issuances of the U.S. Department of Health and Human Services (HHS) on the interpretation of federal law and federal regulations in the area of child welfare, including adoption subsidies. (Federal Child Welfare Policy Manual, Ex. 113; http://www.acf.hhs.gov/j2ee/programs/cb/laws_policies/laws/cwpm/index.jsp; trial testimony of Jeanette Wiedemeier Bower.) 11. Children with “special needs” are those whom the State has “determined . . . cannot be returned to the home of his parents” and for whom “there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance under this section or medical assistance under title XIX.” See 42 U.S.C. § 673(c).
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12. Missouri law and Missouri DSS policy include all foster children in the custody of the Children’s Division of DSS as “special needs” children for purposes of adoption assistance subsidies. See Mo.Rev.Stat. § 453.073.2.
13. As a matter of law, all class members are thus “special needs” children under federal and state law.
14. The federal Adoption Assistance Act, Section 673(a)(3), requires, in part: “[t]he amount of the payments [adoption subsidies] to be made in any case under clauses (i) and (ii) of paragraph (1)(B) shall be determined though agreement between the adoptive parents and the State or local agency administering the program under this section, which shall take into consideration the circumstances of the adopting parents and the needs of the child to be adopted, and may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.”
15. Section 673(a)(21) of the Adoption Assistance Act requires that a state’s Title IV-E plan must: “provide for health insurance coverage … for any child who has been determined to be a child with special needs, for whom there is in effect an adoption assistance agreement (other than an agreement under this part [42 USCS §§670 et seq.] between the state and an adoptive parent or parents, and who the state has determined cannot be placed with an adoptive parent or parents without medical assistance ….”
16. As a matter of law, all current or former DSS foster children are entitled to full medical benefits upon adoption regardless of the income of their adoptive parents. See Section 673(a)(21).
17. Federal law prohibits the payment of Title IV-E adoption assistance benefits in amounts in excess of the pre-existing foster care maintenance payments. (Missouri Title IV-E State Plan, Ex. 45, at Sec. 4, Requirement 3(c).) See 42 U.S.C. 673(a)(3).
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18. The federal Adoption Assistance Act, Section 675(3), requires that “[t]he term “adoption assistance agreement” means a written agreement, binding on the parties to the agreement, between the State agency, other relevant agencies, and the prospective adoptive parents of a minor child which at a minimum (A) specifies the nature and amount of any payments, services, and assistance to be provided under such agreement, and (B) stipulates that the agreement shall remain in effect regardless of the State of which the adoptive parents are residents at any given time.” See 42 U.S.C. §675(3).
19. Section 453.073 RSMo requires: “a written agreement shall be entered into by the division and the parents. The agreement shall set forth the following terms and conditions: (1) The type of allotment; (2) The amount of assistance payments; (3) The services to be provided; (4) The time period for which the subsidy is granted.”
20. Senate Bill 539 amends Section 453.073.3(4) of RSMo to require: “The time period for which the subsidy is granted [if that period is reasonably ascertainable] shall not exceed one year. The agreement can be renewed for subsequent years at the discretion of the director. All existing agreements will have deemed to have expired one year after they were initially entered into.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) Section 453.073.3(4) of Senate Bill 539, on its face, applies to both Title IV-E eligible (federal/state funded) and non-Title IV-E eligible (state-only funded) adoption assistance agreements.
21. Senate Bill 539 amends Section 453.073.4 of RSMo to require: “The subsidy shall only be granted to children who reside in a household with an income that does not exceed two hundred percent of the federal poverty level or are eligible for Title IV-E adoption assistance.” (Senate Bill 539, Ex. 34, at 453.073.3(4).) Section 453.073.4, on its face, applies to non-Title IV-E eligible adoption assistance agreements.
22. HHS regulations require that “there must be no income eligibility requirement (means
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test) for the prospective adoptive parent(s) in determining eligibility for adoption assistance payments.” 45 CFR 1356.40(c). (1) Plaintiffs’ Success on the Merits Plaintiffs have succeeded on the merits of the statutory and constitutional causes averred in Counts I, II and III of their complaint.
COUNT I: Violation of Adoption Assistance Act 23. Under 42 U.S.C. § 1983, a federal cause of action exists against anyone acting
pursuant to state authority that violates any “rights, privileges or immunities secured by the Constitution and laws of the United States.” Pediatric Specialty Care, Inc. v. Arkansas Dep’t of Human Services, 293 F.3d 472, 477 (8th Cir. 2002) (quoting 42 U.S.C. § 1983). Section 1983 provides a federal claim for violations of both federal constitutional and statutory law. Id. (citing Maine v. Thiboutot, 448 U.S. 1, 4 (1980).
24. The Adoption Assistance and Child Welfare Act of 1980, as amended by the Adoption and Safe Families Act of 1997, 42 U.S.C. §§ 620-629(i) and 670-679(b), constitutes controlling federal statutory law under the Supremacy Clause of the United States Constitution. See Blum v. Bacon, 457 U.S. 132, 145-56 (1986)(holding that, under the Supremacy Clause, federal Spending Clause legislation, such as the Adoption Assistance Act, supercedes conflicting state statutes and regulations). See also Missouri Child Care Association v. Cross, 294 F.3d 1034 (8th Cir. 2002)(the Adoption Assistance Act constitutes the supreme law of the land).
25. Moreover, Section 673(a)(3) of the Adoption Assistance Act is privately enforceable. See Pediatric Specialty Care, supra,, 293 F.3d 472, 477-78 (8th Cir. 2002) (setting forth private right of action standard); ASW v. Oregon, 424 F.3d 970, 975-78 (9th Cir. 2005) (§ 673(a)(3) creates private right of action); Missouri Child Care Ass’n v. Martin, 241 F. Supp. 2d 1032, 1041-42 (W.D. Mo. 2003) (on remand) (§§ 672 and
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675 confer enforceable private rights of action). 26. Three factors determine whether a particular statute creates a private right of action:
(1) whether the provision in question was “intend[ed] to benefit the putative plaintiff”; (2) whether the interest the plaintiff asserts is not so “vague and amorphous” that it is beyond the competence of the judiciary to enforce; and (3) whether the provision in question creates a binding obligation on the governmental unit. Pediatric Specialty, 293 F.3d 472, 477 (8th Cir. 2002)(citing Blessing v. Freestone, 520 U.S. 329, 340 (1997)). 27. Section 673(a)(3) meets the first prong of the private right of action test, as Plaintiffs are the intended recipients and beneficiaries of the adoption assistance benefits conferred under the federal statute. Missouri Child Care, 241 F. Supp. 2d 1032, 1041 (W.D.Mo. 2003)(the beneficiaries of Section 672 foster care maintenance payments are the foster children though their benefits may be paid indirectly through licensed providers); ASW, 424 F.3d 970, 975-78 (9th Cir. 2005). Section 673(a)(3) contains “rights creating language” that demonstrates a statutory intent to confer a private right of action. See Gonzaga University v. Doe, 536 U.S. 273 (2002)(where the Court clarified the three-pronged standard in Blessing. Id at 283); see also Masterman v. Goodno, 2004 U.S. Dist. LEXIS 354 at *20-24 (D.Minn. Jan. 8, 2004). 28. Section 673(a)(3) additionally satisfies the second prong of the private right of action test requiring that plaintiff assert an interest that is not so “vague and amorphous” as to be beyond the competence of the judiciary to enforce. Pediatric Specialty Care, 293 F.3d at 477 (citing Blessing, 520 U.S. at 340). See also Missouri Child Care, 241 F. Supp. 2d 1032, 1041 (W.D.Mo. 2003); ASW, 424 F.3d 970, 97578 (9th Cir. 2005) Section 673(a)(3) explicitly provides that the amount of any adoption assistance payments may be adjusted only with the “concurrence” of the adopting parents, and in consideration of specific factors, including the “the needs of
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the child being adopted.” 42 U.S.C § 673. As a matter of law, this statutory provision is well suited to court enforcement. 29. The final prong of the test, “whether the provision in question creates a binding obligation on the governmental unit,” is also satisfied by § 673(a)(3). Pediatric Specialty Care, 293 F.3d at 477 (citing Blessing, 520 U.S. at 340)(the statutory provision to be enforced must be couched in mandatory rather than precatory terms.”). Section 673(a)(3) states that the adoption subsidy “shall be determined through agreement between the adoptive parents and the state or local agency” and that the only circumstance where the subsidy may be “adjusted periodically” is “with the concurrence of the adopting parents.” (emphasis added). See also ASW, 424 F.3d 970, 975-78 (9th Cir. 2005) (concluding § 673(a)(3) creates a private right of action). 30. Section 453.073.3(4) places within the discretion of the DSS Director the unilateral authority to renew adoption subsidy agreements executed by the state of Missouri for both IV-E eligible and non-IV-E eligible subsidies. On its face, this provision conflicts with, violates, and is preempted by the express language of 42 U.S.C. 673(a)(3) which states that adoption subsidy agreements “may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances.” (emphasis added.) 31. Section 453.073.3(4) further imposes a blanket one-year limitation upon the duration of all adoption subsidy agreements and causes all existing adoption subsidy agreements to expire automatically upon their one-year anniversary. On its face, this provision likewise conflicts with, violates, and is preempted by the express language of 42 U.S.C. 673(a)(3) which states that adoption subsidy agreements “may be readjusted periodically with the concurrence of the adopting parents …” 32. In evaluating an alleged statutory violation or conflict, courts first look to the plain
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meaning of the subject statutory provisions. Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984); See also Camacho v. Texas Workforce Comm’n, 408 F.3d 229, 236-37 (5th Cir. 2005). Additionally, official policy issuances of HHS, the federal agency charged with implementing the Title IVE program, are to be given deference. See id. at 844 (“a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of any agency”). 33. Here, the plain language of Section 673(a)(3) is dispositive; however, even if the Court were to look beyond this plain statutory language, Section 453.073.3(4), in imposing a blanket limitation on duration and automatic expiration, conflicts with and is preempted by the controlling official HHS issuance in the HHS Child Welfare Policy Manual, Section 8.2D.2, which states: “States may not have a blanket policy which limits the duration of all adoption assistance payments to a date earlier than the eighteenth birthday of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents, depending on the needs of the child and the circumstances of the parents.” 34. Moreover, the blanket limitation on duration provision also conflicts with and is preempted by the controlling official HHS issuance in the HHS Child Welfare Policy Manual, Section 8.2D.5, requiring that adoption assistance payments must continue until (1) the child has attained the age of 18 (or 21 if the state has determined that the child has a mental or physical disability which would warrant the continuation of assistance); (2) the State determines that the adoptive parents are no longer legally responsible for the support of the child; or (3) the State determines that the adoptive parents are no longer providing any support to the child. ( HHS Child Welfare Policy Manual, Sec. 8.2, Ex. 59, at 8.2D.5.) 35. As a matter of law, under the challenged amendments to 473.073.3(4), all existing
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adoption subsidy contracts expire on June 30, 2006, and all new subsidy contracts will expire on their one-year anniversary. DSS policy, unchanged by the challenged provision, expressly distinguishes between review and automatic renewal on the one hand, and renegotiation upon expiration on the other hand. (Plaintiffs' Ex. 48; Defendant's Post Trial Proposed Findings of Fact para. 39; Plaintiffs' Post Trial Proposed Findings of Fact para. 77.) Defendant's assertion of an "intent" not to do what the challenged provision and DSS policy both say to the contrary -- taken as a litigation position and never reduced in writing within even a DSS policy -- is without merit. See, e.g., Idaho Dep’t of Health and Welfare v. United States Dep’t of Energy, 959 F.2d 149, 153 (9th Cir. 1992) (“We grant no deference to [a regulatory] interpretation put forth merely as a litigation position.”) 36. Finally, the Court has received into the evidentiary record an August 29, 2005 letter from Linda K. Lewis, Regional Administrator of the United States Department of Health and Human Services to DSS Director K. Gary Sherman. This letter sets forth the following official position of HHS: “[t]he Administration for Children and Families has determined that Missouri is out of compliance with title IV-E requirements because SB 539 states that the period for which all subsidies will be granted will not exceed one year and the director has the discretion as to whether the agreement can be renewed for subsequent years.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 37. The August 29, 2005 HHS letter further states, “Federal requirements state that once a child is determined eligible for title IV-E adoption assistance, he or she remains eligible and the subsidy continues for reasons specified in the Federal policy [Child Welfare Policy Manual, Section 8.2B.9 and Social Security Act – Section 473]. The Federal policy further states that States may not have a blanket policy which limits the duration of adoption assistance payments to a date earlier than the eighteenth birthday
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of eligible children, although a time limit may be set in individual cases with the concurrence of the adopting parents … [Child Welfare Policy Manual, Section 8.2D.2 and Social Security Act – section 473]. The Missouri legislation, however, states that the period for which all subsidies will be granted will not exceed one year.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 38. The August 29, 2005 letter also states, “Federal policy [Child Welfare Policy Manual Section 8.2D.5 and Social Security Act – section 473; and 45 CFR 1356.40(b)] provides that once a child is determined eligible for adoption assistance under IV-E, he or she remains eligible and the subsidy continues unabated. Once an adoption assistance agreement is signed and in effect, it can only be terminated if 1) the child has reached the age of 18 (or the age of 21 if the State has determined that the child has a mental or physical disability which would warrant continuation of assistance), 2) the State determines that the adoptive parents are no longer legally responsible for the support of the child, or 3) the State determines that the adoptive parents are no longer providing any support to the child. Missouri’s legislation, however, states that the agreement can be renewed for subsequent years “at the discretion of the director” and therefore violates Federal policy.” (Letter from L. Lewis of HHS to G. Sherman of DSS, August 29, 2005, Ex. 94, at Bates 1 PRP 38-4 to 38-6.) 39. The Court gives due deference to this letter as well as official HHS policy issuances in construing of 42 U.S.C. Section 673(a)(3). Section 453.073.3(4) conflicts with and is preempted by the plain meaning of 673(a)(3) of the Adoption Assistance Act, the reasonable official HHS issuances under that Act, and as specifically construed and applied by HHS in the Lewis letter in administering the Title IV-E federal program.
