Opinion ID: 785778
Heading Depth: 2
Heading Rank: 1

Heading: Budget Constraints and Needs of Others

Text: 37 As mentioned above, Olmstead directs courts to evaluate the fundamental-alteration defense in light of the state's resources and its responsibility to continue providing services to mental health patients other than those seeking community care. 38 The bulk of Appellants' objections have focused on the following statement in the Conclusions of Law section of the District Court's opinion: 39 Even if cost savings may eventually be achieved through deinstitutionalization, the immediate extra cost, and the concomitant lack of immediate aggregate cost saving, is sufficient to establish that a fundamental alteration would be required if the relief sought by plaintiffs — accelerated community placements — were granted in this case. 40 Frederick L., 217 F.Supp.2d at 593 (internal citations omitted). Appellants argue that the Commonwealth's articulation of additional costs that would attend deinstitutionalization does not automatically give rise to a fundamental-alteration defense. Furthermore, Appellants continue, these cost concerns do not automatically make a requested modification unreasonable. In sum, Appellants urge that the Commonwealth's fiscal concerns, without more, cannot provide the sole basis for a fundamental-alteration defense. DPW acknowledges that government agencies frequently must spend money in order to meet their ADA and RA obligations, absent a windfall of cost-savings. 41 We have not previously considered the extent to which states may assert a fundamental-alteration defense based on fiscal concerns alone, but now hold that if the District Court's opinion is read as focusing only on immediate costs, as Appellants contend, it would be inconsistent with Olmstead and the governing statutes. First, Olmstead lists several factors that are relevant to the fundamental-alteration defense, including but not limited to the state's ability to continue meeting the needs of other institutionalized mental health patients for whom community placement is not appropriate, whether the state has a waiting list for community placements, and whether the state has developed a comprehensive plan to move eligible patients into community care settings. Olmstead, 527 U.S. at 605-06, 119 S.Ct. 2176. The Court noted that Section 504 of the RA specifies that: 42 [the fundamental-alteration and undue hardship] inquiry requires not simply an assessment of the cost of the accommodation in relation to the recipient's overall budget, but a case-by-case analysis weighing factors that include: (1)[t]he overall size of the recipient's program with respect to number of employees, number and type of facilities, and size of budget; (2)[t]he type of the recipient's operation, including the composition and structure of the recipient's workforce; and (3)[t]he nature and cost of the accommodation needed. 28 CFR § 42.511(c) (1998); see 45 CFR § 84.12(c) (1998) (same). 43 Id. at 606 n. 16, 119 S.Ct. 2176. 44 Second, at least one court of appeals and one district court have held that a singular focus upon a state's short-term fiscal constraints will not suffice to establish a fundamental-alteration defense. In Fisher v. Oklahoma Health Care Authority, 335 F.3d 1175 (10th Cir.2003), the plaintiffs challenged the state's decision to limit the number of prescriptions provided for outpatients with disabilities who received Medical Assistance, irrespective of medical necessity, while it continued providing unlimited prescriptions to disabled inpatients in nursing homes. The Fisher plaintiffs argued that because the policy would require low-income disabled persons to move to nursing homes in order to continue receiving full coverage of all of their prescriptions, the state had violated the ADA integration mandate. Id. at 1177-78. Oklahoma countered that granting plaintiffs' requested relief would have required a fundamental alteration in light of its fiscal crisis. Id. at 1178, 1182. The district court entered summary judgment against the plaintiffs because they were not currently institutionalized nor did they face a risk of institutionalization. Id. at 1181. 45 After holding that institutionalization was not a prerequisite to plaintiffs' ADA claim, the Court of Appeals for the Tenth Circuit rejected the state's fundamental-alteration defense, stating that Oklahoma's fiscal problems did not establish a per se fundamental-alteration defense. Id. at 1182. The court reviewed the legislative history of the ADA and concluded that Congress contemplated that states sometimes would be required to make short-term financial outlays, even in the face of mounting fiscal problems. Id. at 1183. The court thus decided that such financial obligations did not automatically relieve the state from meeting Congress' integration mandate. Id. Because the court found that the plaintiffs may have had a meritorious claim under the ADA, it reversed the district court's grant of summary judgment and remanded for consideration of whether the plaintiffs' requested modifications would fundamentally alter the program. Id. at 1186. 46 Similarly, in Makin v. Hawaii, 114 F.Supp.2d 1017 (D.Haw.1999), a class of mentally retarded persons on a waiting list for Hawaii's community-based program sued the state for violations of the ADA and the RA, seeking additional community placements and the development of a program to encourage movement on the waiting list at a reasonable pace. Hawaii attempted to assert a fundamental-alteration defense based on the theory that increased community placements would require the state to ignore state and federal funding limits and alter its existing programs by establishing an unlimited state fund for community mental health services. Id. at 1034. The district court rejected the state's defense, noting that a potential funding problem, without more, did not give rise to a fundamental-alteration defense. Id. We agree with the Makin court and with Appellants that states cannot sustain a fundamental-alteration defense based solely upon the conclusory invocation of vaguely-defined fiscal constraints. 