Court Opinion

ID: 854312
Source: CourtListenerOpinion
Date Created: 2013-03-06 01:00:21.273533+00
Date Added: 2024-06-11T15:33:18.996555
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS
              FOR THE FOURTH CIRCUIT

HENRY PASHBY; ANNIE BAXLEY;             
MARGARET DREW; DEBORAH FORD;
MELISSA GABIJAN; MICHAEL
HUTTER; JAMES MOORE; LUCRETIA
MOORE; AYLEAH PHILLIPS; ALICE
SHROPSHIRE; SANDY SPLAWN;
ROBERT JONES; REBECCA PETTIGREW,
               Plaintiffs-Appellees,

BETTY MOORE,
                and
                                           No. 11-2363

                           Plaintiff,
                 v.
ALBERT DELIA, In his official
capacity as Secretary of the N.C.
Department of Health and Human
Services,
              Defendant-Appellant.
                                        
        Appeal from the United States District Court
   for the Eastern District of North Carolina, at Raleigh.
            Terrence W. Boyle, District Judge.
                    (5:11-cv-00273-BO)

                Argued: September 18, 2012

                   Decided: March 5, 2013

   Before AGEE, WYNN, and FLOYD, Circuit Judges.
2                      PASHBY v. DELIA
Remanded by published opinion. Judge Floyd wrote the
majority opinion, in which Judge Wynn joined. Judge Agee
wrote a separate opinion concurring in part and dissenting in
part.

                         COUNSEL

ARGUED: Tracy J. Hayes, NORTH CAROLINA DEPART-
MENT OF JUSTICE, Raleigh, North Carolina, for Appellant.
Sarah Somers, NATIONAL HEALTH LAW PROGRAM,
Carrboro, North Carolina, for Appellees. ON BRIEF: Roy
Cooper, North Carolina Attorney General, Lisa Granberry
Corbett, Special Deputy Attorney General, NORTH CARO-
LINA DEPARTMENT OF JUSTICE, Raleigh, North Caro-
lina, for Appellant. Douglas Stuart Sea, LEGAL SERVICES
OF SOUTHERN PIEDMONT, INC., Charlotte, North Caro-
lina; Jane Perkins, NATIONAL HEALTH LAW PROGRAM,
Carrboro, North Carolina; John R. Rittelmeyer, Jennifer L.
Bills, Elizabeth D. Edwards, DISABILITY RIGHTS NC,
Raleigh, North Carolina, for Appellees.

                         OPINION

FLOYD, Circuit Judge:

   In 2010, the North Carolina General Assembly voted to
impose stricter eligibility requirements for in-home personal
care services (PCS), an optional Medicaid program that
assists disabled adults with daily tasks such as eating and
bathing. Appellees—thirteen North Carolina residents who
lost access to in-home PCS due to the statutory change (col-
lectively "the PCS Recipients")—brought suit, contending
that the new PCS program violated the Social Security Act,
the Americans with Disabilities Act (ADA), and the Rehabili-
tation Act. The PCS Recipients further alleged that the boiler-
                        PASHBY v. DELIA                       3
plate termination letters they received did not fulfill the
Fourteenth Amendment’s due process requirements.

   The district court granted the PCS Recipients’ motions for
a preliminary injunction and class certification, and Appel-
lant—Acting Secretary of the North Carolina Department of
Health and Human Services (DHHS) Albert Delia—filed this
timely appeal. On appeal, the DHHS argues that (1) the dis-
trict court lacked subject matter jurisdiction; (2) the district
court erred in granting the PCS Recipients’ motion for class
certification; (3) the injunction qualifies as a mandatory pre-
liminary injunction, necessitating a heightened standard of
review; (4) the PCS Recipients failed to make the case for a
preliminary injunction; and (5) the district court’s order does
not satisfy Rule 65 of the Federal Rules of Civil Procedure.
We agree with the district court’s conclusion that a prelimi-
nary injunction was appropriate in this case. However,
because the district court’s order failed to comply with Rule
65, we remand.

                               I.

                              A.

   Medicaid is a cooperative program through which the fed-
eral government offers financial assistance to states, allowing
them to provide medical services to individuals with limited
incomes. 42 U.S.C. § 1396-1. If a state participates in Medic-
aid, it must comply with federally mandated standards. Id.
§ 1396a. States may also choose to provide additional,
optional benefits. North Carolina has elected to participate in
Medicaid, and the DHHS administers its program.

   One of the optional Medicaid benefits that North Carolina
offers is PCS. Individuals who qualify for PCS are assigned
an aide who assists them with everyday tasks. Prior to June
2011, Medicaid-eligible adults could receive PCS in their
homes if a physician determined that they required medically
4                      PASHBY v. DELIA
necessary assistance with two or more of the following five
activities of daily living (ADLs): eating, bathing, dressing,
mobility, and toileting. The North Carolina General Assembly
began the process of altering these requirements when it
passed Session Law 2010-31, which replaced the old in-home
PCS program with the new In-Home Care for Adults (IHCA)
program. The DHHS developed a plan for providing PCS
under IHCA and sought approval from the Centers for Medi-
care and Medicaid Services (CMS), the federal agency that
administers Medicaid. The CMS approved the DHHS’s plan
through a "state plan amendment" (SPA) on April 15, 2011,
and IHCA went into effect on June 1, 2011.

   As part of the implementation process for IHCA, the
DHHS developed IHCA Policy 3E, which is the focal point
of this case. IHCA Policy 3E imposes stricter eligibility
requirements for receiving in-home PCS. Pursuant to IHCA
Policy 3E, adults qualify for in-home PCS if they require lim-
ited assistance with three ADLs or extensive assistance with
two ADLs. As under the prior in-home PCS program, the
recipient’s physician must attest that in-home PCS is medi-
cally necessary, and a representative of the DHHS’s Division
of Medical Assistance (DMA) must conduct a face-to-face
assessment before an individual can receive in-home PCS.
Under both programs, the DMA’s representative can reassess
whether an individual qualifies for in-home PCS at any time.

   In addition to offering in-home PCS, North Carolina also
provides Medicaid-funded PCS to individuals who reside in
adult care homes (ACHs). The eligibility requirements for
receiving PCS in an ACH are less stringent than the require-
ments for obtaining in-home PCS under IHCA Policy 3E.
Whereas an individual must need assistance with two or three
of five ADLs before the DMA will approve in-home PCS
under IHCA Policy 3E, individuals residing in ACHs qualify
for PCS if they require "assistance" or "limited supervision"
with regard to one of seven ADLs: bathing, dressing, personal
hygiene, ambulation or locomotion, transferring, toileting, and
                       PASHBY v. DELIA                      5
eating. An individual’s personal care needs must be "medi-
cally related" to qualify for ACH PCS, but an ACH staff
member rather than a DMA representative may conduct the
assessment. Consequently, individuals who do not meet the
requirements for in-home PCS may be able to receive PCS if
they move to an ACH.

   The CMS-approved SPA that authorized the DHHS to
implement IHCA also required the DHHS to impose stricter
eligibility requirements for ACH PCS. Specifically, pursuant
to that SPA, ACH residents could qualify for PCS if they
required assistance with two of seven ADLs. On May 1, 2012,
the CMS approved a second SPA, reiterating that the DHHS
must make its ACH PCS eligibility criteria comparable with
its in-home PCS eligibility requirements and extending its
deadline to do so until December 31, 2012. The North Caro-
lina General Assembly took preliminary steps to assuage the
CMS’s concerns when it passed Session Law 2012-142,
which specifies that Medicaid recipients must satisfy the same
requirements to receive PCS regardless of whether they reside
at home or in an ACH. These new eligibility criteria were
scheduled to go into effect on January 1, 2013. The DHHS
ultimately aims to provide all PCS—both in homes and in
ACHs—under § 1915(i) of the Social Security Act. Because
§ 1915(i) allows a waiver of Medicaid’s comparability
requirements, the DHHS claims that the transition to § 1915(i)
will eliminate any comparability issues with respect to PCS.

                             B.

   Before IHCA Policy 3E went into effect, the DHHS mailed
letters informing approximately 2,405 individuals—including
the named Appellees and certified class members—that they
no longer met the eligibility requirements for in-home PCS
and would cease to receive the service as of June 1, 2011. The
letters did not give individualized reasons why each person’s
PCS had been terminated; instead, the letters cited North Car-
olina’s shift to the new IHCA program as the reason for the
6                       PASHBY v. DELIA
change in benefits. However, the letters did explain the
administrative appeal process and advised the recipients of
their right to review Medicaid’s files regarding their cases.
Many of the individuals who received these notifica-
tions—including Appellees Ayleah Phillips and Rebecca Pet-
tigrew—continue to receive in-home PCS pending the
resolution of their administrative appeals, and the DHHS
reversed its decision with respect to Appellees Henry Pashby,
Annie Baxley, Margaret Drew, Deborah Ford, Melissa Gabi-
jan, Michael Hutter, James Moore, Lucretia Moore, Alice
Shropshire, and Sandy Splawn after they filed this lawsuit.
Appellee Robert Jones voluntarily dismissed his administra-
tive appeal when a mediator refused to reinstate his in-home
PCS.

   The PCS Recipients brought suit on May 31, 2011, chal-
lenging IHCA Policy 3E and seeking a preliminary injunction
to prohibit the DHHS from implementing stricter eligibility
requirements for in-home PCS. Specifically, the PCS Recipi-
ents contended that the differences between the new in-home
PCS program and the PCS available to individuals who reside
in ACHs cause IHCA Policy 3E to contravene the ADA, sec-
tion 504 of the Rehabilitation Act, and the Social Security
Act. The PCS Recipients further alleged that the DHHS did
not provide sufficient notice before terminating their in-home
PCS, violating the Due Process Clause of the Fourteenth
Amendment.

  The PCS Recipients filed a motion for class certification on
June 6, 2011. On December 8, 2011, the district court entered
an order granting the PCS Recipients’ motion for a prelimi-
nary injunction, thereby halting the implementation of IHCA
Policy 3E. Pashby v. Cansler, 279 F.R.D. 347, 356 (E.D.N.C.
2011). The district court also granted the PCS Recipients’
motion for class certification and defined the class as follows:

    [A]ll current or future North Carolina Medicaid
    recipients age 21 or older who have, or will have,
                        PASHBY v. DELIA                        7
    coverage of PCS denied, delayed, interrupted, termi-
    nated, or reduced by Defendant directly or through
    his agents or assigns as a result of the new eligibility
    requirements for in-home PCS and unlawful policies
    contained in IHCA Policy 3E.

Id. The DHHS now appeals both the district court’s decision
to certify the class and its decision to grant the preliminary
injunction.

                              II.

   The DHHS first contends that this Court lacks subject mat-
ter jurisdiction over the PCS Recipients’ claims. Specifically,
the DHHS argues that this controversy is moot, that it is not
ripe for review, and that the district court should have dis-
missed the PCS Recipients’ claims and required them to pro-
ceed against the CMS under the Administrative Procedure Act
(APA). As discussed below, the DHHS’s contentions lack
merit, and the district court possessed subject matter jurisdic-
tion over the PCS Recipients’ claims.

                              A.

   Standing is determined at the commencement of a lawsuit.
Lujan v. Defenders of Wildlife, 504 U.S. 555, 571 n.5 (1992).
However, even if a plaintiff has standing when he or she files
a complaint, subsequent events can moot the claim. Simmons
v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 763 (4th
Cir. 2011). A case becomes moot, and thus deprives federal
courts of subject matter jurisdiction, "when the issues pre-
sented are no longer ‘live’ or the parties lack a legally cogni-
zable interest in the outcome." Id. (quoting United States v.
Hardy, 545 F.3d 280, 283 (4th Cir. 2008)) (internal quotation
marks omitted). When the case is a class action lawsuit, the
named class representatives "must allege and show that they
personally have been injured, not that injury has been suffered
by other, unidentified members of the class to which they
8                       PASHBY v. DELIA
belong." Blum v. Yaretsky, 457 U.S. 991, 1001 n.13 (1982)
(quoting Warth v. Seldin, 422 U.S. 490, 502 (1975)) (internal
quotation marks omitted). If the named plaintiff’s claim is a
live controversy at the time of class certification, the case will
not become moot even if the named plaintiff’s personal claim
later expires. U.S. Parole Comm’n v. Geraghty, 445 U.S. 388,
398-99 (1980).