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COUNT II: Equal Protection 40. Missouri Senate Bill 539 amends the state’s adoption subsidy law to include a new
Mo.Rev.Stat. § 453.073.4. The “means test” established in Section 453.073.4, as amended by Senate Bill 539, on its face, creates two classes out of an otherwise similarly situated pool of abused and neglected, special needs children, defined by Mo.Rev.Stat. § 453.073.2 as all current or former state wards of the Missouri foster care system. The means test will be applied both retroactively and prospectively to initially deny or terminate existing adoption subsidy benefits to one group of children and not the other. 41. Specifically, for one group, in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the 1996 Aid for Families With Dependent Children (AFDC) eligibility standard for Title IV-E purposes (also referred to as “non IV-E eligible” children), the new means test will be imposed on the income of the children’s existing or prospective adoptive parents to initially deny or terminate their existing adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes (“IV-E eligible” children), no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. Mo.Rev.Stat. § 453.073.4 creates an unlawful discriminatory classification under the Equal Protection Clause. 42. A single governmental purpose has been advanced for § 453.073.4 and its means test: achieving cost savings in the state’s adoption subsidy program by reducing the amount of state funds appropriated for the program and directing those funds to the most needy. 43. First, this classification infringes on the fundamental right of foster children -- their liberty interest in avoiding unnecessary government confinement -- and cannot
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survive strict scrutiny review. A discriminatory classification implicating a suspect class or a fundamental right triggers strict scrutiny. Plyler v. Doe, 457 U.S. 202, 216218 (1982); Lubin v. Panish, 415 U.S. 709, 721-22 (1974). Under strict scrutiny, a statute’s classification must be narrowly tailored to achieve a compelling state purpose. Plyler v. Doe, 457 U.S. at 216-218. 44. “Liberty from bodily restraint always has been recognized as the core of the liberty protected by the Due Process Clause from arbitrary governmental action.” Youngberg v. Romeo, 457 U.S. 307, 316 (1982) (citing Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1, 18 (1979) (Powell, J., concurring in part and dissenting in part). See also DeShaney v. Winnebago, 489 U.S. 189, 200 (1989); Ingraham v. Wright, 430 U.S. 651, 673-674 (1977); Collins v. Bellinghausen, 153 F.3d 591, 596 (8th Cir. 1998). 45. Unnecessarily prolonged confinement in government foster care invokes the substantive due process liberty interests of foster children. See DeShaney, 489 U.S. at 201 n.9; Taylor v. Ledbetter, 818 F.2d 791, 796-97 (11th Cir. 1987) (recognizing due process liberty interest of foster child in state custody in a damages action under § 1983); Kenny A. v. Perdue, 356 F.Supp.2d 1353, 1360-61 (N.D.Ga., 2005) (finding that “the evidence shows that foster children in state custody are subject to placement in a wide array of different types of foster care placements, including institutional facilities where their physical liberty is greatly restricted”). See also Norfleet ex rel. Norfleet v. Arkansas Dep’t of Human Servs., 989 F.2d 289, 293 (8th Cir. 1993) (foster children have constitutional right to “adequate medical care, protection and supervision”). See also Foucha v. Louisiana, 504 U.S. 71, 85-86 (1992) (plurality opinion) (four justices acknowledged that restraint on liberty is a fundamental right and violative of equal protection where the State had not provided a “particularly convincing reason.”) The asserted purpose of cost savings here fails to meet this articulation of heightened scrutiny.
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46. Defendant in this case concedes that Mo.Rev.Stat. § 453.073.4 will result in foster children staying in foster care for at least six months longer. This impingement of foster children’s substantive due process rights constitutes a violation of their fundamental rights, triggering strict scrutiny review. Section 453.073.4 must be enjoined because it is not narrowly tailored to serve a compelling state interest. The state’s asserted government purpose, cost savings, is not sufficient to withstanding this rigorous standard of review. See Shapiro v. Thompson, 394 U.S. 618, 632 (1969). The means test is not narrowly tailored, as it selectively tests some adoptive parents’ gross income without consideration of actual expenditures or even the child’s needs.
47. Second, even assuming arguendo that rational basis review applies, the means test in RsMo 453.073.4 is not rationally related to a legitimate government interest.
48. The means test established in Section 453.073.4, as amended by Senate Bill 539, on its face, creates two classes out of an otherwise similarly situated pool of abused and neglected, special needs children, defined by Mo.Rev.Stat § 453.073.2 as all current or former state wards. The means test will be applied to deny adoption subsidy benefits to one group of children and not the other. Specifically, for one group in which the income of the children’s biological parent(s) (from whom they were removed and placed into foster care) exceeded the AFDC eligibility standard for Title IV-E purposes, the means test will be imposed on the income of the children’s existing or prospective adoptive parents to deny or abrogate their adoption subsidy. For the other group, in which the income of the children’s biological parent(s) met the AFDC eligibility standard for Title IV-E purposes, no means test will be applied to the children’s current or prospective adoptive parent(s), regardless of their income. In the area of economics and social welfare, equal protection analysis requires that the state establish that the challenged classification is rationally related to some legitimate
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governmental purpose. Ranschburg, 709 F.2d 1207, 1209 (8th Cir. 1983) (citing United States Dep’t of Agric. v. Moreno, 413 U.S. 528, 533 (1973); Dandridge v. Williams, 397 U.S. 471, 485 (1970); Medora v. Colautti, 602 F.2d 1149, 1152 (3d Cir. 1979); Alcala v. Burns, 545 F.2d 1101, 1104 (8th Cir. 1976)). 49. A virtually identical social welfare classification in Missouri failed to withstand Equal Protection scrutiny in Ranschburg, 709 F.2d 1207 (8th Cir. 1983). In Ranschburg, plaintiffs challenged on Equal Protection grounds a utility subsidy program in Missouri that granted financial assistance to multiple classifications of disabled citizens, whose eligibility for a statutory utility program under state law was determined solely by their additional participation in other statutorily enumerated public assistance programs. Id. at 1208-09. Plaintiffs, deemed “disabled” under the purview of the Missouri Medical Assistance Program, were nonetheless denied utility subsidy benefits because they did not participate in any of the public assistance programs specifically enumerated in the challenged statute. Id. 50. Plaintiffs contended that because they were equally situated in terms of need and disability with those receiving the utility subsidy, the state had acted unconstitutionally in excluding them from the program benefits. See Id. at 1209-11. The state of Missouri defended its statutory scheme in the District Court, arguing that it rationally promoted the state’s legitimate interest in allocating limited public funds among the state’s most needy citizens. Id. The Court struck down the challenged statute finding that no legitimate governmental interest was served by the subject classification. 51. Upon review, the Eighth Circuit Court affirmed the District Court’s judgment striking down the utility subsidy law on Equal Protection grounds. The Circuit agreed that the state of Missouri generally possesses a legitimate interest in directing limited public funds to the most needy; however, it concluded that the challenged program’s
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eligibility classifications were irrational as they assured no greater need on the part of program recipients than was demonstrated by the non-recipient plaintiffs. Id. at 1210. 52. The Eighth Circuit held: “[a]lthough states may have great discretion in the area of social welfare, they do not have unbridled discretion. They must still explain why they chose to favor one group of recipients over another. Thus, it is untenable to suggest that a state’s decision to favor one group of recipients over another by itself qualifies as a legitimate state interest.” Id. at 1211. 53. The classification imposed by Senate Bill 539 is as irrational as the classification struck down in Ranschburg. The means test in Senate Bill 539 is not rationally related to a legitimate governmental interest, and is arbitrary and harmfully unfair. No rational thread ties Senate Bill 539's means testing of a child’s adoptive parents’ gross income, because that same child’s biological parents’ income exceeded an income standard, to the governmental interest in directing state funds to the most needy. Undisputedly needy children will be denied the benefit -- the children whose adoption assistance subsidies are selectively denied or terminated under the new law are, by definition, at least equally in need of the benefit as those who will receive the subsidies. 54. The challenged law is also unfair and not rationally related to saving money by directing state funds to the most needy because it will never apply a means test to the income of the adoptive parents of IV-E eligible children, no matter how high their gross income may be. Moreover, the state will continue to fund all IV-E eligible children, regardless of their adoptive parents’ gross income, with 38% state dollars. See 69 Fed. Reg. 68,372 (Nov. 24, 2004) (Federal Financial Participation in State Assistance Expenditures, FY 2006). At the same time, the law will deny or terminate adoption assistance subsidies completely to only certain special needs children whose adoptive parents’ gross income exceeds 200% of the federal poverty level or “FPL”
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($32,180 for a family of three) solely because their biological parents’ income exceeded the 1996 AFDC standard. State dollars will thus fund subsidies for children in adoptive homes with higher gross incomes than the homes where the state will deny or terminate subsidies for equally needy children. Adoptive parents with more than one adoptive child could arbitrarily lose the subsidy for one child, but retain it for another. (Preliminary Injunction hearing, at 188.) 55. Finally, the asserted governmental purpose underlying Senate Bill 539's means test is wholly illusory and non-existent because the bill’s means test will not save taxpayer money, but will increase the overall cost of child welfare in the State of Missouri. The State irrationally projected fiscal savings to flow from Senate Bill 539 based upon (1) the clearly erroneous assumption that 43% of all existing adoption subsidy beneficiaries in Missouri were non-IV-E eligible when, in actuality, only 18% were non-IV-E eligible, (2) the clearly erroneous assumption that the adoption subsidy population in Missouri would grow at the flat rate of 1300 per year when, in actuality, adoptions in Missouri had steadily declined from 1,515 in FY2002 to 1,123 in FY2005 according to readily available DSS adoption program data, (3) the arbitrary and false assumption that children whose adoptive placements are disrupted as a result of the means test will experience, on average, a six month additional stay in foster care, even though readily available state foster care performance data demonstrated that additional stays of 24 months or longer should be expected, (4) a complete failure to account for the significant administrative and caseworker costs required to serve the increased foster care population resulting from Senate Bill 539, even though these cost impacts were fully recognized and anticipated by DSS officials, and (5) a failure to properly account for the legislature’s FY2006 adoption subsidy program appropriation at 250% of FPL, instead of 200% of FPL. (Morris Dep., Dec. 12, 2005, at 27-31; Table 28, February 2006 Children’s Services
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Management Report, Ex. 120; Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1; Preliminary Injunction hearing, at 46-47; Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 56. As a matter of law, the Court holds that the asserted governmental purpose for the means test of Senate Bill 539 is arbitrary and clearly erroneous. State of Minnesota v. Clover Leaf Creamery, 449 U.S. 456, 464 (1981). In the face of readily available DSS adoption data and the recognized additional foster care costs to flow from Senate Bill 539's means test, the budgetary savings asserted by the state could not reasonably be conceived to be valid by any reasonable governmental decision-maker.
COUNT III: Contracts Clause 57. The Contracts Clause of the United States Constitution prohibits the states from
enacting legislation that “impair[s] the Obligation of Contracts . . .” on a retroactive basis. United States Constitution, Art. I, Sec. 10, cl. 1. In adjudicating the legality of a statute under the Contracts Clause, the court must determine “whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.” Energy Reserves Group, Inc. v. Kansas Power and Light Co., 459 U.S. 400, 411 (1983) (citing Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244 (1978)). See also, Koster v. City of Davenport, Iowa, 183 F.3d 762, 766 (8th Cir. 1999). 58. The United States Supreme Court has established a three-part analysis for a constitutional inquiry under the Contracts Clause: “(1) does a contractual relationship exist, (2) does the change in the law impair that contractual relationship, and, if so, (3) is the impairment substantial.” Koster, 183 F.3d at 766 (quoting Honeywell, Inc. v. Minnesota Life and Health Ins. Guar. Assoc., 110 F.3d 547, 551 (8th Cir. 1997)). 59. Significantly, when the State is a party to the subject contract, the Court does not grant the customary level of deference it affords a state legislature when “reviewing economic and social regulation[.]” Energy Reserves Group, 459 U.S. at 412-413
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(quoting United States Trust v. New Jersey, 431 U.S. 1, 22 (1977)). “Impairment of a State’s own contract … faces[s] more stringent examination under the Contract Clause than would laws regulating contractual relations between private parties.” Allied Structural Steel Company v. Spannaus, 438 U.S. 234, 245 n. 15 (1978)(citing United States Trust, 431 U.S. at 22-23). “When a State itself enters into a contract, it cannot simply walk away from its financial obligations.” Energy Reserves Group, 459 U.S. at 413 n.14. “Complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake.” Id. (quoting United States Trust, 431 U.S. at 26). 60. The Form CS-SA-2 Adoption Subsidy Agreements executed between the state of Missouri and adoptive parents, on behalf of their adopted children, constitute binding and enforceable contracts. 61. The Form CS-SA-2 Adoption Subsidy Agreement, Part 1, A, 1-5 obligates the State to “subsidize adoptive parents” for expenses which are categorized in the contracts as “maintenance,” “recurring expenses” and “non-recurring expenses.” 62. The Form CS-SA-2 Adoption Subsidy Agreement, Part I, C obligates the State “to provide the necessary authorization for participation [of the adopted child] in the Missouri Medicaid Plan….” 63. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 on their face impair the obligation of the state to subsidize the expenses of adopted parents through maintenance payments as stated in the Form CS-SA-2 Adoption Subsidy Agreement and the Form CS-SA-2 Attachments. 64. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 on their face impair the State’s contractual obligation to “provide necessary authorization for participation [of adopted children] in the Missouri Medicaid Plan” as stated in the Form CS-SA-2 Adoption Subsidy Agreement, Part I Sec. C.
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65. The impairment of contractual rights caused by Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 is substantial. Section 453.073.3(4) abrogates all existing agreements (“all existing agreements will have been deemed to have expired ….”). Section 453.073.3(4) transforms what were binding contractual obligations for adoption assistance into payments made “at the discretion” of the State and reviewable by the State alone on a yearly basis.
