Court Opinion

ID: 2805947
Source: CourtListenerOpinion
Date Created: 2015-06-05 17:01:48.853044+00
Date Added: 2024-06-11T12:12:11.583984
License: Public Domain

FOR PUBLICATION

      UNITED STATES COURT OF APPEALS
           FOR THE NINTH CIRCUIT

K. W., by his next friend D.W.; C.        No. 14-35296
M.; C. L.; A. L., through her
guardian E.B.; K. S., through his            D.C. Nos.
next friend S.S.; M. S., through his      1:12-cv-00022-
guardian V.S.; N. R., through her              BLW
next friend G.R.; T. F., through her      3:12-cv-00058-
guardian R.F.; T. M., through his              BLW
guardian T.W.; B. B., through his
next friend D.B.; R. P., through her
guardian T.P.; M. S., through her           OPINION
guardian D.S.; E. L.; TOBY
SCHULTZ, by and through his legal
guardian Jana Schultz on behalf of
himself and all others similarly
situated; BREANNA MULLIC, by and
through her legal guardian Brenda
Passmore; CALEB HALL, by and
through his next friend Melanie Hall,
                  Plaintiffs-Appellees,

                  v.

RICHARD ARMSTRONG, in his official
capacity as Director of the Idaho
Department of Health and Welfare;
LISA HETTINGER, in her official
capacity as Medicaid Administrator
of the Idaho Department of Health
and Welfare; IDAHO DEPARTMENT
2                    K.W. V. ARMSTRONG

OF HEALTH AND WELFARE, a
department of the State of Idaho,
             Defendants-Appellants.

         Appeal from the United States District Court
                   for the District of Idaho
       B. Lynn Winmill, Chief District Judge, Presiding

                  Argued and Submitted
            November 18, 2014—Portland, Oregon

                      Filed June 5, 2015

        Before: Richard R. Clifton, Milan D. Smith, Jr.,
           and Andrew D. Hurwitz, Circuit Judges

             Opinion by Judge Milan D. Smith, Jr.;
    Partial Concurrence and Partial Dissent by Judge Clifton
                       K.W. V. ARMSTRONG                              3

                           SUMMARY*

                           Medicaid Act

    The panel affirmed the district court’s order expanding a
preliminary injunction forbidding the Idaho Department of
Health and Welfare from decreasing the individual budgets of
participants in and applicants to Idaho’s Developmental
Disabilities Waiver program without adequate notice.

    The DD Waiver program supplants traditional Medicaid
plan services for Idaho beneficiaries with home-based support
services. The plaintiffs allege that the budget-decrease
notices that the Department sent violated both the Due
Process Clause and the fair hearing requirements of the
Medicaid Act.

    The panel held that the dispute was ripe for resolution
because the plaintiffs alleged that they suffered a deprivation
of services without adequate notice when their budgets were
decreased, and thus felt the effects of the Department’s
actions in a concrete way.

    The panel affirmed the district court’s order expanding
the preliminary injunction to cover a subsequently-certified
plaintiffs’ class. The panel held that the district court did not
abuse its discretion in finding that the plaintiffs were likely to
succeed on the merits of their claims under the Due Process
Clause and the Medicaid Act. The panel rejected the
Department’s argument that the preliminary injunction

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4                   K.W. V. ARMSTRONG

violated the Eleventh Amendment by awarding retrospective
relief against the state.

    The panel held that it lacked pendent jurisdiction to
review the district court’s order denying the Department’s
motion to approve a proposed revised budget notice to the
class because this order was not inextricably intertwined with
whether the district court abused its discretion in expanding
the preliminary injunction.

    Concurring in part and dissenting in part, Judge Clifton
wrote that the panel had pendent jurisdiction over the district
court’s denial of the Department’s motion to approve a
proposed revised notice because if the revised notice were
adequate, then the plaintiffs would not have established an
ongoing violation, and there would have been no good reason
to extend the preliminary injunction.

                         COUNSEL

Cynthia Yee-Wallace (argued), Clay R. Smith, and W. Scott
Danzig, Deputy Attorneys General, Office of the Attorney
General, Boise, Idaho, for Defendants-Appellants.

Richard Alan Eppink (argued), American Civil Liberties
Union of Idaho Foundation, Boise, Idaho; James Piotrowski,
Herzfeld & Piotrowski, LLP, Boise, Idaho, for Plaintiffs-
Appellees.
                    K.W. V. ARMSTRONG                        5

                         OPINION

M. SMITH, Circuit Judge:

    Richard Armstrong, in his official capacity as Director of
the Idaho Department of Health and Welfare, Lisa Hettinger,
in her official capacity as Medicaid Administrator of the
Idaho Department of Health and Welfare, and the Idaho
Department of Health and Welfare (collectively,
Department), appeal from the district court’s order expanding
a preliminary injunction forbidding the Department from
decreasing the individual budgets of a class of participants in
and applicants to Idaho’s Developmental Disabilities Waiver
program (DD Waiver program) without adequate notice. The
Department also seeks review of the district court’s order
denying its motion to approve a proposed Budget Notice to
the class.