   The DHHS alleges that this case is moot for two reasons.
First, the DHHS points out that many of the PCS Recipients
dismissed their administrative appeals prior to class certifica-
tion because mediators reversed the DHHS’s decision to ter-
minate their in-home PCS. The DHHS contends that this
reinstatement of PCS mooted these PCS Recipients’ claims.
However, mootness does not result from a defendant’s volun-
tary cessation of his allegedly illegal conduct unless it is clear
that the behavior is unlikely to recur. City of Mesquite v.
Aladdin’s Castle, Inc., 455 U.S. 283, 289 & n.10 (1982). In
this case, the DHHS voluntarily reinstated in-home PCS for
ten PCS Recipients, so their claims are not moot unless the
DHHS is unlikely to repeat its allegedly illegal conduct. The
DMA remains free to reassess the PCS Recipients’ needs and
cancel their PCS under IHCA Policy 3E at any time. Conse-
quently, it is possible that the DMA will once again terminate
their in-home PCS. Although the DHHS correctly contends
that North Carolina has always reassessed in-home PCS recip-
ients and that the risk of termination is not unique to IHCA
Policy 3E, the DHHS overlooks an important distinction: the
PCS Recipients do not challenge the practice of reassessment
in general but rather take issue with IHCA Policy 3E’s eligi-
bility criteria. Because the DHHS voluntarily reinstated cer-
tain PCS Recipients’ in-home PCS and could reassess them
under IHCA Policy 3E, the fact that those PCS Recipients dis-
missed their administrative appeals does not moot their
claims.

  Second, the DHHS argues that the parties lack a "legally
cognizable interest" in the outcome of this case because any
                        PASHBY v. DELIA                       9
comparability issues will disappear when North Carolina’s
§ 1915(i) waiver takes effect. However, the most recent SPA
allows North Carolina to continue the current PCS program
until December 31, 2012, and the DHHS has not completed
its transition to the § 1915(i) program. The fact that North
Carolina plans to replace the current Medicaid program in the
future does not prevent this case from presenting a live con-
troversy. Notably, the DHHS could delay or abandon its
implementation of the § 1915(i) program, leaving IHCA Pol-
icy 3E as North Carolina’s in-home PCS program for the fore-
seeable future. For these reasons, the PCS Recipients’ claims
are not moot.

                              B.

   A plaintiff also lacks standing if his claim is not ripe. The
ripeness doctrine aims to "prevent the courts, through avoid-
ance of premature adjudication, from entangling themselves
in abstract disagreements over administrative policies."
Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967), abro-
gated on other grounds by Califano v. Sanders, 430 U.S. 99
(1977). For a claim to be ripe, "it must involve ‘an administra-
tive decision [that] has been formalized and its effects felt in
a concrete way by the challenging parties.’" Arch Mineral
Corp. v. Babbitt, 104 F.3d 660, 665 (4th Cir. 1997) (alteration
in original) (quoting Charter Fed. Sav. Bank v. Office of
Thrift Supervision, 976 F.2d 203, 208 (4th Cir. 1992)). The
DHHS interprets this language to mean that the two PCS
Recipients who have not completed the administrative appeals
process lack standing because their claims are not ripe. How-
ever, as the district court correctly noted, the PCS Recipients
are not challenging the outcome of the individual administra-
tive appeals; they instead contest the DHHS’s decision to
implement IHCA Policy 3E, which is certainly a formalized
administrative decision with concrete effects. Consequently,
the PCS Recipients’ claims satisfy the ripeness requirement.
10                       PASHBY v. DELIA
                                C.

   Finally, the DHHS contends that we should dismiss the
PCS Recipients’ Social Security Act claims and require them
to proceed against the CMS under the APA. To support this
argument, the DHHS cites the Supreme Court’s recent deci-
sion in Douglas v. Independent Living Center of Southern
California, Inc., 132 S. Ct. 1204 (2012). In Independent Liv-
ing, the Supreme Court considered whether the respondents
should seek review under the APA because the CMS had
approved the California statute at issue during the pendency
of the lawsuit. Id. at 1209-11. However, the Medicaid benefi-
ciaries who brought suit in Independent Living challenged the
SPA itself rather than a program related to the SPA, such as
IHCA Policy 3E. Id. at 1209. Furthermore, in Independent
Living, the CMS had determined that the changes at issue
complied with federal law, id. at 1210, whereas here the CMS
found that North Carolina’s in-home PCS program violates
Medicaid’s comparability requirements. Finally, the Supreme
Court did not hold that the plaintiffs in Independent Living
had to proceed under the APA; instead, it remanded the case
to the Ninth Circuit to allow it to make that determination. Id.
at 1210-11. In light of Independent Living’s holding and the
distinctions between its facts and the facts of this case, there
was no need for the district court to require the PCS Recipi-
ents to seek review pursuant to the APA.

                               III.

   Next, the DHHS contends that the district court erred in
granting the PCS Recipients’ motion for class certification.
Rule 23(f) of the Federal Rules of Civil Procedure allows a
party to seek a permissive interlocutory appeal from an order
granting class certification. Pursuant to this rule, an appellant
must file a petition to appeal within fourteen days after the
district court enters its order regarding class certification. Fed.
R. Civ. P. 23(f). The petition must include: (1) the question
presented, (2) the facts necessary to understand the question
                         PASHBY v. DELIA                        11
presented, (3) the relief sought, (4) the rule or statute that
authorizes the appeal and the reasons the Court should allow
it, and (5) a copy of the order. Fed. R. App. P. 5(b). The
DHHS does not dispute that it failed to appeal the district
court’s class certification decision pursuant to Rule 23(f).

   Rule 23(f) is not the only method by which parties can
challenge a district court’s class certification order. In Allstate
Insurance Co. v. McNeill, 382 F.2d 84 (4th Cir. 1967), this
Court explained that "an appeal from an order granting or
refusing an injunction brings before the appellate court the
entire order, not merely the propriety of injunctive relief." Id.
at 88 (quoting Charles A. Wright, Federal Courts (1st ed.
1963)). Therefore, when this Court entertains an appeal pursu-
ant to 28 U.S.C. § 1292(a)(1)—which grants the courts of
appeals’ jurisdiction over interlocutory orders regarding
injunctions—it "may and should resolve all other questions
adjudicated by the [district court’s] decree." Id. at 87. The
DHHS contends that Allstate’s holding authorizes us to
review the district court’s class certification order despite the
DHHS’s failure to comply with Rule 23(f).

   Other circuits have refused to review class certification
decisions pursuant to § 1292(a)(1) unless the class certifica-
tion issue is "inextricably bound up with the injunction."
FDIC v. Bell, 106 F.3d 258, 262 (8th Cir. 1997) (quoting
Fogie v. THORN Ams., Inc., 95 F.3d 645 (8th Cir. 1996)); see
also Shaffer v. Globe Prot., Inc., 721 F.2d 1121, 1124 (7th
Cir. 1983) ("Cases applying § 1292(a)(1) have held that other
incidental orders or issues nonappealable in and of themselves
but in fact interdependent with the order granting or denying
an injunction may also be reviewed, but only to the extent that
they bear upon and are central to the grant or denial of the
injunction."); Kershner v. Mazurkiewicz, 670 F.2d 440, 448-
49 (3d Cir. 1982) ("[A] pendent class certification order is not
appealable under section 1292(a)(1) unless the preliminary
injunction issue cannot properly be decided without reference
to the class certification question."); Payne v. Travenol Labs.,
12                      PASHBY v. DELIA
Inc., 673 F.2d 798, 808-09 (5th Cir. 1982) (holding that the
Fifth Circuit could review the district court’s class certifica-
tion decision because the "questions concerning class certifi-
cation . . . [were] directly tied to the partial denial of an
injunction"). Even the Allstate Court specified that it could
consider pendent issues pursuant to § 1292(a)(1) only because
those issues were "basic to the injunction." Allstate Ins. Co.,
382 F.2d at 87. Consequently, for this Court to review the dis-
trict court’s class certification decision, class certification
must be closely connected to the preliminary injunction.

   The DHHS argues that class certification is intertwined
with the propriety of injunctive relief for two reasons. First,
the DHHS contends that the PCS Recipients lack standing to
bring this lawsuit and must rely upon the class members to
remedy this defect. As discussed above, this argument lacks
merit because the PCS Recipients have standing. Second, the
DHHS alleges that the district court took the class members
into account when determining whether IHCA Policy 3E
caused irreparable harm. In support of this proposition, the
DHHS points only to the district court’s statement that the
"[l]ack of in-home PCS could result in either serious physical
or mental injury or forced entry into institutional settings for
many of the named Plaintiffs and members of the class."
However, this single reference to class members hardly makes
the grant of class certification so connected to the injunction
that this Court can consider the class certification issue pursu-
ant to § 1292(a)(1). Notably, as discussed below, the district
court could have determined that IHCA Policy 3E caused
irreparable harm by looking only at its effect on the named
Appellees and omitting any reference to the class members.
Accordingly, because the class certification question is dis-
tinct from the preliminary injunction, the issue is not properly
before us.

                              IV.

  The DHHS next contends that this Court should apply a
heightened standard of review when evaluating the prelimi-
                         PASHBY v. DELIA                        13
nary injunction in this case because it qualifies as a mandatory
preliminary injunction rather than a traditional, prohibitory
preliminary injunction. We evaluate a district court’s decision
to grant preliminary injunctions under an abuse of discretion
standard. Aggaro v. MOL Ship Mgmt. Co., 675 F.3d 355, 366
(4th Cir. 2012). Pursuant to this standard, we review the dis-
trict court’s factual findings for clear error and review its legal
conclusions de novo. Dewhurst v. Century Aluminum Co., 649
F.3d 287, 290 (4th Cir. 2011). The district court must exercise
its discretion "within the applicable rules of law or equity."
Direx Isr., Ltd. v. Breakthrough Med Corp., 952 F.2d 802,
814 (4th Cir. 1992). Because preliminary injunctions are "ex-
traordinary remed[ies] involving the exercise of very far-
reaching power," id. at 811, this Court should be particularly
"exacting" in its use of the abuse of discretion standard when
it reviews an order granting a preliminary injunction. Sun
Microsystems, Inc. v. Microsoft Corp. (In re Microsoft Corp.
Antitrust Litig.), 333 F.3d 517, 524 (4th Cir. 2003), abrogated
on other grounds by eBay, Inc. v. MercExchange, L.L.C., 547
U.S. 388 (2006). Furthermore, when the preliminary injunc-
tion is "mandatory rather than prohibitory in nature," this
Court’s "application of this exacting standard of review is
even more searching." Id. at 525.

   Prohibitory preliminary injunctions aim to maintain the sta-
tus quo and prevent irreparable harm while a lawsuit remains
pending. Sun Microsystems, 333 F.3d at 525 ("The traditional
office of a preliminary injunction is to protect the status quo
and to prevent irreparable harm during the pendency of a law-
suit ultimately to preserve the court’s ability to render a mean-
ingful judgment on the merits."). Citing a case from the Tenth
Circuit, the DHHS contends that whether the injunction pre-
serves the status quo is not the determinative factor in catego-
rizing it as prohibitory or mandatory. The DHHS bases this
argument on the Tenth Circuit’s identification of three types
of preliminary injunctions that necessitate a heightened stan-
dard: "(1) preliminary injunctions that alter the status quo; (2)
mandatory preliminary injunctions; and (3) preliminary
14                      PASHBY v. DELIA
injunctions that afford the movant all the relief that it could
recover at the conclusion of a full trial on the merits." O Cen-
tro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 389
F.3d 973, 975 (10th Cir. 2004) (per curiam). Other than a
favorable reference in an unpublished opinion to the case
from which the Tenth Circuit drew this standard, SCFC ILC,
Inc. v. Visa USA, Inc., 936 F.2d 1096 (10th Cir. 1991), this
Court has not adopted this three-part definition. Tiffany v.
Forbes Custom Boats, Inc., 959 F.2d 232 (4th Cir. 1992)
(unpublished table decision). Instead, this Court has held that
a preliminary injunction’s tendency to preserve the status quo
determines whether it is prohibitory or mandatory. E. Tenn.
Natural Gas Co. v. Sage, 361 F.3d 808, 828 (4th Cir. 2004);
Wetzel v. Edwards, 635 F.2d 283, 286 (4th Cir. 1980)
("Mandatory preliminary injunctions do not preserve the sta-
tus quo. . . ."). Consequently, to determine whether we should
apply a heightened standard of review in this case, we must
ascertain whether the injunction maintains the status quo.

   This Court has defined the status quo as the "last uncon-
tested status between the parties which preceded the contro-
versy." Aggaro, 675 F.3d at 378 (quoting Stemple v. Bd. of
Educ., 623 F.2d 893, 898 (4th Cir. 1980)) (internal quotation
marks omitted). The DHHS contends that the last uncontested
status was the North Carolina General Assembly and the
CMS authorizing it to implement stricter eligibility criteria for
in-home PCS. In support of this argument, the DHHS points
out that the first SPA had been in effect for over seven months
when the district court heard oral arguments regarding the
preliminary injunction on November 17, 2011, and the DHHS
had prepared to implement this SPA for over a year before
IHCA Policy 3E took effect on June 1, 2011. However, the
DHHS ignores the fact that the PCS Recipients were unaware
that IHCA Policy 3E had resulted in the termination of their
in-home PCS until mid-May 2011, approximately two weeks
before they filed their motion for a preliminary injunction on
May 31, 2011. In sum, the DHHS appears to contend that the
                        PASHBY v. DELIA                        15
delays inherent in the judicial system somehow altered the
status quo to the PCS Recipients’ detriment.