66. By making all pre-existing contracts expire after one year, Section 453.073.3(4) fundamentally alters the duration of existing contracts. Significantly, the State’s obligation to authorize the participation of adopted children in the Missouri Medicaid Plan becomes an item subject to a yearly review for eligibility under Sections 453.073.3(4) and 453.073.4.
67. Finally, Section 453.073.4 adds requirements and conditions for adoption assistance and Medicaid participation which were not part of the original contracts.
68. Sections 453.073.3(4) and 453.073.4 of Senate Bill 539 are unconstitutional under the Contracts Clause of Article I, Section 10 of the United States Constitution. Under the heightened scrutiny standard set forth in U.S. Trust, Allied Structural Steel and Energy Reserves, the subject statutory revisions are not reasonable as they are intended solely to further an asserted governmental interest in saving money. (See e.g. U.S. Trust, 431 U.S. at 26: “If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”)
69. As a matter of law, the Court finds that the state may not lawfully use the pre-printed termination clause of Form CS-SA-2 Adoption Subsidy Agreement, Sec. V.C, to terminate existing adoption assistance agreements. This provision states, “(f)urther, either party at any time may, upon thirty (30) days written notice, terminate this agreement without the necessity of showing good cause for this termination. The
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Division does not intend to terminate this Agreement unless legal, fiscal, or other circumstances necessitate some adjustment in the Missouri Adoption Subsidy Program expenditures or procedures.” (Form CS-SA-2, Ex. 99, at V.C.) 70. First, the V.B. termination clause undermines the federal and state statutory schemes providing for the existence of the contracts in the first place. Missouri contract law requires the severance of clauses that violate public policy. See Swain v. Auto Services, Inc., 128 S.W.3d 103 (Mo. Ct. App. 2003) and High Life Sales Company v. Brown-Forman Corp., 823 S.W.2d 493 (Mo. 1992) (forum selection clauses voided for reasons of public policy; remainder of arbitration agreements held valid). 71. Where a party terminates a contract according to its provisions, the contract and all rights thereunder are wholly abandoned. After termination of a contract, all of the parties' unperformed undertakings are ended. HGS Homes, Inc. v. Kelly Residential Group, Inc. 948 S.W.2d 251, 255 (Mo. Ct. App. 1997); Thumm v. Lohr, 306 S.W.2d 604, 609 (Mo. Ct. App.1957). Such a result is clearly against public policy and unenforceable. The Adoption Assistance and Child Welfare Act of 1980, 42 U.S.C. Sec. 620-629(i), the Adoption and Safe Families Act of 1997, 42 U.S.C. Sec 670679(b) and RSMO Chapter 453 were all enacted to help provide permanent homes for adopted children. 72. Second, operation of the termination clause would violate the principle that a party seeking to rescind or terminate a contract must act before the other party is placed in a position where it would be prejudiced by a rescission or termination. See e.g., Jetz Service Company, Inc. v. KC Citadel Apartments, L.L.C. Coinmach Corporation, 59 S.W.3d 527, 530 (Mo. Ct. App. 2001); Gilmartin Bros., Inc. v. Kern, 916 S.W.2d 324, 330 (Mo. Ct. App. 1995). While the parents did not adopt children solely because of the availability of financial assistance from the State, the parents relied upon the State to fulfill its contractual obligation to defray the considerable financial
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expenses required to raise and support special needs children. Adoptive parents, regardless of income, relied upon the State to provide financial assistance to special needs children until their eighteenth birthday. The State’s abandonment of the contracts is too late. Once the children were adopted, the parents became legally and morally obligated to raise their adopted children. 73. Finally, under Missouri law, specific contractual terms control over inconsistent general provisions. See e.g. A&L Holding Company v. Southern Pacific Bank, 34 S.W.3d 415, 418 (Mo. Ct. App. 2000); Tri-County Retreading, Inc. v. Bandag Inc., 851 S.W.2d 780 (Mo.Ct. App.1993). It is a well-accepted rule in Missouri that where one contract clause is general, and another is more limited and specific, the more specific clause acts to modify and nullify the more general clause. Id. at 784; In re Marriage of Buchmiller, 566 S.W.2d 256, 259 (Mo. Ct. App. 1978); Surface v. Ranger Insurance Company, 526 S.W.2d 44, 48 (Mo. Ct. App. 1975). 74. The purpose of the Form CS-SA-2 Adoption Subsidy Agreement is to make possible the permanent placement of special needs children in adoptive households. The general termination upon 30 days notice language in Part V., Paragraph B conflicts with the more specific contractual language contained in Part V. A(1)-(6) which identify particular events in the lives of the adoptive child and parent(s) that will terminate the agreement:
Assistance as agreed upon in this Agreement shall continue until: (1) The child’s 18th birthday or the age of 21 years … or; (2) The parent’s rights to the child have been terminated; (3) The parent is no longer financially responsible for the child; or (4) The child is no longer in the legal custody of the parent … or; (5) Child moved out of the home; or (6) Death of the child or both adoptive parents. 75. Use of the term “shall” demonstrates that the contract guarantees that assistance will continue until one of the specifically defined events occurs. Viewed in consideration of V.A and B and the overall purpose of the contract, Sec. V.B. provides the mechanism by which parents or the State would stop the receipt or payment of
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assistance following the occurrence of one of the events in V.A. Generalized terms in a contract are limited and restricted by the specific provisions. Surface v. Ranger Ins. Co., 526 S.W.2d 44, 48 (Mo. Ct. App. 1975). (2) Irreparable Harm to Plaintiffs 76. Absent the entry of a permanent injunction, the plaintiff children will suffer irreparable harm and the continuing threat of irreparable harm to the stability of their existing adoptive relationships and home settings. For children still in foster care, they will suffer irreparable harm to their prospects for finding a permanent home through adoption. It is undisputed that children will remain in government custody in foster care for longer periods of time as a direct result of the Senate Bill 539 adoption subsidy provisions. (Bullet Points Memo, Ex. 93.) 77. The Section 453.073.4 means test of Senate Bill 539, if permitted to take effect, will likely reduce the overall number of adoptions of special needs children in Missouri by reducing the pool of financially capable adoptive parents. This will cause irreparable harm to those foster children who, as a result, will not achieve permanency. (Trial testimony of Jeanette Wiedemeier Bower.) 78. The Section 453.073.4 means test of Senate Bill 539, if permitted to take effect, would substantially interfere with the financial ability of existing adoptive parents to care for and meet the unique needs of their adopted special needs children. This will cause harm to the adopted children in the form of either inadequate care or disrupted adoptions. (Trial testimony of Jeanette Wiedemeier Bower.) 79. For example, Named Plaintiff A.C., a 5 year-old boy, is an adopted special needs child with a congenital heart disorder. A.C. has already undergone 14 hospitalizations and requires additional heart surgeries for his serious medical condition. A.C.’s parent and Next Friend, Lana Capps, now earns an annual income of approximately $43,200, an amount that exceeds the Senate Bill 539 means test. Without the monthly
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$651 adoption subsidy provided by Missouri pursuant to the long-term adoption subsidy agreement executed at the time of A.C.’s adoption, however, Ms. Capps cannot sustain her household and financially meet the special needs of A.C. and his medical, psychiatric and educational care. 80. Similarly, Named Plaintiff J.A., another 5 year-old boy, is an adopted special needs child who suffers from severe anxiety, ADHD, oppositional defiant behavior disorder, depression and delayed learning. J.A. lived in some 23 different DSS foster homes from ages 8 through 10 and later resided in a group foster home following a failed suicide attempt. J.A’s special needs are quite substantial; and his parent and Next Friend, John Antonich, along with his spouse, Sharon, relies upon J.A.’s long-term $651 monthly adoption subsidy to provide special professional care. Mr. Antonich earns an annual income that also surpasses the Senate Bill 539 means test. (Testimony of John H. Antonich at the preliminary injunction hearing.) 81. On a prospective basis, the annual renewal provision of Senate Bill 539 will deter putative adoptive parents from choosing special needs children for adoption, as these otherwise interested parents will quite rationally worry about their long-term financial ability to support the adopted child. (Trial testimony of Jeanette Wiedemeier Bower.) 82. On a retroactive basis, the annual renewal provision threatens to negate the benefits now provided under the numerous existing adoption assistance agreements in Missouri. This basic threat to the viability of adoption assistance agreements creates an increased likelihood that numerous finalized adoptions will disrupt due to changed circumstances resulting in financial hardship within effected adoptive families and the risk that children’s special needs will go unaddressed. (Trial testimony of Jeanette Wiedemeier Bower.) 83. Affected special needs children, including the Named Plaintiffs, will suffer irreparable harm in the form of lost permanency, lost services to meet their special
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needs, and lost stability. (Declarations of Next Friends, John Fischer, Robert Strange, Michael Patterson, Lana Capps, John Antonich, Lavada Johnson and Tammy Smith.) 84. Moreover, Senate Bill 539 threatens to reverse the significant improvements in permanency outcomes achieved in Jackson County, Missouri under the courtsupervised consent decree entered in G.L. et al. v. Gary Stangler et al, No. 77-0242CV-W-1 in the Western District of Missouri. The systemic reforms implemented in Jackson County under the G.L. consent decree have caused the average time a child spends in foster care before realizing adoption to fall from 36.12 months in 1994 to 26.99 months in 2004. Similarly, the average length of time between the identification and assignment of adoption as a child’s permanency goal to the child’s adoptive placement has fallen from 23.37 months in 1995 to 15.92 months in 2004. (July 1, 2004 through December 31, 2004 Report of Compliance, G.L. et al. v. Gary Stangler et al., Ex. 56.) 85. In enacting Senate Bill 539, the state of Missouri and DSS were aware that the new eligibility scheme would undermine the essential purpose underlying the state’s adoption subsidy program: the achievement of timely permanency with adoptive families for special needs children. Thus, DSS staff prepared a memorandum entitled, “Bullet Points for Means Testing Adoption Subsidy,” (“Bullet Points Memo”) that provided as follows:
(a) “By implementing a means test on only the state only adoptions, children who are not IV-E eligible will be put at a disadvantage to being adopted versus children that are IV-E eligible.” (b) “By reducing the resources available to parents to adopt special needs children, it is likely that children will remain in custody longer. The average cost for a child in foster care is 20.48% higher than the average cost of a child in adoption subsidy, not including the additional staff time required for Foster
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Care as opposed to children [in] who are in Adoption Subsidy.” (c) “Any savings due to means testing adoption subsidy could be offset by the children remaining in custody longer.” (Bullet Points Memo, Ex. 93.) (3) Balancing the Equities 86. The irreparable harm to be suffered by plaintiffs absent injunctive relief substantially outweighs any threat of prejudice to defendant. 87. The only possible “harm” to the State is the loss of asserted “savings” to be generated by the new law; however, these purported savings are not only dwarfed by the undisputed harm to occur to the plaintiff children, they are false. 88. The state irrationally projected fiscal savings to flow from Senate Bill 539 based upon (1) the clearly erroneous assumption that 43% of all existing adoption subsidy beneficiaries in Missouri were non-IV-E eligible when, in actuality, only 18% were non-IV-E eligible, (2) the clearly erroneous assumption that the adoption subsidy population in Missouri would grow at the flat rate of 1300 per year when, in actuality, adoptions in Missouri had steadily declined from 1,515 in FY2002 to 1,123 in FY2005 according to readily available DSS adoption program data, (3) the demonstrably false assumption that children whose adoptive placements disrupt as a result of the means test will experience, on average, a six month additional stay in foster care, even though readily available state foster care performance data demonstrated that additional stays of 24 months or longer should be expected, (4) a complete failure to account for the significant administrative and caseworker costs required to serve the increased foster care population resulting from Senate Bill 539, even though these cost impacts were fully recognized and anticipated by DSS officials and (5) a failure to properly account for the legislature’s FY2006 adoption subsidy program appropriation at 250% of FPL, instead of 200% of FPL. (Morris Dep., Dec.
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12, 2005, at 27-31; Table 28, February 2006 Children’s Services Management Report, Ex. 120; Report No. 2005-79, October 2005, Office of the State Auditor of Missouri, Ex. 96, at 1; Preliminary Injunction hearing, at 46-47; Savings from Means Testing, Ex. 106, at 1 PRP 28-36.) 89. The costs of disrupting the lives of special needs children, diminishing their opportunities for adoption, and maintaining them in state custody for longer periods of time – the likely results of the SB 539 provisions – far surpass the false, and, even if true, comparably insignificant, cost savings asserted by the state. (4) The Public Interest 90. The public interest will be served by the entry of permanent injunctive relief. Public policy strongly favors the efficient and expeditious provision of permanency for abused and neglected children taken into the temporary custody of the state and its child welfare agency. Moreover, the public has a strong interest in the sanctity and enforceability of contracts entered into between the state of Missouri and its citizens. Missouri Senate Bill 539, if allowed to take effect, will undermine these vital interests. 91. There is immense value to society and to individual foster children to have those children move from the foster care system into permanent, adoptive homes when reunification is not possible. (CWLA, Adoption Standards, Ex. 85, at 5; Expert Report of Jeanette Wiedemeier Bower, Ex. 115, at 4; trial testimony of Wiedemeier Bower.) 92. The Senate Bill 539 means test will cause emotional and developmental harm to those children who fail to achieve permanency through adoption. It is widely recognized that there is a higher incidence of poverty, emotional and mental disability, and criminal behavior among foster youth who have attained adulthood, particularly among those foster youth who aged out of the foster care system without ever
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knowing a permanent family. (Trial testimony of Wiedemeier Bower.) 93. The challenged provisions will serve to undermine the core purpose of the
federal/state adoption subsidy program: to promote permanent homes for special needs foster children. The public interest in furthering the purpose of the federal/state adoption subsidy program will thus be served by issuing a permanent injunction. Accordingly, the Court has signed an Order granting plaintiffs’ Motion for Permanent Injunction in this matter for the reasons stated in these Amended Findings of Fact and Conclusions of Law.