    On appeal, the Department argues that the Plaintiffs’
claims are not ripe because calculating a lower individual
budget does not trigger the fair hearing provisions of the
Medicaid Act, 42 U.S.C. § 1396a(a)(3); 42 C.F.R. § 431.206,
or deprive a participant of property under the Due Process
Clause, U.S. Const. amend. XIV, § 1. The Department also
argues that the Plaintiffs failed to show that they were likely
to succeed on the merits of their claims and that the
injunction violated the Eleventh Amendment.

    We affirm the district court’s extension of the preliminary
injunction to the class and hold that we lack pendent
jurisdiction to review the order regarding the proposed notice.
6                   K.W. V. ARMSTRONG

    FACTUAL AND PROCEDURAL BACKGROUND

I. Factual Background

    The Medicaid Act allows states to apply for a waiver to
provide home- and community-based services to
developmentally disabled Medicaid beneficiaries to help
them avoid institutionalization. See 42 U.S.C. § 1396n; 42
C.F.R. § 440.180. The federal government has approved
Idaho’s DD Waiver program, which supplants traditional
Medicaid plan services for Idaho beneficiaries with home-
based support services, including residential habitation
services, chore services, supported employment, non-medical
transportation, specialized medical equipment, home
delivered meals, and skilled nursing. Idaho Admin. Code. r.
16.03.10.700. As of July 2013, there were 3,288 participants
in the DD Waiver program.

    The Department assigns each DD Waiver program
participant an individualized budget. The budget is set
“according to an individualized measurement of the
participant’s functional abilities, behavioral limitations, and
medical needs, related to the participant’s disability.” Id. r.
16.03.10.514. Participants select the services they wish to
receive by crafting an annual “plan of service” based on their
individualized budgets. Id. r. 16.03.10.513.

    The Plaintiffs represent a class of participants in and
applicants to the DD Waiver program. They allege that the
Department failed to give adequate notice when their
individualized budgets were decreased. The Plaintiffs
contend that the notices the Department sent violated both the
Due Process Clause and the fair hearing requirements of the
Medicaid Act.
                    K.W. V. ARMSTRONG                         7

   A. Eligibility and Annual Reevaluation

     To be eligible for DD Waiver program services, an adult
Medicaid participant must have a developmental disability
impairing mental or physical function or independence. See
id. rr. 16.03.10.500, .501, .700. Those interested in receiving
DD Waiver services must submit an application, and current
participants are reassessed annually to determine whether
they remain eligible. During the annual reevaluations, the
Department administers several assessments to determine a
participant’s eligibility and level of need.

   B. Budget Calculation and Notice

    If the Department determines that an individual is eligible
for services, it must calculate the participant’s individualized
budget. See id. rr. 16.03.10.513., .514. To do so, the
Department enters information gathered during the
participant’s assessments into an Adult Budget Calculation
Tool (Budget Tool). The Budget Tool is a statistical model
designed to predict a participant’s needs based on the
participant’s characteristics. Once the Department has
calculated a participant’s budget for the upcoming plan year,
it sends a Budget Notice to the participant confirming
eligibility and specifying the budget amount. The Budget
Notices the Department sent in 2011 (2011 Budget Notices)
are the subject of this dispute.

   C. The Service Plan

    If the participant does not appeal the calculated budget,
the participant works with a plan developer or support broker
to submit a service plan to the Department. The service plan
8                   K.W. V. ARMSTRONG

lists the type and frequency of services and outlines their cost
relative to the participant’s calculated budget.

    After the participant submits a service plan, the
Department determines whether it meets the needs of the
participant, safeguards the participant’s health and safety, and
is within the calculated budget. If the plan is inadequate or
over-budget, the Department may refer the plan back to the
developer for adjustment. If the plan still does not meet the
participant’s needs or is not within budget, the Department
may either authorize some of the services or deny all of the
services in the plan.

    In such cases, the Department notifies the participant
about which services, if any, were approved. The participant
may then request an administrative appeal within 28 days. If
a participant requests an appeal, a hearing officer is appointed
and a hearing is held. The hearing officer may not approve
eligibility, modify the budget, or approve denied services.
Rather, the hearing officer may only uphold the Department’s
decision or remand to the Department to update assessment
documents, recalculate a participant’s budget, or reexamine
a service denial. If the participant or the Department
disagrees with the hearing officer’s decision, either may seek
a Director’s Review. The Director’s decision may be
appealed to the district court.