   When the PCS Recipients filed their motion for a prelimi-
nary injunction, IHCA Policy 3E had not taken effect. There-
fore, the last uncontested status between the parties was the
pre-IHCA Policy 3E regime, under which the PCS Recipients
were able to receive in-home PCS. The district court’s order
"prohibited [the DHHS] from implementing IHCA Policy
3E," thereby maintaining this status quo. Pashby, 279 F.R.D.
at 356. Because it preserved the status quo, the injunction is
prohibitory rather than mandatory, and the heightened stan-
dard of review does not apply.

                               V.

   Next, we consider whether the district court erred in grant-
ing the PCS Recipients’ request for a preliminary injunction.
The Supreme Court established the standard for imposing a
preliminary injunction in Winter v. Natural Resources
Defense Council, Inc., 555 U.S. 7 (2008). That case requires
parties seeking preliminary injunctions to demonstrate that (1)
they are likely to succeed on the merits, (2) they are likely to
suffer irreparable harm, (3) the balance of hardships tips in
their favor, and (4) the injunction is in the public interest. Id.
at 20. Before the Supreme Court issued its ruling in Winter,
this Court used a "balance-of-hardship test" that allowed it to
disregard some of the preliminary injunction factors if it
found that the facts satisfied other factors. Blackwelder Furni-
ture Co. of Statesville, Inc. v. Seilig Mfg. Co., 550 F.2d 189,
196 (4th Cir. 1977). However, in light of Winter, this Court
recalibrated that test, requiring that each preliminary injunc-
tion factor be "satisfied as articulated." The Real Truth About
Obama, Inc. v. FEC, 575 F.3d 342, 347 (4th Cir. 2009),
vacated on other grounds, Citizens United v. FEC, 130 S. Ct.
876 (2010), aff’d, The Real Truth About Obama, Inc. v. FEC,
607 F.3d 355 (4th Cir. 2010) (per curiam). Accordingly,
16                      PASHBY v. DELIA
courts considering whether to impose preliminary injunctions
must separately consider each Winter factor.

                               A.

   First, plaintiffs seeking preliminary injunctions must dem-
onstrate that they are likely to succeed on the merits. Winter,
555 U.S. at 20. Although this inquiry requires plaintiffs seek-
ing injunctions to make a "clear showing" that they are likely
to succeed at trial, Real Truth, 575 F.3d at 345, plaintiffs need
not show a certainty of success, see 11A Charles Alan Wright
et al., Federal Practice & Procedure § 2948.3 (2d ed. 1995).
The PCS Recipients make the following merits-based argu-
ments in this case: (1) IHCA Policy 3E violates the ADA and
section 501 of the Rehabilitation Act because it is easier to
qualify for ACH PCS than it is to qualify for in-home PCS,
which effectively relegates individuals who require PCS to
ACHs; (2) IHCA Policy 3E violates the Social Security Act’s
comparability requirement by treating individuals differently
even though they have the same level of need; and (3) the ter-
mination notices that the PCS Recipients received did not
comport with the requirements of due process. For the reasons
that follow, the district court did not abuse its discretion in
finding that the PCS Recipients demonstrated a likelihood of
success on the merits of their ADA, Rehabilitation Act, and
Social Security Act claims. However, we conclude that the
district court erred in determining that the PCS Recipients are
likely to succeed on the merits of their due process claim.

             ADA and Rehabilitation Act Claims

   Title II of the ADA provides that "no qualified individual
with a disability shall, by reason of such disability, be
excluded from participation in or be denied the benefits of the
services, programs, or activities of a public entity, or be sub-
jected to discrimination by any such entity." 42 U.S.C.
§ 12132. Although the ADA "does not require a public entity
to provide to individuals with disabilities . . . services of a
                        PASHBY v. DELIA                       17
personal nature including assistance in eating, toileting, or
dressing," 28 C.F.R. § 35.135, a state that decides to provide
these services must do so "in the most integrated setting
appropriate to the needs of qualified individuals with disabili-
ties," id. § 35.130(d). Pursuant to federal regulations, the
"most integrated settings" are those that "enable[] individuals
with disabilities to interact with nondisabled persons to the
fullest extent possible." 28 C.F.R. pt. 35, app. B. In addition
to arguing that IHCA Policy 3E violates Title II of the ADA,
the PCS Recipients also allege that IHCA Policy 3E violates
section 504 of the Rehabilitation Act. We consider their Title
II and section 504 claims together because these provisions
impose the same integration requirements. See Henrietta D. v.
Bloomberg, 331 F.3d 261, 272 (2d Cir. 2003).

   The Supreme Court addressed Title II’s requirements in
Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581 (1999). In
Olmstead, the Supreme Court held that "unjustified institu-
tional isolation of persons with disabilities is a form of dis-
crimination." Id. at 600. The DHHS forcefully argues that the
PCS Recipients are unlikely to succeed on the merits under
Olmstead because Policy 3E has not resulted in the actual ins-
titutionalization of any former in-home PCS recipients;
instead, they merely face a risk of institutionalization. How-
ever, decisions from both the United States Department of
Justice (DOJ) and the Tenth Circuit have refuted this argu-
ment.

   Because Congress instructed the DOJ to issue regulations
regarding Title II, we are especially swayed by the DOJ’s
determination that "the ADA and the Olmstead decision
extend to persons at serious risk of institutionalization or seg-
regation and are not limited to individuals currently in institu-
tional or other segregated settings." U.S. Dept. of Justice,
Statement of the Department of Justice on the Integration
Mandate of Title II of the ADA and Olmstead v. L.C., http://
www.ada.gov/olmstead/q&a_olmstead.htm (last updated June
22, 2011); see also Olmstead, 527 U.S. at 597-98 ("Because
18                      PASHBY v. DELIA
the Department is the agency directed by Congress to issue
regulations implementing Title II, its views warrant respect."
(citation omitted)). Moreover, the Tenth Circuit has held that
"there is nothing in the plain language of the regulations that
limits protection to persons who are currently institutional-
ized." Fisher v. Okla. Health Care Auth., 335 F.3d 1175, 1181
(10th Cir. 2003). In sum, individuals who must enter institu-
tions to obtain Medicaid services for which they qualify may
be able to raise successful Title II and Rehabilitation Act
claims because they face a risk of institutionalization.

   As a preliminary matter, we note that the district court did
not explain the reasoning behind its determination that the
PCS Recipients are "at risk of segregation, in the form of ins-
titutionalization, as a result of . . . Policy 3E." Pashby, 279
F.R.D. at 355. However, it is well-settled that we "review
judgments, not opinions," which allows us to "affirm the dis-
trict court on any ground that would support the judgment in
favor of the party prevailing below." Everett v. Pitt Cnty. Bd.
of Educ., 678 F.3d 281, 291 (4th Cir. 2012) (quoting Crosby
v. City of Gastonia, 635 F.3d 634, 643 n.10 (4th Cir. 2011))
(internal quotation marks omitted); see also Cochran v. Mor-
ris, 73 F.3d 1310, 1315 (4th Cir. 1996) (en banc) (noting the
"well-recognized authority of courts of appeals to uphold
judgments of district courts on alternate grounds"). We may
therefore affirm the district court’s conclusion that IHCA Pol-
icy 3E places the PCS Recipients at risk of institutionalization
as long as the record supports this conclusion.

   Eleven of the PCS Recipients and individuals familiar with
the remaining two PCS Recipients’ needs made declarations
regarding the PCS Recipients’ in-home care requirements.
These declarants stated that the PCS Recipients could not live
on their own without in-home PCS or that it would be unsafe
for them to do so. Each of these declarants also attested that
the PCS Recipients had no friends or family members who
could offer the same amount of care that their aides provided
under the in-home PCS program. Finally, the declarations
                        PASHBY v. DELIA                       19
indicate that all but two of the PCS Recipients "may,"
"might," "probably" would, or were "likely" to enter an ACH
facility due to the termination of their in-home PCS. Appellee
Michael Hutter specifically stated that he "will have no choice
but to enter a facility" if the DHHS fails to reinstate his in-
home PCS. These declarations demonstrate that the PCS
Recipients face a significant risk of institutionalization due to
the termination of their in-home PCS under IHCA Policy 3E.

   The DHHS also alleges that, even if Olmstead allows
claims premised on a risk of institutionalization, ACHs are
not institutions. The district court assumed without discussion
that residing in an ACH qualifies as "institutionalization,"
Pashby, 279 F.R.D. at 355, and we find that the record sup-
ports this conclusion. After conducting an investigation of
whether North Carolina’s ACHs violated Olmstead’s integra-
tion requirement, the DOJ concluded in a July 28, 2011, letter
that "[a]dult care homes are institutional settings that segre-
gate residents from the community and impede residents’
interactions with people who do not have disabilities." The
DHHS, in turn, submitted the declarations of ACH employees
who dispute the DOJ study’s findings. The only declaration
that specifically contests the DOJ’s determination that ACHs
are institutions points to section 131D-21 of the General Stat-
utes of North Carolina, which lays out an "Adult Care Home
Residents’ Bill of Rights." The declaration implies that ACHs
cannot qualify as institutions because institutions would not
allow residents the level of autonomy that this statutory provi-
sion guarantees. In relevant part, the Adult Care Home Resi-
dents’ Bill of Rights safeguards ACH residents’ right "[t]o
associate and communicate privately and without restriction
with people and groups of [their] own choice," their rights to
send and receive mail and use the telephone, and their right
to "participate by choice in accessible community activities
and in social, political, medical, and religious resources."
N.C. Gen. Stat. § 131D-21(8)-(10), (15). Although these
rights demonstrate North Carolina’s goal of providing ACH
residents with certain freedoms, goals often fall short of real-
20                      PASHBY v. DELIA
ity. We therefore hold that the district court did not abuse its
discretion when it concluded that North Carolina’s ACHs
were institutions.

   Finally, the DHHS argues that, even if Olmstead allows
claims based on a risk of institutionalization and ACHs qual-
ify as institutions, the PCS Recipients still cannot succeed on
the merits of their ADA claim because modifying the PCS
program to avoid discrimination would "fundamentally alter"
the service. Pursuant to 28 C.F.R. § 35.130(b)(7), "[a] public
entity shall make reasonable modifications in policies, prac-
tices, or procedures when the modifications are necessary to
avoid discrimination on the basis of disability, unless the pub-
lic entity can demonstrate that making the modifications
would fundamentally alter the nature of the service, program,
or activity." The DHHS essentially argues that continuing to
offer in-home PCS to the class members and named Appel-
lees constitutes a fundamental alteration due to the adminis-
trative and financial burdens it entails.

   Contrary to the DHHS’s assertions, "budgetary concerns do
not alone sustain a fundamental alteration defense." M.R. v.
Dreyfus, 663 F.3d 1100, 1118 (9th Cir. 2011), amended by
No. 11-35026, 2012 WL 2218824 (9th Cir. June 18, 2012);
see also Pa. Prot. & Advocacy, Inc. v. Pa. Dep’t of Pub. Wel-
fare, 402 F.3d 374, 380 (3d Cir. 2005) ("Though clearly rele-
vant, budgetary constraints alone are insufficient to establish
a fundamental alteration defense."); Fisher, 335 F.3d at 1183
("If every alteration in a program or service that required the
outlay of funds were tantamount to a fundamental alteration,
the ADA’s integration mandate would be hollow indeed.").
Although the First Circuit has held that "in no event is the
[government] required to undertake measures that would
impose an undue financial or administrative burden . . . or
effect a fundamental alteration in the nature of the service,"
the court drew this standard from a Supreme Court opinion
interpreting 28 C.F.R. § 35.150(a)(3), which specifically men-
tions "undue financial and administrative burdens." Toledo v.
                           PASHBY v. DELIA                             21
Sanchez, 454 F.3d 24, 39 (1st Cir. 2006) (quoting Tennessee
v. Lane, 541 U.S. 509, 532 (2004)) (internal quotation marks
omitted). We join the Third, Ninth, and Tenth Circuits in
holding that, although budgetary concerns are relevant to the
fundamental alteration calculus, financial constraints alone
cannot sustain a fundamental alteration defense. Because the
PCS Recipients face a significant risk of institutionalization,
because North Carolina’s ACHs are institutions, and because
the DHHS has failed to make out a successful fundamental
alteration defense, the district court did not abuse its discre-
tion in holding that the PCS Recipients are likely to succeed
on the merits of their ADA and Rehabilitation Act claims.

