In the

United States Court of Appeals

For the Seventh Circuit

No. 99-3135

Andrea N. Butler, Emmalea Butler

and Ted Butler,

Plaintiffs-Appellants,

v.

H. Dean Evans, individually and in his capacity

as Superintendent of the Indiana Department

of Education, Indiana Department of Education,

Jerry Thaden, individually and in his capacity

as Commissioner of the Indiana Department

of Mental Health, Dina Haugh, in her capacity

as Superintendent of LaRue D. Carter Memorial

Hospital, and Paul Ash, individually and in his

capacity as Director of the Indiana Division of

Special Education,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of Indiana, Hammond Division.

No. 91 C 216--Theresa L. Springmann, Magistrate Judge.

Argued May 9, 2000--Decided August 31, 2000

 Before Manion, Kanne and Rovner, Circuit Judges.

 Kanne, Circuit Judge. As a child, Andrea "Niki"

Butler experienced severe emotional and

psychological troubles that made it difficult for

her to be educated in a regular school. Her local

school recommended that she be placed in a

residential educational facility that could

provide a structured setting designed to

accommodate her condition. Before her local

school and the Indiana Department of Education

could process this placement, Niki Butler’s

condition forced her parents, Emmalea and Ted

Butler, to have her committed to a psychiatric

hospital for several months. After Niki was

released from the hospital, the state of Indiana

placed her in a residential educational facility.

Nevertheless, her parents sought reimbursement

from the state for the costs of Niki’s

hospitalization. We affirm the district court’s

denial of the Butlers’ reimbursement claim

because Niki’s hospitalization did not result
from delays by the state of Indiana in processing

Niki’s placement, nor did the hospital care

constitute "related services" reimbursable under

the Individuals with Disabilities Education Act

("IDEA"), 20 U.S.C. sec.sec. 1400-1487.

I. History

 The IDEA represents "an ambitious federal effort

to promote the education of handicapped

children." Board of Educ. of Hendrick Hudson

Cent. Sch. Dist. v. Rowley, 458 U.S. 176, 179

(1982) (discussing the Education for All

Handicapped Children Act, later amended and

renamed the IDEA). Its purpose is "to ensure that

all children with disabilities have available to

them appropriate public education that emphasizes

special education and related services designed

to meet their unique needs." 20 U.S.C. sec.

1400(d). Among other things, the IDEA supplies

the states with federal funding for specialized

education services to assist eligible disabled

children. In conformity with applicable federal

guidelines, the state of Indiana administers

those funds through the Indiana Department of

Education and its local school systems. See Ind.

Code sec. 20-1-6-4. 

 For each child in need of special education

assistance, the state of Indiana convenes an IDEA

case conference between parents and local

officials to tailor an individualized education

plan ("IEP") for the disabled student. See 20

U.S.C. sec.sec. 1401(11), 1414(d). In most cases,

the local school or school cooperative can

provide the necessary accommodations suggested by

the IEP and keep the child in her regular school.

However, in unusual circumstances, the local

school is unequipped to provide the necessary

services and must transfer the child to a special

residential facility. Typically at that point, a

local coordinating committee comprising a

juvenile court judge, the child’s parents and

local education and health officials evaluates

the child’s condition and makes proposals to the

local school board. The Indiana Department of

Education administers these special cases through

what it calls a Rule S-5 application, pursuant to

which the local school can apply to the state for

IDEA funding of a residential placement on the

disabled child’s behalf. See Ind. Code sec. 20-1-

6-19; 511 Ind. Admin. Code sec. 7-12-5.

 Niki Butler endured a series of emotional

disturbances during her childhood and was

diagnosed with severe schizophrenia. By her

sixteenth birthday, she had suffered auditory and

visual hallucinations, attempted suicide and

struggled with paranoia and psychotic episodes.

She eventually was hospitalized for six weeks at
Alexian Brothers Medical Center in August 1990.