Date: 8/4/06

/s/Scott O. Wright SCOTT O. WRIGHT Senior United States District Judge

75 Case 2:05-cv-00726-SOW Document 124 Filed 08/04/06 Page 75 of 75

 
 CLOSED,EAPN,PHV
U.S. District Court Western District of Missouri (Jefferson City) CIVIL DOCKET FOR CASE #: 2:05−cv−00726−SOW

E.C. et al v. Blunt et al Assigned to: District Judge Scott O. Wright Cause: 42:1983 Civil Rights Act
Plaintiff E.C. a minor, by Next Friend, Jill Katz

Date Filed: 08/15/2005 Date Terminated: 05/10/2006 Jury Demand: None Nature of Suit: 950 Constitutional − State Statute Jurisdiction: Federal Question
represented by Ira Lustbader 404 Park Avenue South New York, NY 10016 (212) 683−2210 LEAD ATTORNEY ATTORNEY TO BE NOTICED

James Patrick Muehlberger Shook, Hardy &Bacon, LLP−Grand 2555 Grand Boulevard Kansas City, MO 64108−2613 (816) 474−6550 Fax: (816) 421−5547 Email: jmuehlberger@shb.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

James J. Wilson Berg, Borgmann, Wilson &Wolk LLC 7711 Bonhomme Suite 850 Clayton, MO 63105 (314) 725−5955 Fax: (314) 725−0559 LEAD ATTORNEY ATTORNEY TO BE NOTICED

John J. Ammann St. Louis University Legal Clinic St. Louis University School of Law 321 North Spring Avenue St. Louis, MO 63108 (314) 977−2796 Fax: (314) 977−3334 Email: ammannjj@slu.edu LEAD ATTORNEY ATTORNEY TO BE NOTICED

Kathleen A. Jeanetta Hughes, Hubbard &Reed LLP 2345 Grand Blvd. Suite 2000 Kansas City, MO 64108−2663 (816) 709−4100 Fax: (816) 709−4198 Email: jeanetta@hugheshubbard.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Loretta E. Burns−Bucklew Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 1 of 27

Plaintiff
J.L. a minor, by Next Friend, Jill Katz

Shook Hardy &Bacon LLP 2555 Grand Boulevard Kansas City, MO 64108−2613 (816) 474−6550 Fax: (816) 421−5547 Email: lbucklew@shb.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Michael Sara Bartosz Children's Rights, Inc. 330 7th Avenue 4th Floor New York, NY 10001 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Nicholas Patrick Mizell Shook, Hardy &Bacon, LLP−Grand 2555 Grand Boulevard Kansas City, MO 64108−2613 (816) 474−6550 Fax: (816) 421−5547 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Pamela Macer Chun Rair &Yoshimoto 1000 Bishop Street Honalulu, HI 96813 (808)528−4200 Fax: (808) 531−8466 Email: pmacer@chunrair.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Priy Sinha Children's Rights, Inc. 330 7th Avenue, 4th Floor New York, NY 10001 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stephen Reynolds Berg, Borgmann, Wilson &Wolk LLC 7711 Bonhomme Suite 850 Clayton, MO 63105 (314) 725−5955 Fax: (314) 725−0559 Email: spr@bbwwllc.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 2 of 27

James J. Wilson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

John J. Ammann (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Kathleen A. Jeanetta (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

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Priy Sinha (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff
T.G. a minor, by Next Friend, Jill Katz

represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James J. Wilson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

John J. Ammann (See above for address) LEAD ATTORNEY
Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 3 of 27

ATTORNEY TO BE NOTICED

Kathleen A. Jeanetta (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Loretta E. Burns−Bucklew (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

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Plaintiff
B.G. a minor, by Next Friend, Jill Katz

represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

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Loretta E. Burns−Bucklew Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 4 of 27

(See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

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Plaintiff
A.G. a minor, by Next Friend, Jill Katz

represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

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Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 5 of 27

Nicholas Patrick Mizell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

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Plaintiff
W.S. a minor, by Next Friend, Robert Strange

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Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 6 of 27

Plaintiff
M.S. a minor, by Next Friend, Robert Strange

LEAD ATTORNEY ATTORNEY TO BE NOTICED
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represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
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Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 7 of 27

Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff
D.S. a minor, by Next Friend, Robert Strange

represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

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Nicholas Patrick Mizell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Pamela Macer (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Priy Sinha (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff
M.P. a minor, by Next Friend, Michael
Case: 2:05-cv-726

represented by Ira Lustbader (See above for address)
As of: 10/06/2012 08:32 AM CDT 8 of 27