                     Social Security Act Claim

   Next, the DHHS argues that the district court abused its
discretion in holding that the PCS Recipients were likely to
succeed on the merits of their Social Security Act claim for
two reasons. Under the Social Security Act, individuals with
comparable medical needs must receive comparable medical
assistance. 42 U.S.C. § 1396a(a)(10)(B). First, the DHHS
contends that the CMS’s determination that the SPA complied
with the Social Security Act is entitled to Chevron deference.
Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467
U.S. 837 (1984). However, regardless of whether the CMS
found that the SPA complied with the Social Security Act, it
never determined that IHCA Policy 3E alone did so.1 Instead,
the CMS approved a SPA that imposed stricter eligibility
requirements for both in-home PCS and ACH PCS, so any
finding regarding the SPA’s legality was dependent upon the
  1
    The record demonstrates that, although the CMS approved the plan that
became IHCA Policy 3E, it never approved IHCA Policy 3E itself. Fur-
thermore, the CMS never approved the plan that became IHCA Policy 3E
without also approving stricter qualification criteria for ACH PCS. We
believe that the district court was referring to the plan that became IHCA
Policy 3E when it found that "CMS approved Policy 3E . . . while simulta-
neously approving stricter criteria for ACH PCS." See Pashby, 279 F.R.D.
at 354.
22                     PASHBY v. DELIA
DHHS altering its ACH PCS program. We therefore decline
to address the DHHS’s argument that the CMS’s approval of
the SPA is entitled to Chevron deference because the DHHS
has not implemented the SPA’s ACH PCS eligibility criteria.

   Second, the DHHS contends that individuals living in
ACHs and individuals receiving in-home PCS do not have
comparable medical needs because the "needs and service
requirements of the two populations are necessarily different."
To support its argument, the DHHS alleges that a physician
must certify that an individual cannot live safely at home
before the individual may live in an ACH. However, this con-
tention is simply inaccurate. The North Carolina Administra-
tive Code provides that

     [a]ny adult (18 years of age or over) who, because
     of a temporary or chronic physical condition or men-
     tal disability, needs a substitute home may be admit-
     ted to an adult care home when, in the opinion of the
     resident, physician, family or social worker, and the
     administrator the services and accommodations of
     the home will meet his particular needs.

See 10A N.C. Admin. Code 13F.0701. As the emphasized
language indicates, an individual may gain admission to an
ACH based on his or her own opinion or the opinions of indi-
viduals with no medical background. Furthermore, the fact
that one of these individuals must believe that the potential
ACH resident "needs a substitute home" before he or she may
move to an ACH is not necessarily in tension with the rule
that in-home PCS recipients must "[n]ot require monitoring,
supervision, or ongoing care from a licensed care profes-
sional"; "a resident, physician, family or social worker, and
the administrator" could believe that an individual "needs a
substitute home" for any number of reasons. Finally, both in-
home PCS recipients and ACH PCS recipients must demon-
strate that family members or friends cannot provide the assis-
tance that they need, which prevents the DHHS from pointing
                           PASHBY v. DELIA                             23
to this requirement as a basis to distinguish the medical needs
of in-home PCS and ACH PCS recipients. The DHHS there-
fore has no basis for arguing that ACH residents and in-home
PCS recipients necessarily have incomparable medical needs.

   Under IHCA Policy 3E, an individual who requires limited,
medically necessary assistance with eating and bathing could
receive PCS in an ACH, but the same individual could not
receive in-home PCS. These individuals’ needs are not just
comparable; they are identical. Because individuals with com-
parable medical needs do not receive comparable medical
care under IHCA Policy 3E, the district court did not abuse
its discretion in finding that the PCS Recipients are likely to
succeed on their comparability claim.

   In addition to mandating comparability, the Social Security
Act also requires government entities to use reasonable stan-
dards for determining eligibility for Medicaid programs. 42
U.S.C. § 1396a(a)(17). The DHHS argues extensively that the
PCS Recipients cannot succeed on their "reasonableness"
claim because they seek to enforce the provision under the
Supremacy Clause. However, in light of our determination
that the PCS Recipients are likely to succeed on the merits of
their ADA, Rehabilitation Act, and comparability claims, we
need not address their reasonableness claim.

                         Due Process Claim

  Finally, the DHHS contends that the PCS Recipients are
unlikely to succeed on the merits of their due process claim.
The PCS Recipients contend that the DHHS2 failed to satisfy
  2
    Although we refer to the DHHS as the author of the termination letters
for purposes of this opinion, the Carolinas Center for Medical Excellence
(CCME)—a DMA-affiliated contractor—was responsible for informing
individuals that they no longer qualified for in-home PCS. The letters
appear on CCME letterhead and bear the signature of the CCME’s "Inde-
pendent Assessment Staff."
24                      PASHBY v. DELIA
the Fourteenth Amendment’s requirements because it used
boilerplate letters that did not include individualized reasons
for terminating the recipients’ in-home PCS, preventing them
from preparing for any post-termination hearings. Instead, the
letters cite North Carolina’s shift to the new IHCA program
as the reason for the benefits termination. The DHHS argues
that the letters did not prejudice the PCS Recipients because
they were able to file appeals and could have resolved any
informational defects by requesting copies of their Medicaid
files. For the reasons we outline below, we agree with the
DHHS’s contention that the letters comport with due pro-
cess’s requirements.

   The CMS has promulgated regulations that set out the
requirements for informing Medicaid recipients of a reduction
or termination of benefits. Those regulations state that, "[a]t
the time of any action affecting [a Medicaid recipient’s]
claim," 42 C.F.R. § 431.206(c)(2), the state agency must
inform each beneficiary in writing "[o]f his right to a hear-
ing," "[o]f the method by which he may obtain a hearing," and
"[t]hat he may represent himself or use legal counsel, a rela-
tive, a friend, or other spokesman," id. § 431.206(b). The
written notice must also contain:

     (a) A statement of what action the State, skilled nurs-
     ing facility, or nursing facility intends to take;

     (b) The reasons for the intended action;

     (c) The specific regulations that support, or the
     change in Federal or State law that requires, the
     action;

     (d) An explanation of—

         (1)   The individual’s right to request an
               evidentiary hearing if one is available,
               or a State agency hearing; or
                        PASHBY v. DELIA                       25
         (2)   In cases of an action based on a
               change in law, the circumstances
               under which a hearing will be granted;
               and

    (e) An explanation of the circumstances under which
    Medicaid is continued if a hearing is requested.

Id. § 431.210. However, this regulatory provision does not
specifically require individualized reasons for the govern-
ment’s decision. See Rosen v. Goetz, 410 F.3d 919, 931 (6th
Cir. 2005) (holding that Medicaid termination notices did not
violate 42 C.F.R. § 431.210 or due process when they did not
include "specific, individualized reasons supporting the agen-
cy’s conclusions").

   A review of the notices at issue in this case reveals that
they include information regarding the recipient’s "right to a
hearing," "the method by which he may obtain a hearing," and
"[t]hat he may represent himself or use legal counsel." 42
C.F.R. § 431.206(b). The notices state: "YOU HAVE THE
RIGHT TO APPEAL THIS DECISION," "[t]o file for a hear-
ing you must submit a completed hearing request form
(enclosed . . . in the recipient’s mailing)," and "[y]ou may rep-
resent yourself in the hearing process, hire an attorney or use
a legal aid attorney, or ask a relative, friend, or other
spokesperson (e.g. case manager) to speak for you."

   The notices also clearly contain "[a] statement of what
action the State . . . intends to take," the "reasons for the
intended action," and identify the change in North Carolina
law that requires the action, 42 C.F.R. § 431.210(a)–(c):

    Effective June 1, 2011, N.C. Medicaid will no longer
    offer services under the Personal Care Services
    (PCS) and PCS-Plus programs. New In-Home Care
    (IHC) programs will be implemented effective June
    1, 2011. The Carolinas Center for Medical Excel-
26                       PASHBY v. DELIA
     lence (CCME) conducts independent assessments
     and makes prior approval decisions for IHC services
     in the N.C. Medicaid program.

     CCME has reviewed your eligibility for the new In-
     Home Care for Adults (IHCA) program. Medicaid
     did not approve this request to transfer to IHCA.

     Medicaid did not approve the request to transfer to
     IHCA because your assessed activities of daily liv-
     ing do not meet the minimum IHCA program
     requirements of hands-on assistance for unmet needs
     with three qualifying activities of daily living, or
     with two qualifying activities of daily living, at least
     one of which requires extensive hands-on assistance.

     Unless you appeal, your current authorized level of
     [care] will stop effective June 1, 2011.

The notices further explain in detail the recipients’ right to
appeal the decision. Among other things, the notices state that
"[i]f you submit the request for a hearing within 30 days of
the date of this letter . . . your service(s) will be reinstated dur-
ing the appeal unless you choose not to maintain your ser-
vice(s)."

   The notices also include "[a]n explanation of . . . the cir-
cumstances under which a hearing will be granted" and "[a]n
explanation of the circumstances under which Medicaid is
continued if a hearing is requested," 42 C.F.R. § 431.210(d),
(e):

     To appeal, you must complete and file the attached
     Medicaid Recipient Services Hearing Request form
     asking for a hearing with the Office of Administra-
     tive Hearings. YOU HAVE 30 DAYS FROM THE
     DATE OF THIS LETTER TO FILE THE
     REQUEST FOR HEARING. . . .
                            PASHBY v. DELIA                             27
      If you submit the request within 30 days of the date
      of this letter and as long as you remain otherwise eli-
      gible for the service, your service(s) will be rein-
      stated during the appeal unless you choose not to
      maintain your service(s).

In sum, the notices comply with the requirements of the appli-
cable regulations.3 We therefore turn to the question of
whether the notices satisfy the Fourteenth Amendment’s stric-
tures.

   In Atkins v. Parker, 472 U.S. 115 (1985), the Supreme
Court considered what requirements the Due Process Clause
imposed under circumstances very similar to the case at hand.
Specifically, the Court evaluated whether food stamp recipi-
ents had been deprived of due process when they received
boilerplate notices informing them of a reduction or termina-
tion in benefits based on a change in federal law. Id. at 117.
With respect to the termination of benefits, the notices distrib-
uted in Atkins stated only that

      RECENT CHANGES IN THE FOOD STAMP
      PROGRAM HAVE BEEN MADE IN ACCOR-
      DANCE WITH 1981 FEDERAL LAW. UNDER
      THIS LAW, THE EARNED INCOME DEDUC-
      TION FOR FOOD STAMP BENEFITS HAS BEEN
      LOWERED FROM 20 TO 18 PERCENT. THIS
      REDUCTION MEANS THAT A HIGHER POR-
      TION OF YOUR HOUSEHOLD’S EARNED
  3
   The DHHS contends that the PCS Recipients cannot bring suit pursu-
ant to 42 U.S.C. § 1396a(a)(3)—which requires states to provide a fair
hearing to individuals whose claims for medical assistance are denied—
because that provision does not create an enforceable right. However,
because we hold that the notices satisfy the applicable regulatory require-
ments, we see no need to address the § 1396a(a)(3) issue. See Doe, 1-13
ex rel. Doe Sr. No.’s 1-13 v. Bush, 261 F.3d 1037, 1056 & n.18 (11th Cir.
2001) (interpreting § 1396a(a)(3) as incorporating the requirements of the
applicable regulatory provisions).
28                      PASHBY v. DELIA
     INCOME WILL BE COUNTED IN DETERMIN-
     ING YOUR ELIGIBILITY AND BENEFIT
     AMOUNT FOR FOOD STAMPS. AS A RESULT
     OF THIS FEDERAL CHANGE, YOUR BENEFITS
     WILL EITHER BE REDUCED IF YOU REMAIN
     ELIGIBLE OR YOUR BENEFITS WILL BE TER-
     MINATED.

Id. at 120. These notices contained no specific or individual-
ized assessments but did include a single additional paragraph
stating that "YOU HAVE THE RIGHT TO REQUEST A
FAIR HEARING IF YOU DISAGREE WITH THIS
ACTION" and that, "IF YOU ARE REQUESTING A HEAR-
ING, YOUR FOOD STAMP BENEFITS WILL BE REIN-
STATED." Id. at 120–21.

   Recipients of this notice contended the notice violated their
due process rights because it did not contain "an individual-
ized calculation" that the plaintiffs argued was necessary "to
avoid the risk of an erroneous reduction or termination." Id.
at 127. The Supreme Court disagreed, holding that the Due
Process Clause does not require the government to provide
individualized reasons in termination notices when the termi-
nation stems from a broad statutory change. Id. at 131 & n.35.
First, the Court considered whether the notice at issue "pro-
vided adequate protection against any deprivation based on an
unintended mistake." Id. at 128. The Court examined the
notice and concluded that the notice did, in fact, provide ade-
quate protections against mistakes because the "notice plainly
informed each household of the opportunity to request a fair
hearing and the right to have its benefit level frozen if a hear-
ing was requested." Id.