After evaluating Niki’s case on November 16,

1990, her local school preliminarily recommended

application for a S-5 residential placement. On

February 12, 1991, the local coordinating

committee agreed that Niki’s condition warranted

a residential placement and approved the proposed

S-5 application to the Indiana Department of

Education. On April 18, 1991, the local school

authorities held an IEP case conference and

agreed that Niki’s condition required a

residential placement for educational purposes.

They devised an IEP that targeted basic academic

skills and social behavior as key areas for

instruction and suggested a number of placement

options, including special classes in a private

or public residential education facility. The IEP

assumed that Niki would not be hospitalized and

was ready for an educational placement. 

 However, during this prolonged administrative

process, Niki’s condition demanded immediate

medical intervention. Following a request from

Niki’s school that she be examined by a

psychiatrist, Niki’s parents admitted her

voluntarily to Valle Vista Hospital on March 15,

1991. Then, on April 23, 1991, before Niki’s

local school had filed its S-5 application with

the Indiana Department of Education, Niki’s

parents transferred her to Our Lady of Mercy

Hospital in Dyer, Indiana, where she would stay

for the next six months. During her hospital

stay, Niki received medical treatment for her

psychiatric needs at a cost of $121,021.13. This

care included daily psychiatric counseling,

strong doses of Lithium and Stelazine and daily

group and recreational therapy. The hospital

retained two teachers and a teacher’s aide on

staff for patients from 9 to 11 a.m., and Niki

received assignments from school while she was

hospitalized. However, Our Lady of Mercy Hospital

was not approved by the state as her IDEA

residential educational placement, nor were these

educational activities at Our Lady of Mercy

Hospital conducted pursuant to Niki’s IEP. 

 On April 24, the day after Niki was admitted to

Our Lady of Mercy Hospital, Niki’s local school

corporation filed the long-anticipated S-5

application. Yet the next day, April 25, 1991, on

their own initiative, Niki’s parents filed a

petition in Indiana state court for Niki’s

involuntary commitment. Her parents alleged in

the commitment petition that Niki was suffering

from a psychiatric disorder and presented a

substantial risk of harming herself and others.

On May 17, 1991, the court reviewed a physician’s

report and entered an order of commitment for

Niki. The court agreed that Niki was mentally

ill: "schizo-affective, paranoid, suicidal,
satanical and with a mental disorder needing

long-term education, structural, locked

residential protective placement." The court

physician reported that a commitment longer than

ninety days would be necessary for Niki’s

condition to stabilize, and the court suggested

LaRue D. Carter Memorial Hospital, a state

hospital operated by the Indiana Division of

Mental Health, as the "most appropriate, least

restrictive facility for placement." LaRue

Hospital had no vacancies and could not

immediately admit Niki, so the court ordered Niki

to remain at Our Lady of Mercy Hospital until

space opened at an alternate psychiatric

institution designated by the Indiana Department

of Mental Health. 

 Niki remained at Our Lady of Mercy Hospital for

another five months awaiting a transfer. Our Lady

of Mercy Hospital reported that Niki "worked

toward a goal ultimately of residential

treatment. . . . She showed significant gains.

She ceased to be delusional and hallucinating.

She slowly began to explore the relationship to

family and to become more appropriate. Certainly

the underlying pathology was still present

throughout. As of the time of discharge she

appeared to be stabilizing and preparing for

transfer to residential care." She eventually

transferred to LaRue Carter Hospital on November

6, and then pursuant to her IEP, moved to a

residential special education program at the

Maryhurst School in Louisville, Kentucky, on

December 2, 1991. It was not until December 3

that LaRue Carter Hospital notified the court

that Niki was no longer a danger to herself or

others and that her civil commitment could be

terminated.

 Meanwhile, a class of disabled children and

their parents filed a class-action lawsuit in

federal district court against the Indiana

Department of Education. The class alleged, among

other things, that the long delays between the

development of IEPs requiring residential

placement and the actual residential placements

violated the IDEA. Niki’s parents added Niki and

themselves as plaintiffs to the lawsuit in

August. On April 8, 1993, Judge Rudy Lozano

granted the plaintiffs’ motion for partial

summary judgment, explaining that "[a]n IEP must

be implemented as soon as possible following the

development of that IEP." Evans v. Evans, 818

F.Supp. 1215, 1222 (N.D. Ind. 1993). 