    The approved and finalized cost of services in the service
plan becomes the participant’s authorized budget. A
participant may change his service plan with the
Department’s approval, but may not spend more than his
calculated budget.
                      K.W. V. ARMSTRONG                              9
Dall. 2011 Changes to the Budget Tool

    The Department periodically evaluates and adjusts its
Budget Tool. In July 2011, the Department made several
changes to the Budget Tool in a purported effort to capture a
participant’s “living situation.” Although the record does not
disclose exactly how the 2011 changes accounted for “living
situation,” it makes clear that a number of the changes were
dramatic.

    First, the weights assigned to the variables–the inputs
from the various assessments used to calculate the
budget–changed. Second, some previous variables were
dropped entirely. For example, before July 2011, “needing
assistance with mobility” was a weighted variable used to
calculate budgets; it no longer is.1

    Additionally, the constant coefficient used in the Budget
Tool changed. The constant coefficient before July 2011 was
$54,965.65. After “living situation” became a weighted
variable, the constant coefficient decreased to $24,476.75.

    E. Notice of Decreases in Class Members’ Calculated
       Budgets

    Numerous class members’ individualized budgets
decreased in the Fall of 2011. The Department notified
participants of these cuts by sending Budget Notices. The
2011 Budget Notices did not explain why the budgets had
been cut, but instead simply stated: “Using information from
the Individual Needs Inventory and a complete case file

  1
    According to the Department, the weighed variables have not changed
since July of 2011.
10                  K.W. V. ARMSTRONG

review conducted by the Regional Independent Assessor,
your individual budget is calculated to be $________.”

II. Prior Proceedings

    On January 18, 2012, twelve plaintiffs filed this action in
the United States District Court for the District of Idaho
seeking declaratory and injunctive relief, claiming, among
other things, that the 2011 Budget Notice failed to provide
meaningful notice of the reasons for the reductions in their
budgets. On January 19, 2012, the Plaintiffs moved for a
temporary restraining order requiring the Department to
restore the Plaintiffs’ Medicaid services to prior levels and
barring the Department from reducing these services without
providing adequate notice and a fair hearing. The district
court entered a temporary restraining order on these terms on
February 3, 2012, and the parties stipulated to entry of a
second, supplemental temporary restraining order on
February 9, 2012.

    Pursuant to another stipulation, the district court entered
a preliminary injunction on March 12, 2012, providing that:

       The defendants shall restore and continue the
       plaintiffs’ Medicaid services under the Idaho
       Developmental Disabilities waiver as
       provided in the Individual Support Plans in
       place for each plaintiff prior to July 1, 2011,
       and before the last “ANNUAL ICF/ID
       LEVEL OF CARE AND DD ELIGIBILITY
       APPROVAL NOTICE” and budget
       assignment notice sent to them, and are
       prohibited from reducing or terminating
       Medicaid services under the Idaho
                    K.W. V. ARMSTRONG                       11

       Developmental Disabilities waiver to the
       plaintiffs based on their most recent assigned
       budget limits unless and until the defendants
       first provide adequate advance notice,
       approved by this Court, and the opportunity
       for a fair hearing prior to the reduction or
       termination of services.

(emphasis added).

    On March 23, 2012, the Department moved for approval
of a proposed Budget Notice (2012 Proposed Notice)
informing the Plaintiffs of their individual budget amounts.
The 2012 Proposed Notice informed participants that they
were eligible for the DD Waiver program, explained in
general terms how budgets are calculated, and set forth the
specific budget amount for each individual. The proposed
notice included an attachment with a copy of the budget
calculation and Inventory of Needs for the participant.

    On August 2, 2012, the district court denied the
Department’s motion to approve the 2012 Proposed Notice.
See K.W. v. Armstrong, No. 1-12-00022, 2012 WL 3201172,
at *1 (D. Idaho Aug. 2, 2012). The court found the proposed
notice inadequate, both under the applicable Medicaid
regulations and the Due Process Clause, because it failed to
explain why participants’ individual budgets had changed.
Id. at *6.

    On May 17, 2013, the Plaintiffs filed a motion for class
certification, and a motion to extend the stipulated
preliminary injunction to cover the class. The proposed class
consisted of “all persons who are participants in or applicants
to the Adult Developmental Disability Services program . . .
12                  K.W. V. ARMSTRONG

administered by the Idaho Department of Health and Welfare
as part of the Idaho Medicaid program, and who undergo the
annual eligibility determination or reevaluation process.”

    Before the district court ruled on the Plaintiffs’ motions,
the Department filed a motion for approval of a new proposed
Budget Notice (2013 Proposed Notice).

    On March 25, 2014, the district court issued a
memorandum decision and order rejecting the 2013 Proposed
Notice. See K.W. v. Armstrong, 298 F.R.D. 479 (D. Idaho
Mar. 25, 2014), as clarified (Apr. 21, 2014). The order also
certified the proposed class and extended the preliminary
injunction to cover the class. Id. at 494.