   The Supreme Court next considered whether due process
"required a more detailed notice of the mass change" than
what the government had provided. Id. The Court stated that
the benefit terminations at issue did "not concern the proce-
dural fairness of individual eligibility determinations" but,
                             PASHBY v. DELIA                              29
rather, "a legislatively mandated substantive change in the
scope of the entire program." Id. at 129. In rejecting the argu-
ment that due process "required a more detailed notice," id. at
128, the Court held that "[t]he procedural component of the
Due Process Clause does not ‘impose a constitutional limita-
tion on the power of Congress to make substantive changes in
the law of entitlement to public benefits,’" id. at 129 (quoting
Richardson v. Belcher, 404 U.S. 78, 81 (1971)). The Court
continued that "[t]he legislative determination provides all the
process that is due," id. at 130 (quoting Logan v. Zimmerman
Brush Co., 455 U.S. 422, 432-33 (1982)) (internal quotation
marks omitted), and concluded that "[t]he claim that petition-
ers had a constitutional right to better notice of the conse-
quences of the statutory amendment is without merit," id.

   Like the benefits reductions at issue in Atkins, the benefits
terminations associated with IHCA Policy 3E stemmed from
a broad statutory change. Id. at 117. We recognize that the
DHHS could have lowered the risk that it would erroneously
deprive individuals of in-home PCS by including a single sen-
tence summarizing the recipients’ in-home PCS qualification
information. However, the Atkins Court clearly stated that
government actors sufficiently counteract this risk by inform-
ing recipients that they can request a hearing and that the gov-
ernment will reinstate their benefits during the pendency of
that hearing. Id. at 128. In light of Atkins, we hold that the dis-
trict court abused its discretion when it summarily determined
that the PCS Recipients were likely to succeed on the merits
of their due process claim.4 However, because we find that
  4
  The district court’s analysis of the PCS Recipients’ due process claim
was limited to the following:
      Defendant’s notice to all Plaintiffs contained verbatim language
      that failed to provide detailed reasons for the proposed termina-
      tion. As the termination of in-home PCS could be quantified as
      a "brutal need," Defendant is likely required to go to greater
      lengths to provide more detailed notice regarding the reasons for
      the termination of an individual’s benefits.
Pashby, 279 F.R.D. at 355.
30                      PASHBY v. DELIA
they are likely to succeed on the merits of their ADA, Reha-
bilitation Act, and Social Security Act claims, our conclusion
regarding their due process claim does not affect our Winter
analysis.

                               B.

   Next, a party seeking a preliminary injunction must prove
that he or she is "likely to suffer irreparable harm in the
absence of preliminary relief." Winter, 555 U.S. at 20. The
DHHS contends that the PCS Recipients have failed to show
irreparable harm because none of them proved that they were
certain to suffer injury as a result of IHCA Policy 3E. How-
ever, as discussed below, this argument lacks merit.

   In M.R. v. Dreyfus, the Ninth Circuit held that a reduction
of PCS constituted irreparable harm, explaining that "benefi-
ciaries of public assistance may demonstrate a risk of irrepa-
rable injury by showing that enforcement of a proposed rule
may deny them needed medical care." 663 F.3d at 1114 (9th
Cir. 2011) (quoting Indep. Living Ctr. of S. Cal., Inc. v.
Maxwell-Jolly, 572 F.3d 644, 658 (9th Cir. 2009)) (internal
quotation marks omitted). As explained above, to qualify for
in-home PCS under the pre-IHCA program, the recipient’s
physician had to attest that in-home PCS was medically nec-
essary. Each of the PCS Recipients met this requirement,
which indicates that they lost "needed medical care" when the
DHHS terminated their in-home PCS. Consequently, even
if—as the DHHS contends—the PCS Recipients’ evidence of
harm does not rise to the level of the evidence in M.R. v.
Dreyfus, the district court did not abuse its discretion in find-
ing that the PCS Recipients demonstrated irreparable harm.

                               C.

  To obtain a preliminary injunction, a plaintiff must also
demonstrate that the balance of hardships tips in his or her
favor. Winter, 555 U.S. at 20. The DHHS argues that the PCS
                        PASHBY v. DELIA                       31
Recipients cannot satisfy this requirement because the injunc-
tion will force North Carolina to direct funds away from other
state programs—including other Medicaid programs—to pro-
vide in-home PCS to the PCS Recipients. When faced with a
similar situation, the Ninth Circuit affirmed a district court’s
decision to grant an injunction, explaining that California’s
financial problems did not outweigh the plaintiffs’ health con-
cerns even when the state’s financial situation threatened to
cause the end of other Medicaid services. Cal. Pharmacists
Ass’n v. Maxwell-Jolly, 596 F.3d 1098, 1115 (9th Cir. 2010),
vacated and remanded on other grounds, 132 S. Ct. 1204
(2012). "[T]he State is free to exercise its ‘considered judg-
ment’ and reduce [Medicaid benefits]. Yet it may not do so
for purely budgetary reasons." Id. The balance of hardships
tips the same way in this case. Accordingly, the district court
did not abuse its discretion in finding that the harm that IHCA
Policy 3E poses to the PCS Recipients’ health outweighs the
burden that the injunction places on North Carolina’s budget.

                               D.

   As outlined above, the district court separately considered
three of the Winter factors: likelihood of success on the mer-
its, irreparable harm, and whether the balance of hardships
tips in the PCS Recipients’ favor. Pashby, 279 F.R.D. at 354-
56. However, when evaluating the public interest prong, the
district court found that the injunction was in the public inter-
est because the PCS Recipients showed "a likelihood of suc-
cess on the merits" and "the public interest always lies with
upholding the law and having the mandates of the Medicaid
Act, the ADA, the Rehabilitation Act, and due process
enforced." Id. at 356. The district court gave no other reason
for finding that the PCS Recipients had satisfied the public
interest factor, despite Winter’s admonition that "courts of
equity should pay particular regard for the public conse-
quences in employing the extraordinary remedy of an injunc-
tion." Winter, 555 U.S. at 24 (quoting Weinberger v. Romero-
32                      PASHBY v. DELIA
Bacelo, 456 U.S. 305, 312 (1982)) (internal quotation marks
omitted).

   Although this Court’s precedent does not address whether
likelihood of success on the merits can singlehandedly satisfy
the public interest factor when other considerations are at
stake, our sister circuits’ opinions offer some guidance on this
point. For example, in Apple, Inc. v. Samsung Electronics Co.,
the Federal Circuit held that "[a]lthough the public interest
inquiry is not necessarily or always bound to the likelihood of
success o[n] the merits, . . . absent any other relevant concerns
. . . the public is best served by enforcing patents that are
likely valid and infringed." 678 F.3d 1314, 1338 (Fed. Cir.
2012) (alterations in original) (quoting Abbott Labs. v. Andrx
Pharm., Inc., 452 F.3d 1331, 1348 (Fed. Cir. 2006)) (internal
quotation marks omitted). Furthermore, in Thalheimer v. City
of San Diego, the Ninth Circuit affirmed the district court’s
conclusion that the public’s interest in "upholding free speech
and association rights" satisfied Winter’s public interest
prong. 645 F.3d 1109, 1128-29 (9th Cir. 2011); Thalheimer v.
City of San Diego, 706 F. Supp. 2d 1065, 1086 (S.D. Cal.
2010). Although this policy interest certainly relates to the
district court’s conclusion that the plaintiffs were likely to
succeed on the merits of their First Amendment claim, the
district court considered other, competing interests before
reaching its conclusion. Thalheimer, 706 F. Supp. 2d at 1086.
In sum, the district court could find that the likelihood of suc-
cess on the merits satisfied the public interest prong only if
other considerations did not meaningfully weigh on that fac-
tor.

   The parties in this case raised multiple public interest con-
siderations that warranted the district court’s attention, so
considering only the likelihood of success on the merits was
inappropriate. Specifically, the DHHS contends that the
injunction is not in the public interest due to the financial
effect it will have on other state programs, including North
Carolina’s other Medicaid programs. The district court con-
                        PASHBY v. DELIA                        33
sidered this issue only when balancing the hardships. Further-
more, the PCS Recipients imply that the termination of their
in-home PCS will adversely affect the public interest because
it will have a detrimental impact on public health. Once again,
the district court discussed this consideration only when bal-
ancing the hardships. Because the district court failed to cor-
rectly apply the rule set forth in Winter and Real Truth when
it combined the likelihood of success and public interest fac-
tors, it applied an incorrect legal standard.

   Although the district court misapplied Winter’s require-
ments, this error does not prohibit us from affirming the
court’s judgment in favor of the PCS Recipients on this issue.
As discussed above, we may affirm the district court’s judg-
ment based on any ground that appears in the record. Conse-
quently, we look to the record to determine whether to affirm
the district court’s conclusion that the injunction promotes the
public interest.

   In support of their contention that the injunction serves the
public interest, the PCS Recipients argue that IHCA Policy
3E’s adverse effect on public health prevents the program
from furthering the public interest. The record shows that
each of the 2,405 individuals who lost access to in-home PCS
under IHCA Policy 3E had to demonstrate that the service
was medically necessary. The Ninth Circuit has explained that
"there is a robust public interest in safeguarding access to
health care for those eligible for Medicaid." Indep. Living Ctr.
of S. Cal., Inc. v. Maxwell-Jolly, 572 F.3d 644, 659 (9th Cir.
2009), vacated and remanded on other grounds, 131 S. Ct.
1204 (2012). That court also held that "[s]tate budgetary con-
cerns cannot . . . be ‘the conclusive factor in decisions regard-
ing Medicaid,’" id. (quoting Ark. Med. Soc’y v. Reynolds, 6
F.3d 519, 531 (8th Cir. 1993)), and we agree. Although we
understand that the North Carolina legislature must make dif-
ficult decisions in an imperfect fiscal climate, the public inter-
est in this case lies with safeguarding public health rather than
with assuaging North Carolina’s budgetary woes. We there-
34                       PASHBY v. DELIA
fore hold that the injunction serves the public interest and
affirm the district court’s judgment on this issue despite its
failure to properly consider this prong of the Winter test.

                               VI.

   The DHHS further contends that we should vacate the dis-
trict court’s order because it does not comply with Federal
Rule of Civil Procedure 65, which lays out certain require-
ments for a preliminary injunction. Specifically, the DHHS
alleges (1) that the order violates Rule 65(d) because it lacks
specificity and (2) that it contravenes Rule 65(c) because the
district court neglected to address the issue of security. For
the reasons below, the district court’s order failed to satisfy
both of these requirements.

                                A.

   Rule 65(d) requires courts granting injunctions to "describe
in reasonable detail . . . the act or acts restrained or required."
The Supreme Court has explained that Rule 65(d) "was
designed to prevent uncertainty and confusion on the part of
those faced with injunctive orders, and to avoid the possible
founding of a contempt citation on a decree too vague to be
understood." Schmidt v. Lessard, 414 U.S. 473, 476 (1974).
In light of these important purposes, "the specificity provi-
sions of Rule 65(d) are no mere technical requirements" and
"basic fairness requires that those enjoined receive explicit
notice of precisely what conduct is outlawed." Id. Conse-
quently, to comply with Rule 65(d), the district court’s order
must be clear enough to inform the DHHS of what it may and
may not do.

   The order at issue in this case "prohibited [the DHHS] from
implementing IHCA Policy 3E," which the district court mis-
takenly assumed would "require only that [the DHHS] con-
tinue to provide for in-home PCS for those Plaintiffs who
were found to be entitled to such benefits prior to June 1,
                        PASHBY v. DELIA                      35
2011." Pashby, 279 F.R.D. at 356. When the DHHS pro-
ceeded to undo IHCA Policy 3E in its entirety and implement
the previous policy, the PCS Recipients took issue with some
of the changes, causing the district court to clarify that the
injunction simply required the DHHS to continue offering in-
home PCS to the plaintiffs who qualified for it before IHCA
Policy 3E took effect. This clarification begs the question:
Even though the district court has prohibited the DHHS from
implementing Policy 3E, must the DHHS continue to follow
that policy’s requirements with respect to issues that do not
touch upon providing in-home PCS to the PCS Recipients?
Notably, the DHHS has no way to ascertain which eligibility
requirements should apply to individuals who sought in-home
PCS after IHCA Policy 3E went into effect on June 1, 2011.
These ambiguities indicate that the district court has not
described the enjoined conduct "in reasonable detail," and the
order therefore violates Rule 65(d).

                              B.