 After some negotiation, the parties submitted an

agreed order settling the suit on June 20, 1994.

The order provides that the plaintiffs were

eligible to petition through administrative

adjudication for "educational and related
services reimbursement for each member of the

class who incurred costs for education and

related services between the date of the IEP . .

. and the date of actual placement." In addition,

the agreed order concluded that the state of

Indiana should place eligible disabled children

in a residential facility no later than thirty

days from their IEPs, "except where special

circumstances require otherwise." The order

explains, "Among the events that shall constitute

special circumstances for purposes of this

paragraph are IDOE’s lack of receipt of notice

[of the IEP]." The state of Indiana also agreed

to waive all the charges that Niki accrued at

LaRue Carter Hospital.

 Pursuant to the administrative procedure

described in the agreed order, the Butlers filed

a reimbursement claim for Niki’s bills from Our

Lady of Mercy Hospital because the

hospitalization occurred during the delay between

completion of Niki’s IEP on April 18, 1991, and

her placement at the Maryhurst School on December

2, 1991. The Indiana Department of Education

independent hearing officer approved the Butlers’

claims. However, because the services that Niki

received at Our Lady of Mercy Hospital were

primarily medical and psychiatric, the Indiana

Board of Special Education Appeals reversed the

hearing officer’s decision and found that Niki’s

psychiatric hospitalization was not "education or

related services" as required for reimbursement

by the agreed order. The Butlers appealed the

final denial of their reimbursement claim to

Judge Lozano who, with the parties’ consent,

referred the appeal to a magistrate judge.

Magistrate Judge Theresa L. Springmann then

affirmed the decision of the Board of Special

Education Appeals. 

II. Analysis

 The Butlers appeal the district court’s

affirmance of the denial of their IDEA

reimbursement claim by the Indiana Board of

Special Education Appeals. Under the IDEA,

parties may appeal the results of a state

administrative proceeding to a district court.

The district court "basing its decision on the

preponderance of the evidence shall grant such

relief as the court determines is appropriate."

20 U.S.C. sec. 1415(i)(2)(B)(iii). The district

court must confer due weight to the final

decisions of the state administrators and cannot

substitute its own notions of sound educational

policy for those of the school authorities. See

Heather S. v. State of Wis., 125 F.3d 1045, 1052-

53 (7th Cir. 1997) (quoting Rowley, 458 U.S. at

206); see also O’Toole v. Olathe Dist. Schs.

Unified Sch. Dist. No. 233, 144 F.3d 692, 698-99
(10th Cir. 1998). Now on appeal, we review the

district court’s judgment as a mixed question of

law and fact, reviewing the ultimate

determination de novo but reversing the court’s

factual findings only if clearly erroneous. See

Heather S., 125 F.3d at 1053. 

 The agreed order in Evans declared that the

Indiana Department of Education was obligated by

federal law to place disabled children in

residential facilities within thirty days of the

IEP, except when "special circumstances require

otherwise." In addition, the agreed order

stipulated that the state of Indiana would

reimburse the plaintiffs, after administrative

adjudication of their claims, for qualified

"educational and related services" incurred as a

result of unreasonable delays between IEP

development and residential placement. The

Butlers contend that Niki’s hospitalization

expenses at Our Lady of Mercy Hospital are

reimbursable costs under the agreed order. 

 The state of Indiana is not liable for Niki’s

hospitalization charges because those expenses

resulted from "special circumstances." Local

school officials approved Niki’s IEP on April 18,

1991, but the IEP was designed only for a

homebound placement and contemplated Niki’s

release from Valle Vista Hospital on April 23,

1991. The IEP recommended placement at a

residential educational facility to serve Niki’s

particular educational needs, not placement at a

hospital for further medical treatment. However,

Niki’s psychological condition demanded emergency

action. On April 23, instead of bringing her home

from Valle Vista Hospital, Niki’s parents

transferred Niki to Our Lady of Mercy Hospital

and two days later commenced involuntary

commitment proceedings. Niki’s unstable

psychological condition necessitated her

hospitalization and rendered her unable to handle

the residential placement recommended by the IEP.