    The Department filed a timely notice of appeal on April
10, 2014. The Department challenges the extension of the
preliminary injunction to cover the class and seeks review of
the denial of its motion to approve the 2013 Proposed Notice.

     JURISDICTION AND STANDARD OF REVIEW

    We have jurisdiction to review the modification of the
preliminary injunction under 28 U.S.C. § 1292(a)(1).
Whether we have jurisdiction to review the order denying the
motion to approve the 2013 Proposed Notice depends on
whether we can exercise pendent appellate jurisdiction over
this issue in conjunction with our review of the modification
of the preliminary injunction. See Meredith v. Oregon, 321
F.3d 807, 811–16, as amended by 326 F.3d 1030 (9th Cir.
2003).

    “We review the district court’s legal conclusions de novo,
the factual findings underlying its decision for clear error, and
                    K.W. V. ARMSTRONG                         13

the injunction’s scope for abuse of discretion.” Armstrong v.
Brown, 768 F.3d 975, 979 (9th Cir. 2014) (citing Scott v.
Pasadena Unified Sch. Dist., 306 F.3d 646, 653 (9th Cir.
2002)).

                        DISCUSSION

I. Ripeness

    The Department first argues that this dispute is not ripe
for resolution because the mere preparation of a budget does
not entitle a participant to notice under either the Due Process
Clause or the Medicaid Act. The Department contends that
the Plaintiffs will not suffer a deprivation of property under
the Fourteenth Amendment until services are actually denied.

    A determination that this dispute is not yet fit for judicial
resolution would divest us and the district court of
jurisdiction. As the Supreme Court has observed,

        [r]ipeness is a justiciability doctrine designed
        “to prevent the courts, through avoidance of
        premature adjudication, from entangling
        themselves in abstract disagreements over
        administrative policies, and also to protect the
        agencies from judicial interference until an
        administrative decision has been formalized
        and its effects felt in a concrete way by the
        challenging parties.”

Nat’l Park Hospitality Ass’n v. Dep’t of Interior, 538 U.S.
803, 807–08 (2003) (quoting Abbott Labs. v. Gardner, 387
U.S. 136, 148–49 (1967)).
14                   K.W. V. ARMSTRONG

    We reject the Department’s ripeness argument. Whatever
the final determination of budget amounts, the Plaintiffs
allege that they suffered a deprivation of services without
adequate notice when their budgets were decreased.
Therefore, the Plaintiffs allege that they have already felt the
“effects” of the Department’s actions “in a concrete way.”
See id.; see also Alaska Airlines, Inc. v. City of Long Beach,
951 F.2d 977, 987 (9th Cir. 1991) (noting that “[w]here . . .
the threat of action is very real,” challenges to legislative
enactments that lack procedural protections may be ripe even
if no deprivation has occurred yet). Postponing adjudication
of this dispute would not bring greater clarity to whether the
Department’s 2011 Budget Notices were adequate. This
dispute is ripe for adjudication.

II. Whether Preliminary Injunctive Relief Was Available

    “A plaintiff seeking a preliminary injunction must
establish (1) likely success on the merits; (2) likely
irreparable harm in the absence of preliminary relief; (3) that
the balance of equities tips in the plaintiff’s favor; and (4) that
an injunction is in the public interest.” Pimentel v. Dreyfus,
670 F.3d 1096, 1105 (9th Cir. 2012) (per curiam) (citing
Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20
(2008)). “We review the district court’s decision to grant or
deny a preliminary injunction for abuse of discretion. Our
review is limited and deferential.” Sw. Voter Registration
Educ. Project v. Shelley, 344 F.3d 914, 918 (9th Cir. 2003)
(en banc) (per curiam) (citation omitted).

    The Department contends that the district court abused its
discretion in finding that the Plaintiffs were likely to succeed
on the merits of their claims under the Due Process Clause
and the Medicaid Act. Because the notice requirements of
                        K.W. V. ARMSTRONG                              15

the Medicaid Act are not identical to the requirements of the
Due Process Clause,2 we address the Plaintiffs’ statutory and
constitutional claims separately.

      A. Likelihood of Success on the Plaintiffs’ Claim
         under the Medicaid Act Fair Hearing Provisions

     To assess whether the district court abused its discretion
in holding that the Plaintiffs were likely to prevail on their
claim under the Medicaid Act, we must first “determine de
novo whether the [district court] identified the correct legal
rule to apply to the relief requested.” United States v.
Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009). We find that
it did.