   Rule 65 further specifies that a "court may issue a prelimi-
nary injunction . . . only if the movant gives security." Fed.
R. Civ. P. 65(c). As the PCS Recipients correctly point out,
the district court retains the discretion to set the bond amount
as it sees fit or waive the security requirement. Hoechst Dia-
foil Co. v. Nan Ya Plastics Corp., 174 F.3d 411, 421 (4th Cir.
1999); Moltan Co. v. Eagle-Picher Indus., Inc., 55 F.3d 1171,
1176 (6th Cir. 1995). However, the district court must
expressly address the issue of security before allowing any
waiver and cannot "disregard the bond requirement alto-
gether." Hoechst Diafoil, 174 F.3d at 421. By failing to con-
sider whether to require security, the district court erred.
Nevertheless, because the district court correctly found that
the PCS Recipients established the need for a preliminary
injunction, we have decided to remand this case without
vacating the order, which will allow the district court to rem-
edy the order’s Rule 65 defects. On remand, the district court
must clarify its order and address the issue of security.
36                          PASHBY v. DELIA
                                   VII.

  For the foregoing reasons, we remand this action for further
proceedings consistent with this opinion.

                                                            REMANDED

AGEE, Circuit Judge, concurring in part and dissenting in
part:

   I concur in the majority opinion except as to part of Section
V, which concludes that the district court properly granted the
PCS Recipients’1 motion for a preliminary injunction based
on the ADA and Rehabilitation Act and Medicaid Act claims.
The district court’s analysis and rationale in granting the pre-
liminary injunction was, to be charitable, perfunctory and
conclusory; to be accurate, it was plainly arbitrary and capri-
cious and an abuse of the district court’s discretion. In my
view, neither the record nor precedent supports the grant of
the preliminary injunction under the standard set forth in Win-
ter v. Natural Resources Defense Council, Inc., 555 U.S. 7
(2008). Accordingly, I respectfully dissent as to the above-
noted parts of Section V of the majority opinion.2

                                     I

   The sovereign state of North Carolina has voluntarily
elected to offer PCS coverage to disabled persons under its
state Medicaid program. While states participating in Medic-
  1
     For brevity and clarity, I adopt the same conventions as in the majority
opinion, so, for example, I refer to the plaintiffs as the "PCS Recipients."
   2
     As I would vacate the preliminary injunction, it is unnecessary for me
to address Section VI of the majority opinion, which permits the injunc-
tion to remain in place despite the district court’s failure to comply with
Rule 65.
                                PASHBY v. DELIA                               37
aid must provide coverage for certain services, such as prena-
tal care for qualifying pregnant women, 42 C.F.R.
§ 440.210(a)(2), states may choose not to provide coverage
for other services, such as PCS, see 42 C.F.R. § 440.225.
Thus, North Carolina could choose to eliminate its purely vol-
untary PCS coverage altogether and continue to receive fed-
eral Medicaid funds for its other services.

   North Carolina initiated the current changes to its PCS cov-
erage in 2010 in response to concerns over abuse of the PCS
program and a severe state budget crisis. Like many other
states, North Carolina has a constitutional provision requiring
a balanced budget that prevents it from running a deficit. See
N.C. Const. art. III, § 5(3).3

                                       II

   A party "seeking a preliminary injunction must establish
[(1)] that he is likely to succeed on the merits, [(2)] that he is
likely to suffer irreparable harm in the absence of preliminary
  3
   The North Carolina constitution provides:
      The total expenditures of the State for the fiscal period covered
      by the budget shall not exceed the total of receipts during that fis-
      cal period and the surplus remaining in the State Treasury at the
      beginning of the period. To insure that the State does not incur
      a deficit for any fiscal period, the Governor shall continually sur-
      vey the collection of the revenue and shall effect the necessary
      economies in State expenditures, after first making adequate pro-
      vision for the prompt payment of the principal of and interest on
      bonds and notes of the State according to their terms, whenever
      he determines that receipts during the fiscal period, when added
      to any surplus remaining in the State Treasury at the beginning
      of the period, will not be sufficient to meet budgeted expendi-
      tures. This section shall not be construed to impair the power of
      the State to issue its bonds and notes within the limitations
      imposed in Article V of this Constitution, nor to impair the obli-
      gation of bonds and notes of the State now outstanding or issued
      hereafter.
N.C. Const. art. III, § 5(3).
38                          PASHBY v. DELIA
relief, [(3)] that the balance of equities tips in his favor, and
[(4)] that an injunction is in the public interest." Winter, 555
U.S. at 20. The court reviews a district court’s decision to
grant a preliminary injunction for an abuse of discretion,
reviewing factual determinations for clear error and legal con-
clusions de novo. United States v. M/V Sanctuary, 540 F.3d
295, 302 (4th Cir. 2008).

   As to the first Winter factor, the district court concluded,
and the majority opinion agrees, that the PCS Recipients dem-
onstrated a likelihood of success on two claims: (1) ADA and
Rehabilitation Act, and (2) Medicaid Act comparability. For
the reasons set forth below, I respectfully disagree.

                                     A

               ADA and Rehabilitation Act Claims

   The ADA provides that "no qualified individual with a dis-
ability shall, by reason of such disability, be excluded from
participation in or be denied the benefits of the services, pro-
grams, or activities of a public entity, or be subjected to dis-
crimination by any such entity." 42 U.S.C. § 12132; see also
29 U.S.C. § 794(a) (Rehabilitation Act).4 In its enactment of
the ADA, Congress stated that "historically, society has
tended to isolate and segregate individuals with disabilities,
and, despite some improvements, such forms of discrimina-
tion against individuals with disabilities continue to be a seri-
ous and pervasive social problem." 42 U.S.C. § 12101(a)(2).
  4
    As the majority points out, the integration requirement of the ADA is
co-extensive with that of the Rehabilitation Act. See Henrietta D. v.
Bloomberg, 331 F.3d 261, 272 (2d Cir. 2003). However, section 504 of the
Rehabilitation Act, unlike the ADA, "contains no express recognition that
isolation or segregation of persons with disabilities is a form of discrimi-
nation." Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581, 600 n.11 (1999).
Thus, whether the Rehabilitation Act encompasses claims alleging the
"unjustified institutional isolation of persons with disabilities" is an open
question, id. at 600, but one that does not require resolution for purposes
of this appeal.
                         PASHBY v. DELIA                        39
   In construing this and similar provisions, the Supreme
Court has noted that "[u]njustified isolation . . . is properly
regarded as discrimination based on disability," that the "un-
justified institutional isolation of persons with disabilities is a
form of discrimination" under the ADA, and that "Congress
explicitly identified unjustified segregation of persons with
disabilities as a form of discrimination." Olmstead v. L.C. ex
rel. Zimring, 527 U.S. 581, 597, 600 (1999) (quoting 42
U.S.C. § 12101(a)(2)) (emphasis added, internal quotation
marks and brackets omitted). The Supreme Court has
expressly rejected the proposition "that the ADA imposes on
the States a ‘standard of care’ for whatever medical services
they render, or that the ADA requires States to ‘provide a cer-
tain level of benefits to individuals with disabilities.’" Id. at
603 n.14. Likewise, the regulations promulgated under the
ADA specifically state, "This part does not require a public
entity to provide to individuals with disabilities . . . services
of a personal nature including assistance in eating, toileting,
or dressing," 28 C.F.R. § 35.135—the very services that the
PCS Recipients claim the ADA requires North Carolina to
provide.

   A state need not modify a policy to accommodate persons
with disabilities if those modifications "would fundamentally
alter the nature of the service, program, or activity" provided
under that policy. 28 C.F.R. § 35.130(b)(7). In considering
such a "fundamental alteration" defense for a state program,
the Supreme Court has instructed that states are required to
provide community-based treatment alternatives only "when
the State’s treatment professionals determine that such place-
ment is appropriate, the affected persons do not oppose such
treatment, and the placement can be reasonably accommo-
dated, taking into account the resources available to the State
and the needs of others with . . . disabilities." Olmstead, 527
U.S. at 607 (emphasis added). Thus, a state should succeed in
its fundamental alteration defense if it shows "that, in the allo-
cation of available resources, immediate relief for the plain-
tiffs would be inequitable, given the responsibility the State
40                          PASHBY v. DELIA
has undertaken for the care and treatment of a large and
diverse population of persons with . . . disabilities." Id. at 604
(emphasis added).

   Despite the Supreme Court’s clear guidance, the district
court disregarded North Carolina’s fundamental alteration
defense and the justifications for its change to state law. In
affirming the district court, the majority opinion also limits its
analysis to the PCS Recipients’ "significant risk of institutional-
ization"5 and fails to acknowledge and weigh the state’s justi-
fications for its change in policies. I believe this is an abuse
of discretion as a matter of law and requires reversal of the
district court’s grant of the preliminary injunction.

   The PCS Recipients allege in their complaint that the
state’s "denial of coverage of personal care services that
Plaintiffs require in order to avoid institutional placements
and to remain in the integrated home settings appropriate to
their needs constitutes unlawful discrimination in violation of
Title II of the ADA, 42 U.S.C. § 12132." J.A. 973. They
assert that the state has discriminated against them in viola-
tion of the ADA by "failing to ensure that Plaintiffs have
access to Medicaid-covered personal care services that meet
their needs in the community and/or requiring Plaintiffs to
  5
    The state argues on appeal that the adult care homes at issue in this
case are not "institutions" within the meaning of the ADA. As the district
court did not consider this issue, that court is the appropriate forum before
which the issue should be addressed. The district court should determine
in the first instance whether adult care homes in North Carolina are suffi-
ciently segregated from society that they are properly considered "institu-
tions" within the meaning of the ADA. See Olmstead, 527 U.S. at 600
(focusing on institutional confinement and segregation as primary consid-
erations); see also 42 U.S.C. § 12101(a)(2) (discussing congressional con-
cern over isolation and segregation of individuals with disabilities); see
generally Michel Foucault, History of Madness 44–77 (Jean Khalfa ed.,
Jonathan Murphy & Jean Khalfa trans., Routledge 2006) (1961) (discuss-
ing the societal shift to confinement and exclusion of persons with mental
disabilities). I therefore assume, only arguendo, that the adult care homes
are institutions for purposes of this opinion.
                         PASHBY v. DELIA                        41
live in institutional settings in order to obtain the services they
need." J.A. 974.

   However, North Carolina is not required to maintain any
particular level of care to prevent the PCS Recipients from
entering an institution. Olmstead, 527 U.S. at 603 n.14 ("We
do not in this opinion hold that the ADA imposes on the
States a standard of care for whatever medical services they
render, or that the ADA requires States to provide a certain
level of benefits to individuals with disabilities." (internal
quotation marks omitted)). Nor does the ADA ensure the pro-
vision of PCS to prevent the institutionalization of persons
with disabilities. 28 C.F.R. § 35.135 ("This part does not
require a public entity to provide to individuals with disabili-
ties . . . services of a personal nature including assistance in
eating, toileting, or dressing.").

   Once a state endeavors to provide PCS to individuals with
disabilities through its Medicaid program, however, it must
administer those services "in the most integrated setting
appropriate." 28 C.F.R. § 35.130(d). Thus, the state may not
"requir[e the PCS Recipients] to live in institutional settings,"
J.A. 974, in order to receive a provided service without justifi-
cation. See Olmstead, 527 U.S. at 600. But the PCS Recipi-
ents have presented no evidence that North Carolina has
required them to enter an institution or that North Carolina’s
policies have created a pervasive or severe risk of institution-
alization. And even assuming, arguendo, that the PCS Recipi-
ents have demonstrated that they face a severe risk of
institutionalization, the state’s fundamental alteration argu-
ment establishes a bona fide justification for its policies,
which, for the reasons set forth below, defeats the PCS Recip-
ients’ claim at this stage of the proceedings.

  The majority opinion recognizes that "the district court did
not explain the reasoning behind its determination that the
PCS Recipients are ‘at risk of segregation.’" Majority Op. 18
(quoting Pashby v. Cansler, 279 F.R.D. 347, 355 (E.D.N.C.
42                      PASHBY v. DELIA
2011)). Yet the majority opinion makes the same basic
assumption as the district court must have made: that "indi-
viduals who must enter institutions to obtain Medicaid ser-
vices for which they qualify may be able to raise successful
Title II and Rehabilitation Act claims because they face a risk
of institutionalization." Majority Op. 18. And in so doing, nei-
ther the district court nor the majority consider all the objec-
tive facts in the record or the caselaw on point. The only
evidence that the PCS Recipients provide to demonstrate that
they face institutionalization consists of self-serving declara-
tions of a limited minority of their membership that they
"may," "might," "probably," or "likely" would enter an adult
care home because their in-home PCS coverage had been ter-
minated. See Majority Op. 18-19. None of the PCS Recipients
presents the objective opinion of a medical professional to
support his or her declaration or any other competent non-
subjective evidence beyond these declarations. Thus, the
majority opinion’s conclusion that the PCS Recipients are
individuals who "must enter institutions" to receive PCS cov-
erage is simply not supported by the record. Majority Op. 18.