In fact, it was only after several months of care

at Our Lady of Mercy Hospital that "she appeared

to be stabilizing and preparing for transfer to

residential care." By December, when Niki’s

commitment ended upon a declaration that she no

longer posed a risk to herself or others, the

state of Indiana had already moved her to the

Maryhurst School for her residential placement.

The district court and the Indiana Board of

Special Education Appeals found that Niki’s

transfer to Our Lady of Mercy Hospital and

subsequent commitment were special circumstances

that delayed her residential placement. We do not

find their conclusions clearly erroneous.

 Moreover, Niki’s hospital charges are not

recoverable because only payments for "education
or related services" are reimbursable under the

agreed order. The IDEA defines related services

as "transportation, and such developmental,

corrective, and other supportive services . . .

as may be required to assist a child with a

disability to benefit from special education." 20

U.S.C. sec. 1401(22). The IDEA lists a number of

services as examples, including medical care, but

stipulates "that such medical services shall be

for diagnostic and evaluation purposes only." Id.

Interpreting this clause, the Ninth Circuit held

that inpatient psychiatric hospitalization, like

Niki’s treatment at Our Lady of Mercy Hospital,

is not a special education placement and that the

hospitalization is not a related service

compensable under the IDEA. See Clovis Unified

Sch. Dist. v. California Office of Admin.

Hearings, 903 F.2d 635, 643 (9th Cir. 1990). The

court explained that the "analysis must focus on

whether [the disabled child’s] placement may be

considered necessary for educational purposes, or

whether the placement is a response to medical,

social, or emotional problems that is necessary

quite apart from the learning process." Id.

Although the Butlers contend that Niki received

some tutoring while hospitalized, we agree with

the Indiana administrative hearing board and the

district court below that Niki was admitted to

Our Lady of Mercy Hospital almost exclusively for

medical reasons, not for educational purposes,

and received almost exclusively medical services,

not educational ones. By April 1991, Niki’s acute

psychological condition demanded medical

intervention and took precedence over her

educational needs. As in Clovis, Niki’s

hospitalization was prompted by a psychiatric

crisis, was not approved by her IEP and occurred

at a medical facility that did not provide

educational services and had not been approved by

the state as her residential educational

institution. Clovis, 903 F.2d at 643-45. 

 Niki’s IEP did not authorize psychiatric

hospitalization as a related service. The IEP

determines the IDEA services that the state will

provide subject to state approval and oversight.

Federal regulations require that the educational

placement of the disabled child be "based on his

or her IEP," 34 C.F.R. sec. 300.552(b)(2), and

Indiana law authorizes IDEA reimbursement for

related services only if "[the IEP] case

conference committee determines the student

requires the related services in order to benefit

from special education." 511 Ind. Admin. Code

sec. 7-13-5(a). As the Butlers themselves point

out, Niki’s education review committee decided

unanimously that Niki did not need

hospitalization. The Butlers conflate the

commitment proceedings and the IEP

recommendations to argue that the Indiana
Department of Education authorized Niki’s

hospitalization. They characterize the court’s

decision to commit Niki as based on Niki’s

educational needs and point to the court’s

recommendation of LaRue Carter Hospital, an

institution that the Butlers contend qualifies as

a residential education placement. However, the

commitment and IEP recommendations were decided

independently in separate proceedings. Niki’s

parents committed and hospitalized Niki outside

of the IDEA procedures and IEP recommendations. 

 By the Butlers’ admission, Our Lady of Mercy

Hospital is a medical hospital, not a residential

education facility, and does not conform to the

recommendations in Niki’s IEP. There is scant

evidence that the hospital provided or was

equipped to provide anything more than meager

educational services, and Our Lady of Mercy

Hospital was not approved by the state to serve

as Niki’s IDEA residential educational placement

under Indiana law. See 511 Ind. Admin. Code sec.