47 We do not read the District Court's opinion in this case as relying solely on the increased short-term costs that additional community placements would entail, notwithstanding the sentence in its opinion that suggests a lack of cost-savings alone will sustain Pennsylvania's fundamental-alteration defense. Although the court noted the absence of cost-savings and the requisite spending that new community placements would entail, it undertook more comprehensive analyses that focused upon DPW's unsuccessful attempts at fund procurement through the Governor's budget. App. at 20-21. It recognized that DPW had submitted evidence that it had responsibly spent its budgetary allocation, re-allocated overtime savings to increase funding for community-based mental health services, and had a favorable bed closure rate when compared with western Massachusetts, which is considered to be a model region for deinstitutionalization. App. at 7, 20-21, 30. Moreover, the District Court emphasized that OMHSAS's ability to increase the number of community care placements was hampered by community opposition to further expansion in the neighborhoods where the community centers were located, App. at 23, and that increasing the number of community placements would eventually lead to a diminution of services for institutionalized persons under the Commonwealth's care. App. at 24. 48 Appellants challenge the Commonwealth's position on cost constraints, arguing that 1) the relief they request would require only negligible cost increases; 2) DPW could increase its community care budget by simply requesting additional funds from the legislature; and 3) DPW could shuffle its current budget to favor increased community care programs. We consider and reject each argument. 6 49 First, Appellants dispute the District Court's factual conclusion that moving currently institutionalized persons into community settings would require significant capital outlay by the Commonwealth. Because Appellants anticipate that the lion's share of the community care costs would be offset by the savings reaped from hospital bed closures, they estimate that the additional community placements requested would have a net cost of $1 million. Appellants' cost comparisons, however, are precisely the sort of reductive cost comparisons proscribed by the Olmstead plurality, 527 U.S. at 603-04, 119 S.Ct. 2176, as well as by Justice Kennedy. Id. at 612-13, 119 S.Ct. 2176 (Kennedy, J., concurring). In following Olmstead and rejecting Appellants' disfavored methodology, the District Court did not err. 50 Second, Appellants argue that the District Court erred by not considering DPW's ability to lobby the legislature for additional funds during the budgetary process. Under the budget process in the Commonwealth, DPW must submit a report to the Commonwealth requesting an operating budget for the upcoming year before DPW receives its budgetary allocation. The Governor may then accept or reject DPW's request. Appellants contend that DPW does not request the full amount necessary to fund all of the community placements requested. The District Court concluded that the prebudgetary process is beyond judicial scrutiny. Frederick L., 217 F.Supp.2d at 593. We agree. This is not an issue of legislative immunity, which DPW has not claimed, but a recognition of the realities of the budgetary process. DPW explains that it would not have been able to request the full amount required to fund all of the community placements needed because it must make its budget request pursuant to the Governor's Guidelines, which limit the percent-increase that it may request. That process is unchallenged here. We cannot hold, as Appellants would have us do, that DPW should have requested additional funding amounts beyond that which is permitted under the Governor's Guidelines. 51 Finally, Appellants argue that the District Court erred by concluding that DPW responsibly used its budgeted monies because DPW should have shifted money from other programs to fund additional community placements. Assuming a limited pool of budgetary resources, if DPW had siphoned off monies appropriated for institutional care for mental health patients in order to increase community placements, DPW would have run afoul of Olmstead prohibition on favoring those who commenced civil actions at the expense of institutionalized mental health patients who are not before the court. Any effort to institute fund-shifting that would disadvantage other segments of the mentally disabled population would thus fail under Olmstead. 527 U.S. at 604-06, 119 S.Ct. 2176. 52 However, Appellants argue that DPW should re-allocate its funds to favor additional community placements to the detriment of budget items that are not associated with community care or the care of institutionalized persons. For example, the parties' stipulations explain that DPW requested additional funding for several non-community care items, such as approximately $9.5 million for a general 3.5% salary increase for state psychiatric services personnel; $2.5 million for contracted repairs; $186,000 for consultant fees; $5.7 million for specialized services; $420,000 for contracted personnel services; $372,000 for travel; $47,000 for out-service training travel; $1.1 million for motorized and other rentals; $75,000 for library materials and supplies; $116,000 for other services and supplies; and $60.6 million for information systems. App. at 730-32. The Commonwealth explains that some of the aforementioned increases are mandated under the terms of the employees' union contract and the other costs assist in providing a safe and secure environment in which to provide active treatment to institutionalized patients. Appellees' Br. at 53-54. 53 Because the judiciary is not well-suited to superintend the internal budgetary decisions of DPW or evaluate its physical plant needs, we decline to rely on Appellants' assertion that the aforementioned costs are not essential to the upkeep of DPW's care-giving apparatus. Our rejection of Appellants' challenges to the District Court's analysis of the cost issues does not mean that we similarly adopt the court's acceptance of the Commonwealth's fundamental-alteration defense. 54