    The fair hearing requirements of the Medicaid Act are
defined both by statute and by regulation. The Medicaid Act
requires that “[a] State plan for medical assistance must . . .
provide for granting an opportunity for a fair hearing before
the State agency to any individual whose claim for medical
assistance under the plan is denied.”              42 U.S.C.
§ 1396a(a)(3). Medicaid regulations in turn require state
agencies to provide notice to participants of their right to a
hearing under some circumstances. See 42 C.F.R. § 431.206.
The regulations provide that an agency must “inform every
applicant or beneficiary in writing . . . [o]f his right to a
hearing . . . [a]t the time of any action affecting his or her

  2
     The notice requirements of the Medicaid Act are triggered by an
“action,” see 42 C.F.R. § 431.206(c)(2), a term defined by regulation, see
id. § 431.201. By contrast, the protections of the Due Process Clause are
triggered by deprivations of constitutionally protected liberty or property
interests. See Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 569
(1972).
16                  K.W. V. ARMSTRONG

claim.” Id. § 431.206(b)–(c)(2). The notice must contain,
among other information, “[t]he reasons for the intended
action.” Id. § 431.210(b). The regulations define an “action”
as a “termination, suspension, or reduction of Medicaid
eligibility or covered services,” or other specified adverse
determinations. Id. § 431.201.

    The district court applied the correct standard to the
Plaintiffs’ claim when it inquired whether the Department’s
calculation of new budgets was an “action” under the
Medicaid regulations. See id. § 431.206(c)(2). As the district
court recognized, this question turns on whether calculating
a lower budget amounts to a “reduction of . . . covered
services.” See id. § 431.201. The court concluded that
calculating a lower budget is an “action” because “the
practical effect is a reduction in the amount of services the
participant receives.”

    Under the second step of our abuse of discretion test, we
must assess whether the district court’s conclusion on this
point was “(1) ‘illogical,’ (2) ‘implausible,’ or (3) without
‘support in inferences that may be drawn from the facts in the
record.’” Hinkson, 585 F.3d at 1262 (quoting Anderson v.
City of Bessemer City, 470 U.S. 564, 577 (1985)). We find
that it was not.

    The district court reasonably found that participants’
services are capped by their individual budgets under Idaho
law. Idaho Code § 56-255(3)(e)(ii) provides that “[t]he
department shall allow budget modifications only when
needed to obtain or maintain employment or when health and
safety issues are identified and meet the criteria as defined in
department rule.” And, Idaho Administrative Code rule
                       K.W. V. ARMSTRONG                             17

16.03.10.513 provides that a participant’s “plan of service is
based on the individualized participant budget.”

     There was ample evidence in the record that, absent an
appeal, the cost of a participant’s service plan could not
exceed the calculated budget. Service plans must be
reviewed by a care manager, who may authorize the plan only
if it is within the calculated budget. If the plan exceeds the
calculated budget, the care manager must either authorize
only services within the budget or deny the plan altogether.
It does not appear that a participant may craft a service plan
that exceeds the calculated budget specified in the initial
Budget Notice without appealing either his budget
determination or the decision of a care manager to reject his
service plan. It was therefore reasonable for the district court
to conclude that, as a practical matter, calculating a lower
budget decreases a participant’s Medicaid services, thereby
triggering the notice requirements of the Medicaid
regulations.

    The district court also did not abuse its discretion in
holding that the Plaintiffs were likely to show that the 2011
Budget Notices did not comply with the notice requirements
of the Medicaid regulations. “A notice required under [42
C.F.R.] § 431.206(c)(2), (c)(3), or (c)(4) . . . must contain . . .
[t]he reasons for the [State’s] intended action.” 42 C.F.R.
§ 431.210(b). The 2011 Budget Notices did not specify why
individual budgets had decreased.3

  3
    We assume, without deciding, that there is a private right of action
under section 1983 to enforce the fair hearing requirements of the
Medicaid Act. Compare Gonzaga Univ. v. Doe, 536 U.S. 273, 280 (2002)
(“[U]nless Congress ‘speak[s] with a clear voice,’ and manifests an
‘unambiguous’ intent to confer individual rights, federal funding
18                      K.W. V. ARMSTRONG

     B. Likelihood of Success on the Plaintiffs’ Due
        Process Claim

    We also conclude that the district court did not abuse its
discretion in holding that the Plaintiffs were likely to prevail
on their claim that they were denied adequate notice under the
Due Process Clause.

     “The requirements of procedural due process apply only
to the deprivation of interests encompassed by the Fourteenth
Amendment’s protection of liberty and property.” Bd. of
Regents of State Colls. v. Roth, 408 U.S. 564, 569 (1972).
Therefore, “[t]he first inquiry in every due process challenge
is whether the plaintiff has been deprived of a protected
interest in ‘property’ or ‘liberty.’” Am. Mfrs. Mut. Ins. Co. v.
Sullivan, 526 U.S. 40, 59 (1999). It is well settled that a
person can have a property interest in continuing to receive
government benefits. See, e.g., Goldberg v. Kelly, 397 U.S.
254, 261–63 (1970); Rosas v. McMahon, 945 F.2d 1469,
1474 (9th Cir. 1991) (explaining that Goldberg applies to a
reduction of benefits). To have a property interest in a
benefit, a person must “have a legitimate claim of entitlement