Patterson
Plaintiff A.C. a minor, by Next Friend, Lana Capps

LEAD ATTORNEY ATTORNEY TO BE NOTICED
James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
James J. Wilson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
John J. Ammann (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Kathleen A. Jeanetta (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Loretta E. Burns−Bucklew (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Michael Sara Bartosz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Nicholas Patrick Mizell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Pamela Macer (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Priy Sinha (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 9 of 27

James J. Wilson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

John J. Ammann (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Kathleen A. Jeanetta (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Loretta E. Burns−Bucklew (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Michael Sara Bartosz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Nicholas Patrick Mizell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Pamela Macer (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Priy Sinha (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff
J.A. a minor, by Next Friend, John Antonich

represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James J. Wilson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

John J. Ammann (See above for address) LEAD ATTORNEY
Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 10 of 27

ATTORNEY TO BE NOTICED

Kathleen A. Jeanetta (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Loretta E. Burns−Bucklew (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Michael Sara Bartosz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Nicholas Patrick Mizell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Pamela Macer (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Priy Sinha (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff
T.J. a minor, by Next Friend, Lavada Johnson

represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James J. Wilson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

John J. Ammann (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Kathleen A. Jeanetta (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Loretta E. Burns−Bucklew Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 11 of 27

(See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Michael Sara Bartosz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Nicholas Patrick Mizell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Pamela Macer (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Priy Sinha (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff
A.J. a minor, by Next Friend, Lavada Johnson

represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James J. Wilson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

John J. Ammann (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Kathleen A. Jeanetta (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Loretta E. Burns−Bucklew (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Michael Sara Bartosz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 12 of 27

Nicholas Patrick Mizell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Pamela Macer (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Priy Sinha (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff
A.E. a minor, by Next Friend, Elizabeth Euer

represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

James J. Wilson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

John J. Ammann (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Kathleen A. Jeanetta (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Loretta E. Burns−Bucklew (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Michael Sara Bartosz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Nicholas Patrick Mizell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Pamela Macer (See above for address)
Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 13 of 27

Plaintiff
N.S. a minor, by Next Friend, Tammy Smith

LEAD ATTORNEY ATTORNEY TO BE NOTICED
Priy Sinha (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
James J. Wilson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
John J. Ammann (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Kathleen A. Jeanetta (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Loretta E. Burns−Bucklew (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Michael Sara Bartosz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Nicholas Patrick Mizell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Pamela Macer (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Priy Sinha (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 14 of 27

Plaintiff
J.C. a minor, by Next Friend, Jill Katz

Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Ira Lustbader (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
James Patrick Muehlberger (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
James J. Wilson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
John J. Ammann (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Kathleen A. Jeanetta (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Loretta E. Burns−Bucklew (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Michael Sara Bartosz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Nicholas Patrick Mizell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Pamela Macer (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Priy Sinha (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stephen Reynolds (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

V.
Defendant Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 15 of 27

Matt Blunt in his official capacity as Governor of the State of Missouri TERMINATED: 01/09/2006
Defendant K. Gary Sherman in his official capacity as Director of the Missouri Department of Social Services

represented by Douglas G. Leyshock Missouri Attorney General P.O. Box 899 Jefferson City, MO 65102 (573) 751−3321 Fax: (573) 751−9456 Email: doug.leyshock@ago.mo.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
Gary L. Gardner Missouri Attorney General's Office−JC P.O. Box 899 Jefferson City, MO 65102 (573) 751−3321 Fax: (573)751−9456 Email: gary.gardner@ago.mo.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Douglas G. Leyshock (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Gary L. Gardner (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Karen King Mitchell Missouri Dept. of Revenue P.O. Box 311 Jefferson City, MO 65105 (573) 751−5671 Fax: (573) 751−7150 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Heidi Doerhoff Vollet Cook, Vetter, Doerhoff &Landwehr, P.C. 231 Madison Street Jefferson City, MO 65101 573−635−7977 Fax: (573)635−7414 Email: hvollet@cvdl.net ATTORNEY TO BE NOTICED

Date Filed 08/15/2005

# Docket Text
1 COMPLAINT against all defendants (Filing fee $250 receipt number 232411) Service due by 12/13/2005, filed by Loretta E. Burns−Bucklew on behalf of J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Attachments: # 1 Civil Cover Sheet # 2 Exhibit "A" Declaration of E.C.# 3 Exhibit "B" Declaration of J.C.# 4 Exhibit "C" Affidavit of Fischer# 5 Exhibit "D" Affidavit of Strange# 6 Exhibit "E" Affidavit of Patterson# 7 Exhibit "F" Declaration of J.L.# 8 Exhibit "G" Declaration of Capps# 9 Exhibit "H" Declaration of Antonich# 10 Exhibit "I" Declaration of Johnson# 11 Exhibit "J" Declaration of Euer# 12 Exhibit "K" Declaration of Smith# 13 Notice of Exhibit Attachment Signed Declarations/Affidavits)(Burns−Bucklew, Loretta) (Entered: 08/15/2005)

Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 16 of 27

08/15/2005

2 MOTION to reassign/transfer case per Rule 83.9 filed byLoretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 8/30/2005 unless otherwise directed by the court (Burns−Bucklew, Loretta) (Entered: 08/15/2005)

08/15/2005

3 MOTION to certify class filed byLoretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 8/30/2005 unless otherwise directed by the court (Burns−Bucklew, Loretta) (Entered: 08/15/2005)

08/15/2005

4 SUGGESTIONS in support re 3 MOTION to certify class filed by Loretta E. Burns−Bucklew on behalf of Plaintiffs J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Attachments: # 1 Exhibit ACYF−CB−PA−01−01# 2 Exhibit Caseload Counter# 3 Exhibit '05 DSS Mgt Report# 4 Exhibit Fiscal Note# 5 Exhibit "E" Declaration of Strange# 6 Exhibit "F" Declaration of Patterson# 7 Exhibit "G" Declaration of Capps# 8 Exhibit "H" Declaration of Fischer# 9 Exhibit "I" Declaration of Antonich# 10 Exhibit "J" Declaration of Euer# 11 Exhibit "K" Declaration of Smith# 12 Exhibit "L" Declaration of Johnson)(Related document(s) 3 ) (Burns−Bucklew, Loretta) (Entered: 08/15/2005)

08/15/2005

5 MOTION to appoint Next Friend ad Litem filed byLoretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 8/30/2005 unless otherwise directed by the court (Burns−Bucklew, Loretta) (Entered: 08/15/2005)

08/15/2005

6 MOTION for leave to file excess pages filed byLoretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 8/30/2005 unless otherwise directed by the court (Attachments: # 1 Exhibit A)(Burns−Bucklew, Loretta) (Entered: 08/15/2005)

08/15/2005

7 MOTION for temporary restraining order or Preliminary Injunction filed byLoretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 8/30/2005 unless otherwise directed by the court (Burns−Bucklew, Loretta) (Entered: 08/15/2005)

08/15/2005

8 SUGGESTIONS in support re 6 MOTION for leave to file excess pages, 7 MOTION for temporary restraining order or Preliminary Injunction filed by Loretta E. Burns−Bucklew on behalf of Plaintiffs J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Attachments: # 1 Exhibit "A" House Bill 539# 2 Exhibit "B" Child Welfare Manual# 3 Exhibit "C" ACYF−CB−PA−01−01# 4 Exhibit "D" PIQ−90−02# 5 Exhibit "E" IRS Publ. 17# 6 Exhibit "F" PIQ 99−01# 7 Exhibit "G" Bower Declaration# 8 Exhibit "H" Patterson Declaration# 9 Exhibit "I" Euer Declaration# 10 Exhibit "J" Capps Declaration# 11 Exhibit "K" Antonich Declaration# 12 Exhibit "L" Fischer Declaration# 13 Exhibit "M" E.C. Declaration# 14 Exhibit "N" J.C. Declaration# 15 Exhibit "O" Strange Declaration# 16 Exhibit "P" Johnson Declaration# 17 Exhibit "Q" Budget Proposal# 18 Exhibit "R" Press Release# 19 Exhibit "S" 8.2B Eligibility# 20 Exhibit "T" G.L. Compliance Rpt.)(Related document(s) 6 , 7 ) (Burns−Bucklew, Loretta) (Entered: 08/15/2005)

08/16/2005

9 Notice of EAP NEUTRAL (Attachments: # 1 General Ofder)(Sullivan, Tanya) (Entered: 08/16/2005)

08/16/2005

SUMMONS ISSUED as to Matt Blunt, K. Gary Sherman. (Sullivan, Tanya) (Entered: 08/16/2005)

08/16/2005

10 LETTER OF REASSIGNMENT from Western Division to Central Division (Richardson, Glenda) (Entered: 08/16/2005)

08/16/2005

11 Motion to allow Ira Lustbader to appear pro hac vice (Pro Hac fee $50 receipt number 232479) filed byLoretta E. Burns−Bucklew on behalf of all plaintiffs (Burns−Bucklew, Loretta) (Entered: 08/16/2005)

08/17/2005

12 ORDER denying 2 motion to reassign/transfer case.. Signed by Judge Scott O. Wright on 8/17/2005. (McIlvain, Kelly) (Entered: 08/17/2005)

08/17/2005

ORDER granting 11 motion to appear pro hac vice approved by Clerk of Court. Attorney Ira Lustbader for T.G.; B.G.; A.G.; W.S.; M.S.; D.S.; M.P.; A.C.; J.A.; E.C.; T.J.; A.J.; A.E.; N.S.; J.C. and J.L..

Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 17 of 27

08/18/2005 08/18/2005 08/18/2005 08/22/2005 08/22/2005 08/23/2005 08/29/2005 08/30/2005
08/31/2005 08/31/2005
09/02/2005 09/02/2005 09/02/2005
09/02/2005

This is a text only entry and will serve as authorization for the pro hac participation by the attorney. No document is attached.
(Price, Jackie) (Entered: 08/17/2005)
13 ORDER granting 5 Jill Katz's application for appointment of next friend. Signed by Judge Scott O. Wright on 8−18−05. (Morse, Judy) (Entered: 08/18/2005)
14 ORDER granting 6 plaintiffs' motion for leave to file excess pages. Signed by Judge Scott O. Wright on 8−18−05. (Morse, Judy) (Entered: 08/18/2005)
15 TEMPORARY RESTRAINING ORDER. Signed by Judge Scott O. Wright on 8/18/2005. (McIlvain, Kelly) (Entered: 08/18/2005)
16 RETURN OF SERVICE of complaint executed by J.C., J.L., T.G., B.G., A.G., M.S., D.S., M.P., A.C., J.A., E.C., A.J., A.E., N.S.. Matt Blunt served on 8/16/2005, answer due 9/6/2005. (Burns−Bucklew, Loretta) (Entered: 08/22/2005)
17 RETURN OF SERVICE of complaint executed by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. K. Gary Sherman served on 8/16/2005, answer due 9/6/2005. (Burns−Bucklew, Loretta) (Entered: 08/22/2005)
18 ORDER: witness and exhibit lists due 9/2/05; proposed findings of fact and conclusions of law due 9/2/05; diskete due nlt 9 a.m. 9/8/05; briefs due 9/2/05; courtesy copies due 9/6/05. Signed by Judge Scott O. Wright on 8−23−05. (Morse, Judy) (Entered: 08/23/2005)
19 Emergency MOTION to expedite Discovery filed byLoretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 9/13/2005 unless otherwise directed by the court (Attachments: # 1 Exhibit "A" Gardner letter)(Burns−Bucklew, Loretta) (Entered: 08/29/2005)
22 TRANSCRIPT of Motion for Temporary Restraining Order held on 8/17/05 before Judge Scott O. Wright. Court Reporter: Melanie Beard. This is a text entry only − no document is attached. The transcript is available for review in the Clerk's Office. Please contact the court reporter listed above for copies. (Kee, Georgia) (Entered: 09/01/2005)
20 SUGGESTIONS in opposition re 19 Emergency MOTION to expedite Discovery filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman. Reply suggestions due by 9/15/2005 unless otherwise directed by the court (Related document(s) 19 ) (Gardner, Gary) (Entered: 08/31/2005)
21 ORDER granting 19 plaintiffs' emergency motion for expedited discovery; defendants shall produce Mr. Frederic M. Simmens for a 3 hr deposition prior to 9/8/05; defendants shall produce to plaintiffs copy of current Title IV−E Missouri State plan by 9/2/05; parties are to file documents previously ordered nlt 2 p.m. on 9/2/05. Signed by Judge Scott O. Wright on 8−31−05. (Morse, Judy) (Entered: 08/31/2005)
23 ANSWER to Complaint filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman.(Gardner, Gary) (Entered: 09/02/2005)
24 PROPOSED WITNESS LIST by Matt Blunt, K. Gary Sherman AND EXHIBIT LIST. (Gardner, Gary) (Entered: 09/02/2005)
25 SUGGESTIONS in opposition re 7 MOTION for temporary restraining order or Preliminary Injunction, 3 MOTION to certify class filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman. Reply suggestions due by 9/19/2005 unless otherwise directed by the court (Related document(s) 7 , 3 ) (Gardner, Gary) (Entered: 09/02/2005)
26 NOTICE of filing by Matt Blunt, K. Gary Sherman Proposed Finding of Fact, Conclusions of Law, and Order Denying Preliminary Injunction (Gardner, Gary) (Entered: 09/02/2005)

Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 18 of 27

09/02/2005 09/02/2005 09/02/2005 09/02/2005 09/02/2005 09/02/2005 09/06/2005
09/07/2005 09/07/2005 09/07/2005 09/07/2005
09/08/2005 09/08/2005 09/08/2005
09/13/2005

27 MOTION to amend/correct Complaint filed byNicholas Patrick Mizell on behalf of all plaintiffs Suggestions in opposition/response due by 9/19/2005 unless otherwise directed by the court (Attachments: # 1)(Mizell, Nicholas) (Entered: 09/02/2005)
28 PRETRIAL MEMORANDUM by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Mizell, Nicholas) (Entered: 09/02/2005)
29 NOTICE of filing by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S. of Plaintiffs' Proposed Findings of Fact and Conclusions of Law (Mizell, Nicholas) (Entered: 09/02/2005)
30 of Plaintiffs' Witness List for Preliminary Injunction Hearing (Mizell, Nicholas) Modified on 9/6/2005 to correct docket text(Bax, Laura). (Entered: 09/02/2005)
31 of Plaintiffs' Exhibit List for Preliminary Injunction Hearing (Mizell, Nicholas) Modified on 9/6/2005 to correct docket text(Bax, Laura). (Entered: 09/02/2005)
32 Motion to allow John Ammann to appear pro hac vice (Pro Hac fee $50 receipt number 1078001) filed byNicholas Patrick Mizell on behalf of all plaintiffs (Mizell, Nicholas) (Entered: 09/02/2005)
ORDER granting 32 motion to appear pro hac vice approved by Clerk of Court. Attorney John J. Ammann for plaintiffs.
This is a text only entry and will serve as authorization for the pro hac participation by the attorney. No document is attached.
(Bax, Laura) (Entered: 09/06/2005)
33 Motion to allow James Wilson to appear pro hac vice (Pro Hac fee $50 receipt number 232808) filed byNicholas Patrick Mizell on behalf of all plaintiffs (Mizell, Nicholas) (Entered: 09/07/2005)
34 Motion to allow Stephen Reynolds to appear pro hac vice (Pro Hac fee $50 receipt number 232807) filed byNicholas Patrick Mizell on behalf of all plaintiffs (Mizell, Nicholas) (Entered: 09/07/2005)
35 ORDER granting 27 motion to amend/correct complaint; amended complaint to be filed within 5 days from the date of this order. Signed by Judge Scott O. Wright on 9/7/2005. (McIlvain, Kelly) (Entered: 09/07/2005)
ORDER granting 33 and 34 motion to appear pro hac vice approved by Clerk of Court. Attorney James J. Wilson and Stephen Reynolds for plaintiffs.
This is a text only entry and will serve as authorization for the pro hac participation by the attorney. No document is attached.
(Carr, Lori) (Entered: 09/07/2005)
***Remark −DOCUMENT #36 HAS BEEN DELETED AS THIS ORDER WAS DOCKETED IN THE WRONG CASE IN ERROR. THERFORE, WILL NOT BE A DOCUMENT #36 (McIlvain, Kelly) (Entered: 09/08/2005)
36 PRELIMINARY INJUNCTION. Signed by Judge Scott O. Wright on 9/8/05. (Beard, Melanie) (Entered: 09/08/2005)
37 Minute Entry for proceedings held before Judge Scott O. Wright : MOTION HEARING held on 9/8/2005 re 7 MOTION for Preliminary Injunction filed by A.G.,, A.J.,, T.J.,, J.A.,, E.C.,, J.L.,, T.G.,, B.G.,, W.S.,, M.S.,, D.S.,, M.P.,, A.C.,, A.E.,, N.S.,. (Court Reporter Melanie Beard.) (McIlvain, Kelly) (Entered: 09/13/2005)
38 REPLY SUGGESTIONS to motion re 3 MOTION to certify class filed by Nicholas Patrick Mizell on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Attachments: # 1 Exhibit A)(Related document(s) 3 ) (Mizell, Nicholas) (Entered: 09/13/2005)

Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 19 of 27

09/14/2005

39 AMENDED COMPLAINT against all defendants filed by Loretta E. Burns−Bucklew on behalf of J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Attachments: # 1 Exhibit E.C. Affidavit# 2 Exhibit J.C. Affidavit# 3 Exhibit Fischer Affidavit# 4 Exhibit Strange Affidavit# 5 Exhibit Patterson Affidavit# 6 Exhibit J.L. Affidavit# 7 Exhibit Capps Affidavit# 8 Exhibit Antonich Affidavit# 9 Exhibit Johnson Affidavit# 10 Exhibit Smith Affidavit)(Burns−Bucklew, Loretta) (Entered: 09/14/2005)

09/15/2005

40 ANSWER to Amended Complaint filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman.(Gardner, Gary) (Entered: 09/15/2005)

09/29/2005

41 ORDER granting 3 plaintiffs' motion to certify class. Signed by Judge Scott O. Wright on 9−29−05. (Morse, Judy) (Entered: 09/29/2005)

09/29/2005

42 ORDER that joint proposed scheduling order due by 10/17/2005. Signed by Judge Scott O. Wright on 9−29−05. (Morse, Judy) (Entered: 09/29/2005)

09/30/2005

43 PROPOSED SCHEDULING ORDER Discovery Plan by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Burns−Bucklew, Loretta) (Entered: 09/30/2005)

10/07/2005

44 NOTICE OF APPEAL by Matt Blunt, K. Gary Sherman. Filing fee $ 255, receipt number 1102199. (Gardner, Gary) (Entered: 10/07/2005)

10/07/2005

45 MOTION to stay or Suspend the Preliminary Injunction Pending Appeal With Suggestions in Support filed byGary L. Gardner on behalf of Matt Blunt, K. Gary Sherman Suggestions in opposition/response due by 10/24/2005 unless otherwise directed by the court (Gardner, Gary) (Entered: 10/07/2005)

10/07/2005

46 ELECTRONIC TRANSMISSION of Notice of Appeal and docket sheet to US Court of Appeals re 44 Notice of Appeal (Kee, Georgia) (Entered: 10/07/2005)

10/07/2005

***Appeal Receipt of Notice of Appeal and supporting documents received by USCA on: Fri Oct 7 14:22:37 CDT 2005 (Kee, Georgia) (Entered: 10/07/2005)

10/13/2005

US COURT OF APPEALS 8th Circuit CASE NUMBER 05−3744 for 44 Notice of Appeal. (Bax, Laura) (Entered: 10/13/2005)

10/14/2005

47 TRANSCRIPT of Evidentiary held on September 8, 2005 before Judge Scott O. Wright. Court Reporter: Melanie Beard. This is a text entry only − no document is attached. The transcript is available for review in the Clerk's Office. Please contact the court reporter listed above for copies. Transcript sent to 8th Circuit Court of Appeals on 10/17/05. (Beard, Melanie) (Entered: 10/17/2005)

10/20/2005

48 SUGGESTIONS in opposition re 45 MOTION to stay or Suspend the Preliminary Injunction Pending Appeal With Suggestions in Support filed by Loretta E. Burns−Bucklew on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. Reply suggestions due by 11/4/2005 unless otherwise directed by the court (Related document(s) 45 ) (Burns−Bucklew, Loretta) (Entered: 10/20/2005)

10/21/2005

49 CERTIFICATE OF SERVICE by all plaintiffs of Rule 26(a) Initial Disclosures filed by Nicholas Patrick Mizell on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S..(Mizell, Nicholas) (Entered: 10/21/2005)

10/26/2005

50 CERTIFICATE OF SERVICE OF INITIAL RULE 26 DISCLOSURES filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman.(Gardner, Gary) (Entered: 10/26/2005)

11/08/2005

51 CERTIFICATE OF SERVICE by all plaintiffs for Notice of 30(b)(6) Deposition filed by Nicholas Patrick Mizell on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S..(Mizell, Nicholas) (Entered: 11/08/2005)

11/08/2005

52 CERTIFICATE OF SERVICE by all plaintiffs for Plaintiffs' Requests for Production of Documents filed by Nicholas Patrick Mizell on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S..(Mizell, Nicholas) (Entered: 11/08/2005)

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11/09/2005 11/09/2005 11/10/2005 11/29/2005 11/30/2005 11/30/2005 11/30/2005 11/30/2005 12/09/2005 12/09/2005 12/09/2005
12/12/2005
12/13/2005 12/16/2005