   In addition, by concluding that the PCS Recipients are
likely to succeed on their ADA claim, the majority opinion
appears to equate any risk of institutionalization with the sub-
stantially higher actual legal standard, which is a "serious risk
of institutionalization." M.R. v. Dreyfus, 697 F.3d 706, 734
(9th Cir. 2012) (emphasis added). It is not enough for the PCS
Recipients to show that they face some risk of institutionaliza-
tion; they must show that the risk of institutionalization that
they face is actual and severe. See V.L. v. Wagner, 669 F.
Supp. 2d 1106, 1119 (N.D. Cal. 2009) (requiring a showing
of a "severe risk of institutionalization" (emphasis added));
see also G. v. Hawaii, 676 F. Supp. 2d 1046, 1057 (D. Haw.
2009) ("A state’s reduction in services may violate the inte-
gration mandate where it unjustifiably forces or will likely
force beneficiaries from an integrated environment into insti-
tutional care."). The PCS Recipients have shown nothing
more than a generalized, uncertain risk that a limited number
                        PASHBY v. DELIA                        43
of them could face entering an adult care home. Cf. M.R., 697
F.3d at 717 (Bea, J., dissenting from the denial of rehearing
en banc) (arguing that a risk of institutionalization created "by
the lessening of the services previously provided" cannot vio-
late the ADA). Thus, the PCS Recipients fall well short of sat-
isfying their burden under Winter to demonstrate a likelihood
of success on the merits.

   But even assuming, arguendo, that the PCS Recipients had
presented evidence of a severe risk of institutionalization,
they still cannot satisfy Winter’s likelihood of success on the
merits requirement because North Carolina has established a
significant fundamental alteration defense that justifies its
change in law. In presenting its fundamental alteration
defense, the state provides three reasons justifying its decision
to provide PCS to individuals residing at home according to
different criteria than those it applies to individuals residing
in adult care homes. First, the state points to its budget crisis.
Second, the state describes the problem of abuse of the in-
home PCS program. And third, the state shows that persons
receiving PCS at home are a qualitatively different group with
much different needs than those receiving PCS in adult care
homes.

   With respect to North Carolina’s fiscal justification, state
budgetary restrictions are "clearly relevant" to a fundamental
alteration defense. Pa. Prot. & Advocacy, Inc. v. Pa. Dep’t of
Pub. Welfare, 402 F.3d 374, 380 (3d Cir. 2005). Yet the dis-
trict court failed to consider these concerns notwithstanding
the state constitutional mandate of a balanced budget. The dis-
trict court summarily concluded, without analysis or refer-
ence, that "[t]he record in this case does not indicate that
Defendant will have to make a fundamental alteration of the
[PCS] program in order to comply with the ADA’s integration
mandate." Pashby, 279 F.R.D. at 355. The majority opinion
only nominally mentions the state’s budgetary constraints,
summarily concluding that "financial constraints alone cannot
sustain a fundamental alteration defense." Majority Op. 21. In
44                         PASHBY v. DELIA
my view, both the district court and the majority opinion
reach arbitrary and unsupported conclusions.

   Although some courts hold that "budgetary constraints
alone are insufficient to establish a fundamental alteration
defense," Pa. Prot. & Advocacy, 402 F.3d at 380,6 Olmstead
very clearly sets out that a state must provide community-
based programs only after "taking into account the resources
available to the State and the needs of others with . . . disabili-
ties." 527 U.S. at 607. Here, the state’s budget was severely
constrained as a result of the national financial crisis and
North Carolina is constitutionally prohibited from running a
deficit. There is no evidence in the record to suggest that this
is a case in which North Carolina arbitrarily elected not to
make certain expenditures that the PCS Recipients desire the
state to make. Rather, North Carolina simply had no choice
but to make significant changes to its prior levels of expendi-
ture of public funds to comply with fiscal reality and its con-
stitutional mandate.

   The duly elected government of North Carolina has deter-
mined in an open, public process that, in view of the resources
available to the state and the diminution in other government
services that must result from greater expenditure on in-home
PCS, it was necessary and appropriate to reduce the appropri-
ation for in-home PCS coverage. Cf. Olmstead, 527 U.S. at
604; Pa. Prot. & Advocacy, 402 F.3d at 383. The district court
and majority opinion give no cognizable weight to this vital
element of the Olmstead analysis and, in doing so, act arbi-
trarily. Basic principles of federalism demand a fair hearing
of North Carolina’s factual argument, and it was an abuse of
  6
   This approach has been strongly called into question. See M.R., 697
F.3d at 713–20 (Bea, J., dissenting from the denial of rehearing en banc).
A "fundamental reality of our democracy" is the fact that limited revenue
requires limited spending. Id. Elected state legislators, who are account-
able to their constituents, must decide how to balance spending with reve-
nue. Those decisions should not be lightly cast aside by spending
mandates from unelected federal judges.
                         PASHBY v. DELIA                        45
discretion for the district court to fail to do so. The people of
North Carolina, through their duly elected government, made
difficult decisions among limited options. To overturn that
choice requires a far more weighty record and clear precedent
than exists in this case.

   North Carolina presented two additional non-budgetary rea-
sons for its reduction of in-home PCS that were also ignored
by the district court and the majority opinion. The state has
indicated, both before the district court and before this court,
that it revised the in-home PCS program in part in response
to concerns that the program has been subject to substantial
abuse and fraud.

   Each dollar that North Carolina expends on the PCS Recip-
ients reduces the amount that the state can spend in any other
area, including for all classes of citizens with disabilities. Sig-
nificantly, North Carolina has also shown that it reduced in-
home PCS coverage based not only upon a consideration of
"the resources available to the State," but also by taking into
account the "needs of others with . . . disabilities." Olmstead,
527 U.S. at 607. The in-home PCS recipients and those PCS
recipients residing in adult care homes are different groups
with different needs. The state posits that it therefore is a
rational and non-arbitrary decision to offer PCS to persons in
these disparate groups according to different standards, and it
would be a fundamental alteration of its PCS program to
require the state to apply the same standards to these two very
different groups. Thus, North Carolina’s decision regarding
the allocation of its available resources for PCS coverage was
based upon a consideration of the needs of all of its citizens
with disabilities, not simply the PCS Recipients.

   Thus, even assuming that the PCS Recipients established a
prima facie case of discrimination under the ADA on their
claim that the state has "requir[ed] Plaintiffs to live in institu-
tional settings in order to obtain the services they need," J.A.
974, (which is a significant stretch), the state has presented a
46                      PASHBY v. DELIA
series of compelling justifications for its policy: (1) the state
has limited resources and is constrained by a constitutional
balanced budget mandate, (2) the state must make expendi-
tures and cuts on an equitable basis, (3) a failure to equitably
include in-home PCS will result in greater cuts elsewhere, (4)
fraudulent in-home PCS claims are a growing concern, and
(5) those receiving in-home PCS have much different needs
than those receiving PCS in adult care homes. These justifica-
tions for its policy establish a substantial fundamental alter-
ation defense. I would therefore hold that the district court
abused its discretion by arbitrarily ignoring the state’s justifi-
cations and refusing to apply this defense and that the PCS
Recipients failed to establish the necessary Winter factor of
likelihood of success on the merits.

                                B

                         Medicaid Act

   As CMS is the administrative agency of the federal govern-
ment directed by statute to administer the Medicaid Act,
courts owe substantial deference to its construction of that
Act. See Douglas v. Indep. Living Ctr. of S. Cal., Inc., 132 S.
Ct. 1204, 1210 (2012); Chevron U.S.A. Inc. v. Natural Res.
Def. Council, Inc., 467 U.S. 837, 844 (1984) ("We have long
recognized that considerable weight should be accorded to an
executive department’s construction of a statutory scheme it
is entrusted to administer."). In reviewing CMS decisions, we
may not "substitute our judgment for that of the agency" and
will overrule those decisions "only if we find that it has failed
to consider relevant factors and committed a clear error of
judgment." Md. Dep’t of Health & Mental Hygiene v. CMS,
542 F.3d 424, 427–28 (4th Cir. 2008) (quoting West Virginia
v. Thompson, 475 F.3d 204, 212 (4th Cir. 2007)) (internal
quotation marks omitted).

   In this case, CMS approved North Carolina’s application of
different PCS eligibility criteria to persons living at home and
                        PASHBY v. DELIA                      47
persons living in group homes. See J.A. 170, 173. In the
CMS-approved SPA, North Carolina proposed to provide
PCS to persons living in adult care homes when they require
"[a]ssistance with at least two of . . . seven ADLs at the lim-
ited, extensive, or full dependency level," J.A. 173, while the
state would provide PCS coverage to persons living at home
when they require assistance with "[t]hree of the five qualify-
ing ADLs at the limited level," J.A. 177. The PCS Recipients
concede CMS’s approval of this disparity in their complaint:

       158. SPA 10-31 also described requirements for
    covering PCS in ACHs (addressed below). The eligi-
    bility requirements for PCS in ACHs are much less
    stringent than PCS for individuals 21 years or older
    living at home (renamed IHCA).

       159. CMS approved SPA 10-31 in April 2011.

J.A. 967. A reasonable conclusion drawn from this approval
is that, in the view of CMS (the relevant administrative
agency), North Carolina’s use of more stringent PCS require-
ments for individuals living at home than for individuals liv-
ing in adult care homes does not violate the Medicaid Act.
Because an agency’s interpretation of the statute that it has
been entrusted to administer is entitled to deference under
Chevron, the court is required to defer to the agency’s conclu-
sion unless the court determines that CMS "committed a clear
error of judgment." Md. Dep’t of Health & Mental Hygiene,
542 F.3d at 427–28 (quoting Thompson, 475 F.3d at 212)
(internal quotation marks omitted).

   Although CMS approved North Carolina’s use of more
stringent PCS requirements for individuals living at home
than for individuals living in adult care homes by its approval
letter of April 15, 2011, the district court failed not only to
give any deference to the CMS decision, it failed to consider
the issue of deference at all. By interpreting the comparability
provision of the Medicaid Act while failing to consider
48                      PASHBY v. DELIA
CMS’s construction of this provision, the district court clearly
erred and therefore abused its discretion.

   Similarly, the majority opinion "decline[s] to address
[North Carolina’s] argument that the CMS’s approval of the
SPA is entitled to Chevron deference," Majority Op. 22,
despite clear precedent that the agency’s construction of the
Medicaid Act in its approval of a state SPA is entitled to
Chevron deference or, at least, a reasoned conclusion that
CMS committed a clear error of judgment upon which defer-
ence is declined. See Md. Dep’t of Health & Mental Hygiene,
542 F.3d at 427–28. Instead, the majority opinion concludes
that Chevron does not apply in this case because "regardless
of whether the CMS found that the SPA complied with the
Social Security Act, it never determined that IHCA Policy 3E
alone did so." Majority Op. 21.

   The distinction drawn by the majority opinion is neither
relevant nor conclusive as to Chevron consideration because
the PCS Recipients’ complaint is directed solely toward North
Carolina’s application of more stringent PCS eligibility
criteria to persons living at home than to persons living in
adult care homes. Regardless of whether North Carolina fully
implemented the CMS-approved SPA, the agency’s construc-
tion of the Medicaid Act in approving the SPA is entitled to
deference as a matter of law unless the court concludes that
the agency’s construction was a clear error of judgment. See
Chevron, 467 U.S. at 844; Md. Dep’t of Health & Mental
Hygiene, 542 F.3d at 427–28. Absent such clear error, the
court must defer to the view of CMS that North Carolina’s
adoption of more stringent PCS eligibility criteria for persons
living at home than for persons living in adult care homes
does not violate the Medicaid Act.

  In support of the contention that CMS determined that
North Carolina’s PCS program violated the Medicaid Act, the
PCS Recipients cite a letter dated January 20, 2011 from
CMS, stating:
                           PASHBY v. DELIA                           49
      We have consulted with the Office of General Coun-
      sel (OGC) who has advised that the State appears to
      be violating comparability by currently offering and
      proposing to continue to offer a different PCS bene-
      fit for persons residing in their own homes and those
      residing in ACHs and SLHs. We will need to discuss
      this further with the State.

J.A. 88 (emphasis added).7 Far from making a determination
in January 2011, CMS merely raised concerns to be discussed
with the state, as this letter indicates.

   The more salient fact in this case is that CMS subsequently
approved the state’s SPA, which included more stringent PCS
eligibility criteria for persons living at home than for those
living in adult care homes, several months after sending the
above letter noting its concerns. Any reliance on the January
20, 2011 letter to conclude either that CMS determined that
North Carolina’s policies violate the comparability provision
of the Medicaid Act or that the PCS Recipients are likely to
succeed on their Medicaid Act claim is error.