provisions provide no basis for private enforcement by § 1983.” (second
alteration in original) (quoting Pennhurst State Sch. & Hosp. v.
Halderman, 451 U.S. 1, 17, 28 & n.21 (1981)), with Watson v. Weeks, 436
F.3d 1152, 1159–62 & n.8 (9th Cir. 2006) (analogizing 42 U.S.C.
§ 1396a(a)(10) to section 1396a(a)(3), the Medicaid fair hearing provision,
and concluding that the former creates a right enforceable by section
1983), and Gean v. Hattaway, 330 F.3d 758, 772–73 (6th Cir. 2003)
(holding that section 1396a(a)(3) creates a right enforceable by section
1983). The Department has not argued otherwise. See Cal. Alliance of
Child & Family Servs. v. Allenby, 589 F.3d 1017, 1020 n.5 (9th Cir. 2009)
(explaining that whether a private right of action exists is not a
jurisdictional issue and may be deemed waived if not raised).
                    K.W. V. ARMSTRONG                        19

to it,” not just “an abstract need or desire for it.” Roth, 408
U.S. at 577.

    The district court held that because calculating lower
budgets had the practical effect of reducing the Plaintiffs’
waiver services, the Plaintiffs were entitled to adequate notice
under the Due Process Clause. We reach the same
conclusion, but for different reasons. The district court
conflated the Medicaid Act’s standards governing fair
hearings with the standards governing constitutional Due
Process claims. While the Medicaid Act’s fair hearing
requirements are triggered by “actions,” including reductions
in benefits, the requirements of procedural due process are
triggered by deprivations of property. Compare 42 C.F.R.
§§ 431.201, 431.206(c)(2), with Am. Mfrs. Mut. Ins. Co., 526
U.S. at 59. However, because the Plaintiffs had a “legitimate
claim of entitlement” to waiver services as capped by the
calculated budgets, we hold that the district court did not
abuse its discretion in holding that the Plaintiffs were likely
to prevail on their due process claim. See Erickson v. U.S. ex
rel. Dep’t of Health & Human Servs., 67 F.3d 858, 861–62
(9th Cir. 1995) (noting that the district court’s order granting
an injunction to redress an alleged Due Process violation “did
not address whether [medical provider] plaintiffs possessed
a liberty or property interest in continued participation in
Medicare,” and proceeding to consider the issue de novo).

    As we stated in Orloff v. Cleland, “[e]ntitlements are
created by ‘rules or understandings’ from independent
sources, such as statutes, regulations, and ordinances.” 708
F.2d 372, 377 (9th Cir. 1983) (quoting Roth, 408 U.S. at
577)). Idaho regulations provide that “the Department sets an
individualized budget for each participant according to an
individualized measurement of the participant’s functional
20                  K.W. V. ARMSTRONG

abilities, behavioral limitations, and medical needs, related to
the participant’s disability.”       Idaho Admin. Code r.
16.03.10.514(01). The regulations further provide that the
participant’s “plan of service is based on the individualized
participant budget.” Id. r. 16.03.10.513. And, the Idaho
statute authorizing “[s]ervices for persons with
developmental disabilities” provides that “[t]he department
shall allow budget modifications only when needed to obtain
or maintain employment or when health and safety issues are
identified.” Idaho Code § 56-255(3)(e)(ii). The Idaho
regulations specifically enumerate the services covered under
the DD Waiver program. See Idaho Admin. Code r.
16.03.10.703. Thus, participants in the DD Waiver program
are entitled to a service plan featuring covered services with
a total value equal to or less than a participant’s individual
calculated budget. Because participants have a legitimate
claim of entitlement to this benefit under Idaho law, they
have a property interest in continuing to receive it. See Roth,
408 U.S. 564.

    The Department argues that even if the Plaintiffs had a
property interest in their benefits, that interest was narrowly
circumscribed. The Department contends that participants
have no basis for expecting that their budgets will continue
beyond the current year because Idaho’s regulations require
that a participant’s individual budget be reevaluated each
year.

    We reject this argument. The Department would have us
define the substance of the Plaintiffs’ entitlement by the
Department’s procedures for evaluating and modifying the
participants’ level of services. But these procedures are
precisely what the Plaintiffs challenge. If a state grants a
property interest, its procedures for terminating or modifying
                     K.W. V. ARMSTRONG                         21

that interest do not narrow the interest’s scope. See
Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 541
(1985). As the Supreme Court has observed,

        “[p]roperty” cannot be defined by the
        procedures provided for its deprivation any
        more than can life or liberty. The right to due
        process “is conferred, not by legislative grace,
        but by constitutional guarantee. While the
        legislature may elect not to confer a property
        interest . . . , it may not constitutionally
        authorize the deprivation of such an interest,
        once conferred, without appropriate
        procedural safeguards.”