53 ORDER denying 45 defendants' motion to stay or suspend the preliminary injunction pending appeal. Signed by Judge Scott O. Wright on 11−9−05. (Morse, Judy) (Entered: 11/09/2005)
54 SCHEDULING ORDER: Permanent injunction hearing set for 5/4/06 at 9 a.m. in Kansas City, MO, pretrial conf. set at 8:30 a.m. Discovery due by 2/1/2006.Dispositive Motions due by 2/1/2006. Signed by Judge Scott O. Wright on 11−9−05. (Morse, Judy) (Entered: 11/09/2005)
55 Supplemental CERTIFICATE OF SERVICE OF INITIAL RULE 26 DISCLOSURES filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman.(Gardner, Gary) (Entered: 11/10/2005)
56 MAIL RETURNED as undeliverable. Mail sent to James Wilson. Returned with notation "No longer with Shook Hardy and Bacon, Return to Sender" (Related document(s) 53 , 54 ) (James, Carrie) (Entered: 11/29/2005)
57 CERTIFICATE OF SERVICE by K. Gary Sherman filed by Gary L. Gardner on behalf of Defendant K. Gary Sherman.(Gardner, Gary) (Entered: 11/30/2005)
58 CERTIFICATE OF SERVICE by Matt Blunt, K. Gary Sherman filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman.(Gardner, Gary) (Entered: 11/30/2005)
59 MOTION for judgment on the pleadings filed byGary L. Gardner on behalf of Matt Blunt Suggestions in opposition/response due by 12/15/2005 unless otherwise directed by the court (Gardner, Gary) (Entered: 11/30/2005)
60 SUGGESTIONS in support re 59 MOTION for judgment on the pleadings filed by Gary L. Gardner on behalf of Defendant Matt Blunt. (Related document(s) 59 ) (Gardner, Gary) (Entered: 11/30/2005)
61 NOTICE of filing by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S. Certificate of Service re Wiedemeier Expert Report (Burns−Bucklew, Loretta) (Entered: 12/09/2005)
62 MOTION for extension of time to Respond to Motion for Judgment on Pleadings filed byLoretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 12/27/2005 unless otherwise directed by the court (Burns−Bucklew, Loretta) (Entered: 12/09/2005)
63 AMENDED MOTION for extension of time to Respond to Motion for Judgment on Pleadings filed by Loretta E. Burns−Bucklew on behalf of all plaintiffs. Suggestions in opposition/response due by 12/27/2005 unless otherwise directed by the court. (Related document 62 ) (Burns−Bucklew, Loretta) Modified on 12/12/2005 to indicate that the motion is an amended motion (Jones, Robin). (Entered: 12/09/2005)
NOTICE OF DOCKET MODIFICATION. A modification has been made to the document filed on December 9, 2005 as MOTION to amend/correct Motion for Extension in response to Motion for Judgment on Pleadings. The docket text was corrected to read AMENDED MOTION for extension of time to Respond to Motion for Judgment on Pleadings. (Related Documents 62 63 ) This is a text entry only − no document is attached. (Jones, Robin) (Entered: 12/12/2005)
64 ORDER dismissing as moot 62 motion for extension of time, granting 63 plaintiffs' motion to amend, granting plaintiffs' request for addt'l time, response due 12/16/05. Signed by Judge Scott O. Wright on 12−13−05. (Morse, Judy) (Entered: 12/13/2005)
65 SUGGESTIONS in opposition re 59 MOTION for judgment on the pleadings Concerning Defendant Matt Blunt filed by Nicholas Patrick Mizell on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. Reply suggestions due by 1/2/2006 unless otherwise directed by the court (Attachments: # 1 Exhibit A# 2 Exhibit B# 3 Exhibit C# 4 Exhibit D# 5 Exhibit E# 6 Exhibit F# 7 Exhibit G)(Related document(s) 59 ) (Mizell, Nicholas) (Entered: 12/16/2005)

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12/28/2005 12/28/2005 12/30/2005 12/30/2005 01/09/2006 01/10/2006
01/12/2006
01/12/2006
01/13/2006 01/19/2006 01/19/2006 02/01/2006 02/01/2006 02/01/2006 02/06/2006

66 REPLY SUGGESTIONS to motion re 59 MOTION for judgment on the pleadings filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman. (Related document(s) 59 ) (Gardner, Gary) (Entered: 12/28/2005)
67 SUPPLEMENT Exhibit A (Attachment to Reply Suggestions in Support of Defendant Blunt's Motion for Judgment on the Pleadings.. (Related document(s) 59 ) (Gardner, Gary) (Entered: 12/28/2005)
68 CERTIFICATE OF SERVICE by all plaintiffs for Plaintiffs' Second Set of Requests for Production filed by Nicholas Patrick Mizell on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S..(Mizell, Nicholas) (Entered: 12/30/2005)
69 CERTIFICATE OF SERVICE by all plaintiffs for Plaintiffs' Second Set of Interrogatories filed by Nicholas Patrick Mizell on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S..(Mizell, Nicholas) (Entered: 12/30/2005)
70 ORDER granting 59 def. Blunt's motion for judgment on the pleadings and def. Blunt is dismissed as a def. w/prejudice. Signed by Judge Scott O. Wright on 1−9−2006. (Morse, Judy) (Entered: 01/09/2006)
71 Joint MOTION to compel In Camera Inspection of Documents Withheld from Production on the Basis of the Deliberative Process Privilege filed byNicholas Patrick Mizell on behalf of all parties Suggestions in opposition/response due by 1/25/2006 unless otherwise directed by the court (Mizell, Nicholas) (Entered: 01/10/2006)
72 SUGGESTIONS in opposition re 71 Joint MOTION to compel In Camera Inspection of Documents Withheld from Production on the Basis of the Deliberative Process Privilege filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman. Reply suggestions due by 1/27/2006 unless otherwise directed by the court (Attachments: # 1 Exhibit # 2 Exhibit # 3 Exhibit # 4 Exhibit)(Related document(s) 71 ) (Gardner, Gary) (Entered: 01/12/2006)
73 SUGGESTIONS in support re 71 Joint MOTION to compel In Camera Inspection of Documents Withheld from Production on the Basis of the Deliberative Process Privilege filed by Nicholas Patrick Mizell on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Attachments: # 1 Exhibit A# 2 Exhibit B# 3 Exhibit C# 4 # 5 Exhibit E)(Related document(s) 71 ) (Mizell, Nicholas) (Entered: 01/12/2006)
74 ORDER granting 71 joint motion for in camera inspection of documents, defendants are not required to produce said documents to plaintiffs. Signed by Judge Scott O. Wright on 1−13−2006. (Morse, Judy) (Entered: 01/13/2006)
75 NOTICE to take deposition of Jeanette Wiedemeier Bower filed by Gary L. Gardner on behalf of Defendant K. Gary Sherman.(Gardner, Gary) (Entered: 01/19/2006)
76 ORDER rescheduling hearing for 4/27, 28, 2006 at 9 a.m. in KCMO. Signed by Judge Scott O. Wright on 1−19−06. (Morse, Judy) (Entered: 01/19/2006)
77 Joint MOTION for extension of time to complete discovery filed byPamela Macer on behalf of all plaintiffs Suggestions in opposition/response due by 2/16/2006 unless otherwise directed by the court (Macer, Pamela) (Entered: 02/01/2006)
78 CERTIFICATE OF SERVICE by Matt Blunt, K. Gary Sherman filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman.(Gardner, Gary) (Entered: 02/01/2006)
79 CERTIFICATE OF SERVICE by Matt Blunt, K. Gary Sherman filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman.(Gardner, Gary) (Entered: 02/01/2006)
80 ORDER granting 77 joint motion for extension of time to complete discovery DUE 3/1/06. Signed by Judge Scott O. Wright on 2−6−06. (Morse, Judy) (Entered: 02/06/2006)

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02/14/2006 02/22/2006 03/10/2006 03/10/2006 03/13/2006
03/13/2006
03/14/2006 04/17/2006 04/17/2006 04/17/2006 04/17/2006 04/17/2006
04/17/2006 04/17/2006 04/17/2006 04/17/2006

81 NOTICE to take deposition of Lana Capps, John Antonich, Lavada Johnson and Tammy Smith filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman.(Gardner, Gary) (Entered: 02/14/2006)
82 NOTICE of filing by Matt Blunt, K. Gary Sherman Joint Report Pursuant to Scheduling Order Regarding Settlement Discussions (Gardner, Gary) (Entered: 02/22/2006)
83 Motion to allow Sara Bartosz to appear pro hac vice (Pro Hac fee $50 receipt number 236094) filed byLoretta E. Burns−Bucklew on behalf of all plaintiffs (Burns−Bucklew, Loretta) (Entered: 03/10/2006)
84 Motion to allow Priy Sinha to appear pro hac vice (Pro Hac fee $50 receipt number 236094) filed byLoretta E. Burns−Bucklew on behalf of all plaintiffs (Burns−Bucklew, Loretta) (Entered: 03/10/2006)
ORDER granting 83 motion to appear pro hac vice approved by Clerk of Court. Attorney Michael Sara Bartosz for J.C. and J.L. allowed to appear pro hac vice. This is a text only entry and will serve as authorization for the pro hac participation by the attorney. No document is attached. Signed by Judge Unassigned on 3/13/06. (James, Carrie) (Entered: 03/13/2006)
ORDER granting 84 motion to appear pro hac vice approved by Clerk of Court. Attorney Priy Sinha for J.C. and J.L. allowed to appear pro hac vice. This is a text only entry and will serve as authorization for the pro hac participation by the attorney. No document is attached. Signed by Judge Unassigned on 3/13/06. (James, Carrie) (Entered: 03/13/2006)
85 CERTIFICATE OF SERVICE by Matt Blunt, K. Gary Sherman filed by Gary L. Gardner on behalf of Defendants Matt Blunt, K. Gary Sherman.(Gardner, Gary) (Entered: 03/14/2006)
86 DESIGNATION Defendant's Designation of Deposition Lines by K. Gary Sherman. (Attachments: # 1 Exhibit # 2 Exhibit # 3 Exhibit # 4 Exhibit # 5 Exhibit # 6 Exhibit)(Gardner, Gary) (Entered: 04/17/2006)
87 TRIAL BRIEF by K. Gary Sherman. (Gardner, Gary) (Entered: 04/17/2006)
88 PROPOSED FINDINGS OF FACT by K. Gary Sherman and Conclusions of Law, Order, and Judgment Denying Permanent Injunction. (Gardner, Gary) (Entered: 04/17/2006)
89 PROPOSED WITNESS LIST by K. Gary Sherman and Exhibit List; Permanent Injunction Hearing. (Gardner, Gary) (Entered: 04/17/2006)
90 DESIGNATION of Deposition Testimony by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Macer, Pamela) Additional attachment(s) added on 4/19/2006 (Beard, Melanie). Modified on 4/19/2006 to acknowledge receipt of exhibits in Clerk's Office (Beard, Melanie). (Entered: 04/17/2006)
91 PROPOSED WITNESS LIST by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Macer, Pamela) (Entered: 04/17/2006)
92 TRIAL BRIEF by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Macer, Pamela) Additional attachment(s) added on 4/20/2006 (Beard, Melanie). Modified on 4/20/2006 to replace and delete the main document, as it was filed in error (Beard, Melanie). (Entered: 04/17/2006)
93 PROPOSED FINDINGS OF FACT by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Macer, Pamela) (Entered: 04/17/2006) Modified on 4/18/2006 − corrected event (Martinez, Alexandra). (Entered: 04/17/2006)
94 PROPOSED EXHIBIT LIST by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Macer, Pamela) Modified on 4/18/2006 − corrected event (Martinez, Alexandra). (Entered: 04/17/2006)

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04/18/2006 04/19/2006
04/20/2006
04/24/2006 04/27/2006 05/01/2006 05/01/2006 05/02/2006 05/02/2006 05/02/2006 05/02/2006 05/02/2006 05/03/2006
05/04/2006
05/08/2006 05/08/2006