7-12-5(o) (requiring state authorization before

placement); see also Clovis, 903 F.2d at 646

(disallowing reimbursement for hospitalization at

a facility not certified by the state department

of education). Niki’s IEP authorized a

residential placement in an educational facility,

but her commitment required a long hospital stay

instead and delayed the placement until December.

The IDEA requires in certain cases that the state

pay for institutionalized care or for tutors and

trained specialists at residential educational

placements, but only if "necessary to provide

special education and related services." 34

C.F.R. sec. 300.302. The IDEA does not require

reimbursement of medical-care costs for

psychiatric hospitalization when, as here, the

hospitalization addresses the child’s medical,

social or emotional disabilities apart from her

special education needs. See Clovis, 903 F.2d at

646-47.

 The Butlers do not argue that Niki’s IEP was

erroneous and should have recommended psychiatric

hospitalization at Our Lady of Mercy Hospital.

See, e.g., School Comm. v. Department of Educ.,

471 U.S. 359, 369 (1985) (holding that

reimbursement may be available when parents place

their child in an educational placement which the

IEP should have authorized in the first place).

In Mrs. B. v. Milford Board of Education, 103

F.3d 1114, 1122 (2d Cir. 1997), the Second

Circuit ordered state reimbursement for a

disabled child’s residential placement only after

the court found that the child’s IEP originally

should have recommended that placement as the

parents had insisted. Likewise in Seattle School

District, No. 1 v. B.S., 82 F.3d 1493, 1502 (9th

Cir. 1996), the Ninth Circuit held that the
school district was liable for the costs of a

residential placement at an accredited

educational institution approved by the state for

IDEA placements. The Butlers, however, did not

challenge Niki’s IEP and never requested a new

case conference to design a new IEP. In any case,

a revised IEP would not have authorized

residential educational placement at Our Lady of

Mercy Hospital because, as the Butlers’ counsel

admitted at oral argument, the facility "was not

in the business of providing residential

placement for educational purposes." 

 It is true that the IDEA requires the provision

of certain medical accommodations within a

regular school environment for disabled students.

See Irving Independent Sch. Dist. v. Tatro, 468

U.S. 883 (1984); Seattle Sch. Dist., 82 F.3d

1493. For example, in Cedar Rapids Community

School District v. Garret F., 526 U.S. 66, 68

(1999), the Supreme Court held that the IDEA

required a school to provide a ventilatordependent student with a full-time nurse during

the school day. The Court reasoned that the sec.

1401(22) exclusion of medical services did not

exclude reimbursement for indispensable in-school

nursing because such "services that enable a

disabled child to remain in school during the day

provide the student with ’the meaningful access

to education that Congress envisioned.’" Id. at

973 (quoting Tatro, 468 U.S. at 891). Provision

of a nurse during the school day was borne of the

student’s educational needs because "the services

at issue must be provided if [the student] is to

remain in school." Cedar Rapids, 526 U.S. at 79;

see also Tatro, 468 U.S. at 891 (finding that inschool catheterization, which enabled the child

to attend school, was a related service).

 In contrast, Niki’s hospitalization was not an

attempt to give her meaningful access to public

education or to address her special educational

needs within her regular school environment. This

is not a case in which the disabled student

needed medical assistance to remain in a regular

school; Niki was committed to a psychiatric

hospital. Niki might have continued to receive

school assignments and some tutoring while

hospitalized, but education was not the purpose

of her hospitalization. Unlike in-school nursing

in Cedar Rapids, Niki’s inpatient medical care

was necessary in itself and was not a special

accommodation made necessary only to allow her to

attend school or receive education. The IDEA does

not require the government to pay for all the

additional services made necessary by a child’s

disability, and it specifically excludes medical

services except those "for diagnostic and

evaluation purposes only." 20 U.S.C. sec.

1401(22). The district court and the state
appeals board were not clearly erroneous in

finding that Niki’s hospitalization was a medical

service extending beyond diagnostic and

evaluation purposes and thus excluded from

reimbursement by 20 U.S.C. sec. 1401(22). 

 III. Conclusion

 For the foregoing reasons, we Affirm the decision

of the district court denying the Butlers’ IDEA

reimbursement claim under the Evans agreed order.