Id. (quoting Arnett v. Kennedy, 416 U.S. 134, 167 (1974)
(Powell, J., concurring in part and concurring in result in
part)). “Were the rule otherwise, the [Due Process] Clause
would be reduced to a mere tautology.” Id. Because the
yearly reapplication process is merely a procedure for
evaluating eligibility, it does not define the substance of the
Plaintiffs’ property interest in their benefits.

    Having found that the Plaintiffs have a property interest
in their benefits, we must now examine whether providing a
lower calculated budget to participants deprives them of this
property interest. We find that it likely does. If a
participant’s new calculated budget is lower than his current
budget, the participant has lost the right to craft a service plan
that is equal in value to his current service plan.

    The Department contends that merely calculating a lower
budget for the upcoming year does not deprive a participant
of property because the participant continues to receive the
22                  K.W. V. ARMSTRONG

services to which he is entitled under the current plan for
some time after the budget notices are circulated. According
to the Department, any reduction in services cannot occur
until after a participant’s new service plan has been
developed, discussed, and approved. But there is ample
evidence in the record that participants’ calculated budgets
effectively capped the value of services participants could
receive. Therefore, once a lower budget is calculated, a
participant has already effectively been deprived of the right
to receive the same level of services in the coming year.

    The Department also argues that merely calculating a
lower annual budget does not deprive a participant of
property because the budget may be increased through
appeal. But just because a party deprived of property may
recover it by exercising procedural rights does not mean that
no deprivation occurs. A primary purpose of providing
adequate notice to participants is to enable them to prepare a
defense for a hearing. See Barnes v. Healy, 980 F.2d 572,
579 (9th Cir. 1992). It would be illogical if the availability of
a hearing deprived the Plaintiffs of their right to receive the
notice they need to challenge benefits reductions at that
hearing.

    The district court did not abuse its discretion in holding
that the 2011 Budget Notices were inadequate under the Due
Process Clause. “Due process requires notice that gives an
agency’s reason for its action in sufficient detail that the
affected party can prepare a responsive defense.” Id. (citing
Goldberg, 397 U.S. at 267-68). The 2011 Budget Notices
were inadequate because they did not specify why
participants’ budgets had decreased.
                        K.W. V. ARMSTRONG                                23

       C. Likelihood of Irreparable Injury

    The district court determined that the Plaintiffs
established a likelihood of irreparable injury.            The
Department argues for the first time on appeal that the
Plaintiffs failed to show that the proposed class was likely to
suffer irreparable harm. The Department waived this
argument by failing to raise it before the district court. See
Int’l Union of Bricklayers & Allied Craftsman Local Union
No. 20, AFL-CIO v. Martin Jaska, Inc., 752 F.2d 1401, 1404
(9th Cir. 1985).4

III.      The Eleventh Amendment

    The Department argues that the injunction violates the
Eleventh Amendment by awarding retrospective relief against
the state. We disagree.

    The Eleventh Amendment shields unconsenting states
from suits in federal court. See Seminole Tribe of Fla. v.
Florida, 517 U.S. 44, 54 (1996). “To ensure the enforcement
of federal law, however, the Eleventh Amendment permits
suits for prospective injunctive relief against state officials
acting in violation of federal law,” Frew ex rel. Frew v.
Hawkins, 540 U.S. 431, 437 (2004) (citing Ex parte Young,
209 U.S. 123 (1908)), and courts may also order “measures
ancillary to appropriate prospective relief,” id. (citing Green
v. Mansour, 474 U.S. 64, 71–73 (1985)). But “[f]ederal

   4
     On appeal, the Department does not contest the district court’s
determination that “the balance of equities tips in the plaintiff[s’] favor”
and that the “injunction is in the public interest.” Pimentel v. Dreyfus, 670
F.3d 1096, 1105 (9th Cir. 2012) (citing Winter v. Natural Res. Def.
Council, Inc., 555 U.S. 7, 20 (2008)).
24                  K.W. V. ARMSTRONG

courts may not award retrospective relief, for instance, money
damages or its equivalent, if the State invokes its immunity.”
Id. (citing Edelman v. Jordan, 415 U.S. 651, 668 (1974)).
Equitable relief is impermissible if it will likely require
payment of state funds and “is measured in terms of a
monetary loss resulting from a past breach of a legal duty on
the part of the defendant state officials.” Edelman, 415 U.S.
at 668.

