Opinion ID: 3036132
Heading Depth: 2
Heading Rank: 2

Heading: Oregon’s Community-Based Services Waiver

Text: Oregon initiated its community-based services waiver program in 1981. The waiver included the Client Assessment and Planning System, whereby the state classified eligible individuals into service priority levels based on medical need; the levels number from one to eighteen, with level one reflecting the most urgent medical need.1 Oregon uses a single set of 1 The service priority levels are codified in Oregon’s administrative rules. OR. ADMIN. R. 411-015-0010 (2005). 1516 WATSON v. WEEKS criteria for determining eligibility, whether services are in nursing facilities or community based.2 The original waiver provided care to all individuals assessed at levels one through seventeen. The Department also made community-based services available to any person eligible for institutional nursing care, leading to a large reduction in the services that had to be provided at nursing facilities. More recently, however, Oregon has eliminated coverage for some service levels, purely to cut state spending. On January 27, 2003, due to budget difficulties, the Department submitted a proposed waiver modification to eliminate eligibility for individuals in service levels fifteen to seventeen. The Secretary approved the modification. On February 24, 2003, the Department successfully requested another modification: the elimination of eligibility for individuals in levels ten to fourteen. The Oregon legislature subsequently restored funding through August 31, 2003, for service levels ten and eleven, and restored levels ten through thirteen for the 2003-2005 budget. Current Oregon regulations reflect these limitations, providing that only those individuals in levels one through thirteen are eligible for services.3 Under Oregon’s cutbacks, individuals who are deemed ineligible for nursing facility or community-based services cannot challenge the state’s decision to eliminate eligibility of a service level, but may challenge only their placement into their particular service level. Oregon estimated that elimination of levels fifteen through seventeen affected 4,000 individuals in community-based settings and 85 individuals in nursing facilities. The elimination of levels ten through fourteen was projected to terminate services for 6,100 individuals 2 See OR. ADMIN. R. 411-015-0100 (2005) (establishing eligibility for nursing facility and community-based services based on the service priority levels of OR. ADMIN. R. 411-015-0010). 3 OR. ADMIN. R. 411-015-0015(1) (2005) (rule is entitled “Current Limitations”). WATSON v. WEEKS 1517 in community-based settings and 300 individuals in nursing facilities. II COURT PROCEEDINGS On February 20, 2003, Plaintiffs filed a complaint against the Department in federal district court for the District of Oregon.4 On March 24, 2003, before the Department had responded, Plaintiffs filed a First Amended Complaint. The amended complaint set forth five claims for relief; Plaintiffs are appealing only the district court’s dismissal of the first three of these claims. The first claim alleged that the Department’s withdrawal of eligibility violated, inter alia, 42 U.S.C. § 1396a(a)(10), which requires that state Medicaid plans provide nursing facility services to eligible individuals. The second claim alleged that the Department’s actions violated, inter alia, 42 U.S.C. § 1396a(a)(17)’s “reasonable standards” requirement. The third claim alleged that the Department violated 42 U.S.C. § 1396a(a)(17) by assessing Plaintiffs’ medical need for nursing facility services using agents who lacked the necessary professional qualifications and training and who employed subjective and inaccurate judgments. On April 22, 2003, the Department moved to dismiss the claims under FRCP 12(b)(6). On November 24, 2003, the magistrate judge filed a report that recommended granting the motion. On December 10, 2003, Plaintiffs filed objections to the magistrate judge’s findings and recommendations. They 4 Plaintiffs requested, among other remedies, a preliminary injunction enjoining the Department from terminating services to persons assessed at service levels ten through seventeen. On June 16, 2003, the district court denied the Plaintiffs’ preliminary injunction request. Plaintiffs interlocutorily appealed, and the Ninth Circuit granted the Department’s motion to dismiss the appeal as moot, because the district court had in the meantime entered an order dismissing the action. Watson v. Thorne, 107 Fed. Appx. 150 (9th Cir. 2004) (unpublished order). 1518 WATSON v. WEEKS stated that they were “entitled to an opportunity to amend the complaint,” identifying two ways in which their amended complaint might be amended further. First, to avoid any misperception that Plaintiffs were alleging a right to communitybased services, rather than nursing facility services, Plaintiffs stated that they could “emphasize more strongly that they assert a statutory right” to nursing facility services. Second, Plaintiffs stated they could add causes of action under the Supremacy Clause. On June 25, 2004, the district court entered a judgment and order that granted the Department’s 12(b)(6) motion. The district court adopted the findings and recommendations of the magistrate judge. In the order, the district court also denied Plaintiffs leave to amend their complaint. The court noted that Plaintiffs already had amended their complaint “and that the opposing parties could suffer significant prejudice from plaintiffs’ amendment at this stage in the litigation, after the extensive briefing and arguments that have been presented.” In addition, the court noted “the apparent futility of amendment under the binding authorities as presently interpreted.” The district court entered final judgment against Plaintiffs on June 25, 2004. Plaintiffs timely filed a Notice of Appeal on July 21, 2004. III