NOTICE OF DOCKET MODIFICATION. A modification has been made to documents #93 and #94 filed on 4/17/06. The docket text was corrected to indicate the correct event for each entry. This is a text entry only − no document is attached. (Martinez, Alexandra) (Entered: 04/18/2006)
NOTICE OF DOCKET MODIFICATION. A modification has been made to the document filed on 4/17/06 as DESIGNATION of Deposition Testimony. added the Notice Regarding Exhibit Attachment, which was omitted in error (doc. #90). (Related Document 90 ) This is a text entry only − no document is attached. (Beard, Melanie) (Entered: 04/19/2006)
NOTICE OF DOCKET MODIFICATION. A modification has been made to the document filed on 4/17/06 as Trial Brief (#92). A document has been deleted from the entry. The clerk's office had replaced and deleted the document as it was filed in error. This is a text entry only − no document is attached. (Beard, Melanie) (Entered: 04/20/2006)
95 DESIGNATION Stipulation re: admissibility of defendant's deposition designation and interrogatory responses by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Macer, Pamela) (Entered: 04/24/2006)
102 Minute Entry for proceedings held before Judge Scott O. Wright : PERMANENT INJUNCTION HEARING held on 4/27/2006. (Court Reporter Shelly McDowell) (McIlvain, Kelly) Modified on 5/9/2006 to correct the record to reflect Shelly McDowell as the court reporter(Beard, Melanie). (Entered: 05/08/2006)
96 ORDER GRANTING PERMANENT INJUNCTIVE RELIEF Signed by Judge Scott O. Wright on 5/1/2006. (McIlvain, Kelly) (Entered: 05/01/2006)
97 NOTICE OF APPEAL by K. Gary Sherman. Filing fee $ 455, receipt number 1256476. (Gardner, Gary) (Entered: 05/01/2006)
98 TRANSMISSION of Notice of Appeal and docket sheet to US Court of Appeals re 97 Notice of Appeal (Crespo, Wil) (Entered: 05/02/2006)
***Appeal Receipt of Notice of Appeal and supporting documents received by USCA on: Tue May 2 08:18:09 CDT 2006 (Crespo, Wil) (Entered: 05/02/2006)
99 TRANSMISSION of Notice of Appeal and docket sheet to US Court of Appeals re 97 Notice of Appeal (Attachments: # 1 NOA Supplement)(Russel, Jeri) (Entered: 05/02/2006)
***Appeal Receipt of Notice of Appeal and supporting documents received by USCA on: Tue May 2 13:25:21 CDT 2006 (Russel, Jeri) (Entered: 05/02/2006)
USCA Case Number from 8th Circuit is 06−2181 for 97 Notice of Appeal filed by K. Gary Sherman, THIS IS A TEXT ENTRY ONLY − NO DOCUMENT IS ATTACHED. (Bax, Laura) (Entered: 05/02/2006)
100 PROPOSED FINDINGS OF FACT by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S. and Conclusions of Law in Support of May 1, 2006 Order Granting Permanent Injunctive Relief. (Attachments: # 1 Exhibit A − Proposed Notice)(Mizell, Nicholas) (Entered: 05/03/2006)
101 NOTICE of filing by K. Gary Sherman re 100 Proposed Findings of Fact, Defendant's Objections to Notice Provisions of Plaintiffs' Proposed Final Judgment Granting Permanent Injunctive Relief (Attachments: # 1 Exhibit Exhibit A# 2 Exhibit Exhibit B# 3 Exhibit Exhibit C)(Gardner, Gary) (Entered: 05/04/2006)
106 Plaintiff's EXHIBIT INDEX from PERMANENT INJUNCTION HEARING held on 4/27/2006 by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Beard, Melanie) (Entered: 05/09/2006)
107 Defendant's EXHIBIT INDEX from PERMANENT INJUNCTION HEARING held on 4/27/2006. by K. Gary Sherman. (Beard, Melanie) (Entered: 05/09/2006)

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05/09/2006

103 Remark re 44 Notice of Appeal (Bax, Laura) (Entered: 05/09/2006)

05/09/2006

104 FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF THE COURT'S MAY 1, 2006 ORDER AND FINAL JUDGMENT GRANTING PERMANENT INJUNCTIVE RELIEF. Signed by Judge Scott O. Wright on 5−9−2006. (Morse, Judy) (Entered: 05/09/2006)

05/09/2006

105 ORDER that plaintiff's proposed notice of order granting injunctive relief will not be entered. Signed by Judge Scott O. Wright on 5−9−2006. (Morse, Judy) (Entered: 05/09/2006)

05/10/2006

108 CLERK'S JUDGMENT (Morse, Judy) (Entered: 05/10/2006)

05/15/2006

109 MOTION for extension of time to file Motion for Attorney Fees and Costs filed by Loretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 5/30/2006 unless otherwise directed by the court (Burns−Bucklew, Loretta) (Entered: 05/15/2006)

05/17/2006

110 ORDER granting 109 plaintiffs' motion for extension of time Response due 6/19/06. Signed by Judge Scott O. Wright on 5−17−06. (Morse, Judy) (Entered: 05/17/2006)

05/30/2006

111 USCA JUDGMENT AND MANDATE as to 44 Notice of Appeal filed by Matt Blunt,, K. Gary Sherman, with mandate issued on 5/25/06 (James, Carrie) (Entered: 05/30/2006)

06/07/2006

112 TRANSCRIPT of Permanent Injunction Hearing held on 4/27/06 before Judge Scott O. Wright. Court Reporter: Lissa C. Whittaker. This is a text entry only − no document is attached. The transcript is available for review in the Clerk's Office. Please contact the court reporter listed above for copies. (Carr, Lori) (Entered: 06/08/2006)

06/13/2006

113 CERTIFICATE OF TRANSMISSION OF DEPOSITION of JILL M. KATZ (Carr, Lori) (Entered: 06/14/2006)

06/16/2006

114 Second MOTION to set aside Deadling for Filing Attorney Fee filed by Loretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 7/3/2006 unless otherwise directed by the court (Burns−Bucklew, Loretta) (Entered: 06/16/2006)

06/16/2006

115 PROPOSED BILL OF COSTS by J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S..Objections to Bill of Costs due by 7/3/2006 (Burns−Bucklew, Loretta) (Entered: 06/16/2006)

06/19/2006

116 ORDER granting 114 plaintiffs' second unopposed motion to set aside ddln, Mot. for Atty Fees due 7/20/06. Signed by Judge Scott O. Wright on 6−19−06. (Morse, Judy) (Entered: 06/19/2006)

06/19/2006

***Appeals remark: received this date from the 8th Circuit Court of Appeals transcript Doc #47. (Crespo, Wil) (Entered: 06/19/2006)

06/30/2006

117 OBJECTIONS (non motions) To Plaintiff's Bill of Costs. (Gardner, Gary) (Entered: 06/30/2006)

07/07/2006

118 NOTICE of appearance by Heidi C. Doerhoff on behalf of K. Gary Sherman (Doerhoff, Heidi) (Entered: 07/07/2006)

07/12/2006

119 MOTION for extension of time to set aside deadline for filing motion for attorneys' fees filed by Loretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 7/27/2006 unless otherwise directed by the court (Burns−Bucklew, Loretta) (Entered: 07/12/2006)

07/13/2006

120 ORDER granting 119 plaintiffs' motion for extension of time DUE 8/4/06. Signed by Judge Scott O. Wright on 7−13−06. (Morse, Judy) (Entered: 07/13/2006)

08/04/2006

121 MOTION to amend/correct May 1, 2006 Judgment and May 9 Findings and Conclusions filed by Heidi C. Doerhoff on behalf of K. Gary Sherman Suggestions in opposition/response due by 8/21/2006 unless otherwise directed by the court (Attachments: # 1 Exhibit A# 2 Exhibit B# 3 Exhibit C# 4 Exhibit D# 5 Exhibit E)(Doerhoff, Heidi) (Entered: 08/04/2006)

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08/04/2006

122 ORDER granting 121 defendant's motion for relief from judgment, vacating 5/1/06 order and findings of fact and conclusions of law and will enter separate amended order and final judgment. Signed by Judge Scott O. Wright on 8−4−06. (Morse, Judy) (Entered: 08/04/2006)

08/04/2006

123 AMENDED ORDER AND FINAL JUDGMENT GRANTING PERMANENT INJUNCTIVE RELIEF. Signed by Judge Scott O. Wright on 8−4−06. (Morse, Judy) (Entered: 08/04/2006)

08/04/2006

124 AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF COURT'S AMENDED ORDER AND FINAL JUDGMENT GRANTING PERMANENT INJUNCTIVE RELIEF. Signed by Judge Scott O. Wright on 8−4−06. (Morse, Judy) (Entered: 08/04/2006)

08/07/2006

125 ORDER that plaintiffs shall submit Mot. for Preliminary Approval of Settlement of Plaintiffs' Atty. Fees and Expenses by 8/18/06. Signed by Judge Scott O. Wright on 8−7−06. (Morse, Judy) (Entered: 08/07/2006)

08/08/2006

126 USCA Judgment as to 97 Notice of Appeal filed by K. Gary Sherman, the joint motion for dismissal of this appeal is granted, thus the appeal is dismissed. (Crespo, Wil) (Entered: 08/08/2006)

08/18/2006

127 MOTION for attorney fees expenses and costs and Form and Method of Notice to Class filed by Loretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 9/5/2006 unless otherwise directed by the court (Attachments: # 1 Exhibit A: Order approving Notice, Fees &Expenses# 2 Exhibit B: Legal Notice of Motion for Approval of fees# 3 Exhibit C1: Master Summary Chart# 4 Exhibit C2: Hours breakdowns by firms# 5 Exhibit D1: Muehlberger Aff.# 6 Notice of Exhibit Attachment D2: SHB fee statement# 7 Exhibit E1: Ammann Aff.# 8 Exhibit E2: Ammann fee statement# 9 Exhibit F1: Marcia Robinson Lowry Aff# 10 Exhibit F2: Resumes# 11 Exhibit F3: CR Billing# 12 Exhibit F4: CR Billing Judgment# 13 Exhibit F5: CR Expenses# 14 Exhibit G1: Aff of TK and DG# 15 Appendix G2: Kennedy Fees# 16 Exhibit H1: Aff. of BBWW# 17 Exhibit H2: BBWW Billing# 18 Notice of Exhibit Attachment I: Bill of Costs# 19 Exhibit J1: Rich McLeod Aff.# 20 Exhibit J2: Ann Lever Aff.)(Burns−Bucklew, Loretta) Modified on 8/21/2006 to acknowledge receipt of exhibits in Clerk's office and to remove proposed order that should have been mailed to chambers (McDowell, Shelly). (Entered: 08/18/2006)

08/18/2006

128 SUGGESTIONS in support re 127 MOTION for attorney fees expenses and costs and Form and Method of Notice to Class filed by Loretta E. Burns−Bucklew on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Related document(s) 127 ) (Burns−Bucklew, Loretta) (Entered: 08/18/2006)

08/25/2006

129 ORDER granting 127 plaintiffs' unopposed motion for preliminary approval of plaintiffs' attorneys' fees, expenses, and costs and form and method of notice to class. Signed by Judge Scott O. Wright on 8−25−06. (Morse, Judy) (Entered: 08/25/2006)

10/13/2006

130 MOTION for leave to file excess pages filed by Loretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 10/30/2006 unless otherwise directed by the court (Burns−Bucklew, Loretta) (Entered: 10/13/2006)

10/13/2006

131 MOTION for order for Final Approval of Settlement of Plaintffs' Attorneys Fees Expenses and Costs filed by Loretta E. Burns−Bucklew on behalf of all plaintiffs Suggestions in opposition/response due by 10/30/2006 unless otherwise directed by the court (Burns−Bucklew, Loretta) (Entered: 10/13/2006)

10/13/2006

132 SUGGESTIONS in support re 131 MOTION for order for Final Approval of Settlement of Plaintffs' Attorneys Fees Expenses and Costs filed by Loretta E. Burns−Bucklew on behalf of Plaintiffs J.C., J.L., T.G., B.G., A.G., W.S., M.S., D.S., M.P., A.C., J.A., E.C., T.J., A.J., A.E., N.S.. (Attachments: # 1 Appendix Order approvaing final settlement# 2 Exhibit Order granting preliminary settlement# 3 Exhibit E−mail correspondence# 4 Exhibit Brian A. v. Sundquist# 5 Exhibit Brian A. v. Hattaway)(Related document(s) 131 ) (Burns−Bucklew, Loretta) (Entered: 10/13/2006)

Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 26 of 27

10/17/2006

133 ORDER granting 130 motion for leave to file excess pages, granting 131 motion for final approval of plaintiffs' attorneys' fees, expenses and costs, denying and dismissing as moot plaintiffs' bill of costs filed 6/16/06. Signed by Judge Scott O. Wright on 10−17−06. (Morse, Judy) (Entered: 10/17/2006)

Case: 2:05-cv-726 As of: 10/06/2012 08:32 AM CDT 27 of 27