   Nonetheless, because we may overrule an agency’s deci-
sion "if we find that it has failed to consider relevant factors
and committed a clear error of judgment," Md. Dep’t of
Health & Mental Hygiene, 542 F.3d at 427–28 (quoting
Thompson, 475 F.3d at 212 (internal quotation marks omit-
ted)), I turn next to the substance of the PCS Recipients’ Med-
icaid Act claim. That analysis requires a review of whether
the CMS determination that North Carolina’s policies do not
violate the Medicaid Act was, in fact, "a clear error of judg-
ment." It was not.
  7
   The PCS Recipients argue that the court should apply Chevron defer-
ence to this January 20 letter rather than to the CMS decision approving
North Carolina’s SPA. The January 20 letter, however, is "beyond the
Chevron pale" as, unlike the CMS approval of North Carolina’s SPA, it
lacks the force of law. United States v. Mead Corp., 533 U.S. 218, 234
(2001).
50                      PASHBY v. DELIA
   States accepting federal Medicaid funds may provide medi-
cal assistance to two groups of eligible applicants—the cate-
gorically needy and the medically needy. See id. at 429. The
categorically needy are individuals whose income falls below
a certain level. See 42 U.S.C. § 1396a(a)(10)(A). The medi-
cally needy, on the other hand, are individuals whose medical
expenses exceed their ability to pay. See 42 U.S.C.
§ 1396a(a)(10)(C). While states accepting Medicaid funds
must provide coverage to the categorically needy, states may
choose not to provide coverage to the medically needy. Lank-
ford v. Sherman, 451 F.3d 496, 504 (8th Cir. 2006).

  The Medicaid Act contains a "comparability mandate,"
which provides that

     medical assistance made available to any individual
     described in subparagraph (A) [i.e., the categorically
     needy]—

         (i) shall not be less in amount, duration, or
         scope than the medical assistance made
         available to any other such individual [i.e.,
         any other categorically needy individual],
         and

         (ii) shall not be less in amount, duration, or
         scope than the medical assistance made
         available to individuals not described in
         subparagraph (A) [i.e., the medically
         needy].

42 U.S.C. § 1396a(a)(10)(B). CMS has adopted a regulation
interpreting this statute that provides:

     (a) The [state Medicaid] plan must provide that the
     services available to any categorically needy benefi-
     ciary under the plan are not less in amount, duration,
                             PASHBY v. DELIA                               51
      and scope than those services available to a medi-
      cally needy beneficiary; and

      (b) The [state Medicaid] plan must provide that the
      services available to any individual in the following
      groups are equal in amount, duration, and scope for
      all beneficiaries within the group:

           (1) The categorically needy.

           (2) A covered medically needy group.

42 C.F.R. § 440.240. The comparability mandate thus "pre-
vents discrimination against or among the categorically
needy." Lankford, 451 F.3d at 505; Schott v. Olszewski, 401
F.3d 682, 686 (6th Cir. 2005) (holding that states must "pro-
vide comparable medical assistance to all Medicaid recipients
within each classification, so long as the medically needy do
not receive greater benefits than the categorically needy
(although the reverse is permitted)"). The PCS Recipients
offer no indication of whether they are categorically needy or
medically needy.8

   But even assuming, arguendo, that the PCS Recipients are
categorically needy, a full reading of § 1396a(a)(10)(B) dem-
onstrates that the PCS Recipients are not likely to succeed on
their Medicaid Act claim. The district court concluded and the
  8
    Without any indication as to whether the PCS Recipients are categori-
cally needy or medically needy, the district court had no basis upon which
to conclude that the PCS Recipients are likely to succeed on their Medic-
aid Act comparability claim. The district court made no finding that the
PCS Recipients are categorically needy, nor do the PCS Recipients allege
in their complaint that they fall within that status. See J.A. 975. The PCS
Recipients have failed to plead essential elements of a claim under
§ 1396a(a)(10)(B) so as to demonstrate that the complaint would survive
a motion to dismiss for failure to state a claim. For this reason as well, the
PCS Recipients cannot show that they are likely to succeed on the merits
of their Medicaid Act claim for purposes of the Winter analysis.
52                      PASHBY v. DELIA
majority opinion agrees that § 1396a(a)(10)(B) requires that
"comparable medical assistance be provided to individuals
with comparable needs." Pashby, 279 F.R.D. at 354; see
Majority Op. 21. Applying this conclusion, both the district
court and the majority opinion hold that any disparate treat-
ment between any two arguably similar groups of people vio-
lates the comparability provision of the Medicaid Act and
that, therefore, North Carolina’s provision of PCS coverage to
two different groups according to different criteria violates
that Act.

   The statute, however, when read as a whole, demonstrates
that both the district court and the majority misinterpret
§ 1396a(a)(10)(B). Rather than ensuring that all "individuals
with comparable medical needs must receive comparable
medical assistance," Majority Op. 21, the Medicaid Act’s
comparability mandate protects against only three types of
discrimination: (1) discrimination against the categorically
needy, (2) discrimination among the categorically needy, and
(3) discrimination among the medically needy, see 42 C.F.R.
§ 440.240. In contrast to the ADA, which focuses on "the
location of services," Townsend v. Quasim, 328 F.3d 511, 517
(9th Cir. 2003), the comparability provision of the Medicaid
Act focuses not on where services will be provided (for exam-
ple, at home or in a care facility), but instead on "whether the
services will be provided" to the categorically needy. Town-
send, 328 F.3d at 517.

   Moreover, the comparability requirement must be read in
view of clear regulatory guidance that a state "may place
appropriate limits on a service based on such criteria as medi-
cal necessity or on utilization control procedures." 42 C.F.R.
§ 440.230(d). A state therefore does not violate the compara-
bility provision of the Medicaid Act even when it provides
different coverage to different categorically needy individu-
als, for example, so long as the coverage it provides bears a
"reasonable relation to the particular needs of the individual."
Cota v. Maxwell-Jolly, 688 F. Supp. 2d 980, 993 (N.D. Cal.
                        PASHBY v. DELIA                        53
2010); see, e.g., V.L., 669 F. Supp. 2d at 1115 (holding that
a state’s eligibility criteria must "reasonably measure[] the
individual need of a disabled or elderly person for a particular
service"); Casillas v. Daines, 580 F. Supp. 2d 235, 244–45
(S.D.N.Y. 2008) (holding that the state’s coverage of a certain
service for persons with one diagnosis does not mean that the
state must provide the same coverage to persons with differ-
ent diagnoses, even if they would also benefit from that cov-
erage).

   In the case at bar, North Carolina has shown that persons
receiving in-home PCS coverage have different needs than
those receiving PCS coverage in an adult care home and that
it provides PCS coverage to persons in those separate groups
according to appropriate, individualized, rational, medical
needs-based eligibility criteria. The record reflects that in-
home PCS recipients must demonstrate that they do "[n]ot
require monitoring, supervision, or ongoing care from a
licensed health care professional," J.A. 177, i.e., that they are
able to safely live at home. In contrast, the record also reflects
that those receiving PCS coverage in an adult care home must
certify that they are "subject to health, safety, and security
risks because there is no capable and willing caregiver to
assure that [their] health and welfare needs are met in a pri-
vate residence," i.e., that they are unable to live safely at
home. J.A. 173. Thus, in its provision of PCS coverage, North
Carolina has drawn a rational distinction between two differ-
ent groups of people—those who are able to live safely at
home and those who are not.

   The majority opinion disregards the salient distinction that
in-home PCS recipients and adult care home PCS recipients
are different groups with different needs as "simply inaccu-
rate," Majority Op. 22, disregarding the evidence in the record
and citing only a section of the North Carolina Administrative
Code to argue that any person requiring PCS could be admit-
ted to an adult care home, making those groups indistinguish-
able. Yet a full reading of that provision demonstrates that it
54                           PASHBY v. DELIA
is, in fact, entirely consistent with the State’s argument that its
decision to distinguish at-home PCS recipients from adult
care home PCS recipients was reasonable:

     Any adult (18 years of age or over) who, because of
     a temporary or chronic physical condition or mental
     disability, needs a substitute home may be admitted
     to an adult care home when, in the opinion of the
     resident, physician, family or social worker, and the
     administrator the services and accommodations of
     the home will meet his particular needs.

10A N.C. Admin. Code 13F.0701. The regulation establishes
that a person may be admitted to an adult care home only
when that person, "because of a temporary or chronic physical
condition or mental disability, needs a substitute home." Id. It
therefore does nothing to contradict the state’s argument that
the two groups at issue are qualitatively different and that its
decision to draw a distinction between these two groups is rea-
sonable.9

   As persons receiving in-home PCS coverage under the
challenged policy must demonstrate that they do "[n]ot
require monitoring, supervision, or ongoing care from a
licensed health care professional," J.A. 177, i.e., that they can
live safely at home, it follows that they do not "need[] a sub-
stitute home," at least not "because of a temporary or chronic
   9
     The majority opinion suggests that nearly any person could be admitted
into an adult care home under this regulation for "any number of reasons,"
as long as that person certifies, in his own opinion, that he "needs a substi-
tute home." Majority Op. 22. Yet the majority’s reading of the regulation
disregards the clear regulatory language that a person may enter an adult
care home only if that person needs a substitute home "because of a tem-
porary or chronic physical condition or mental disability." 10A N.C.
Admin. Code 13F.0701. Regardless, the issue that the court must consider
is not whether certain persons within these two groups may overlap in
some cases, but whether North Carolina’s distinction between these two
groups is reasonable. See Cota, 688 F. Supp. 2d at 993. It is.
                        PASHBY v. DELIA                      55
physical condition or mental disability," 10A N.C. Admin.
Code 13F.0701. This is a major point of distinction between
these two groups that the PCS Recipients do not and cannot
dispute.

   The majority opinion states that "both in-home PCS recipi-
ents and ACH PCS recipients must demonstrate that family
members or friends cannot provide the assistance that they
need, which prevents DHHS from pointing to this require-
ment as a basis to distinguish the medical needs of in-home
PCS and ACH PCS recipients." Majority Op. 22-23. The
majority misses the point. Of course both groups of PCS
recipients must demonstrate that they require care. But that
does not change the fact that the state is expressly permitted
to engage in rational line-drawing in its provision of PCS cov-
erage. See 42 C.F.R. § 440.230(d). North Carolina has dem-
onstrated that the two groups at issue have different needs and
require different levels of care. The PCS Recipients present
no evidence to the contrary. Thus, based upon the law and the
evidence in the record, North Carolina’s distinction between
these two groups is reasonable and does not contravene the
comparability provisions of the Medicaid Act.

   Under a plain reading of North Carolina’s policies, all cate-
gorically needy individuals who need limited assistance with
at least two ADLs, J.A. 173, and who "because of a temporary
or chronic physical condition or mental disability, need[] a
substitute home," 10A N.C. Admin. Code 13F.0701, qualify
for and may receive PCS coverage in an adult care home. And
all categorically needy individuals who need limited assis-
tance with at least three ADLs and do "[n]ot require monitor-
ing, supervision, or ongoing care from a licensed health
professional," J.A. 177, qualify for in-home PCS coverage.
The PCS Recipients are therefore unable to show discrimina-
tion against or among the categorically needy, as required
under § 1396a(a)(10)(B). See Lankford, 451 F.3d at 505. The
state’s distinctions in the provision of PCS coverage are
drawn across a rational, needs-based consideration among two
56                          PASHBY v. DELIA
distinct groups: those who can live safely at home, and those
who cannot. North Carolina’s PCS policy simply does not
violate the actual, express requirements of the Medicaid Act.

   For all these reasons, I would hold that the PCS Recipients
failed to demonstrate that they are likely to succeed on the
merits of their Medicaid Act comparability claim and that the
district court abused its discretion by failing to apply, or even
recognize, the correct legal standards in determining that issue.10

                                    III

   The portion of the district court’s order in this case granting
the preliminary injunction exemplifies an arbitrary and capri-
cious decision. It was an abuse of discretion as a matter of
law. The majority opinion errs in affirming that order for the
reasons set forth above. Accordingly, I respectfully dissent
from the portion of Section V of the majority opinion regard-
ing the ADA and Rehabilitation Act and Social Security Act
claims. For that reason, I would vacate the district court’s
order granting the preliminary injunction and remand for fur-
ther proceedings.

  10
    As I conclude that the PCS Recipients are not likely to succeed on the
merits of any of their claims, their failure to meet that Winter factor makes
it unnecessary to address the remaining Winter factors. See Winter, 555
U.S. at 20 (holding that "[a] plaintiff seeking a preliminary injunction
must establish" all factors).