    The classwide injunction grants only prospective relief
allowed under the Eleventh Amendment, by restoring class
members to the individualized budgets they had prior to the
Department’s defective 2011 Budget Notice. The injunction
does not compensate class members for any loss of services
that occurred prior to the date it was entered. Thus, the relief
granted is not measured in terms of a past monetary loss. See
id. We therefore join a number of our sister circuits in
rejecting Eleventh Amendment challenges directed at orders
reinstating social assistance benefits prospectively. See, e.g.,
Turner v. Ledbetter, 906 F.2d 606, 609–10 (11th Cir. 1990);
Coalition for Basic Human Needs v. King, 654 F.2d 838, 842
(1st Cir. 1981) (“[W]e see no Eleventh Amendment
impediment to an order which enjoins the state defendants to
resume payment of AFDC benefits prospectively.”); Kimble
v. Solomon, 599 F.2d 599, 605 (4th Cir. 1979) (holding that
reinstating Medicaid benefits prospectively does not violate
the Eleventh Amendment).

IV.    Pendent Jurisdiction to Review Denial of Motion
       to Approve Notice

    We now turn to the Department’s argument that the
district court abused its discretion by failing to approve the
2013 Proposed Notice. We must first determine whether we
                    K.W. V. ARMSTRONG                        25

have jurisdiction to review this issue. The order denying the
motion to approve is not final under 28 U.S.C. § 1291, see
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996)
(“[A] decision is . . . final and appealable under § 1291 only
if it ends the litigation on the merits and leaves nothing for
the court to do but execute the judgment.” (internal quotation
marks omitted)); does not fit within the collateral order
exception to the final judgment rule, see Mohawk Indus., Inc.
v. Carpenter, 558 U.S. 100, 106–09 (2009); and is not an
appealable interlocutory order, see 28 U.S.C. § 1292. The
Department urges that we exercise pendent appellate
jurisdiction to review the non-appealable order rejecting the
2013 Proposed Notice in conjunction with the appealable
order expanding the injunction. We conclude that we may
not.

    “Pendent appellate jurisdiction refers to the exercise of
jurisdiction over issues that ordinarily may not be reviewed
on interlocutory appeal, but may be reviewed on interlocutory
appeal if raised in conjunction with other issues properly
before the court.” Cunningham v. Gates, 229 F.3d 1271,
1284 (9th Cir. 2000). “[T]he Supreme Court [has] declined to
settle definitively ‘whether or when it may be proper for a
court of appeals, with jurisdiction over one ruling, to review,
conjunctively, related rulings that are not themselves
appealable.’” Meredith, 321 F.3d at 812 (quoting Swint v.
Chambers Cnty. Comm’n, 514 U.S. 35, 50–51 (1995)). We
have consistently acknowledged that we must “exercise
restraint in reviewing on interlocutory appeal otherwise non-
appealable orders,” id., lest litigants use collateral orders as
“multi-issue . . . appeal tickets,” id. (quoting Swint, 514 U.S.
at 49–50); see also Poulos v. Caesars World, Inc., 379 F.3d
654, 670 (9th Cir. 2004) (noting that “we took pains to cabin
our holding [in Meredith] to the unique facts” of the case).
26                  K.W. V. ARMSTRONG

We may exercise pendent jurisdiction over an otherwise non-
appealable issue only in two “narrow” circumstances: (1) if
it is “‘inextricably intertwined’ with” or (2) “‘necessary to
ensure meaningful review of’” the order properly before us
on interlocutory appeal. See Meredith, 321 F.3d at 813
(quoting Swint, 514 U.S. at 51).

    The adequacy of the 2013 Proposed Notice is not
“inextricably intertwined” with whether the district court
abused its discretion in expanding the preliminary injunction.
To justify the exercise of pendent jurisdiction, “the legal
theories on which the issues advance must either (a) be so
intertwined that we must decide the pendent issue in order to
review the claims properly raised on interlocutory appeal . . . ,
or (b) resolution of the issue properly raised on interlocutory
appeal necessarily resolves the pendent issue.” Cunningham,
229 F.3d at 1285 (emphases added). “We have consistently
interpreted ‘inextricably intertwined’ very narrowly,” id. at
1284, and “[o]ur cases make clear that if the properly
appealable order can be resolved without necessarily
resolving the pendent order, then the latter is not ‘inextricably
intertwined’ with the former,” Hilton v. Hallmark Cards, 599
F.3d 894, 902 (9th Cir. 2009) (citing Batzel v. Smith, 333
F.3d 1018, 1023 (9th Cir. 2003)), as amended (Mar. 23,
2010).

    It is not necessary for us to decide whether the 2013
Proposed Notice was adequate in order to resolve whether the
district court abused its discretion in expanding the
preliminary injunction. The 2013 Proposed Notice had not
been circulated to the class when the preliminary injunction
was expanded. Whether the Plaintiffs were likely to succeed
on the merits–the sole Winter factor the Department has
properly contested on appeal–depended on the notice they
                    K.W. V. ARMSTRONG                         27

had already received, not the notice the Department might
provide in the future. Even if the district court had approved
the 2013 Proposed Notice, it still would have been
appropriate to expand the preliminary injunction to protect
the status quo until that notice was circulated. Therefore, the
adequacy of the 2013 Proposed Notice was not inextricably
intertwined with whether the preliminary injunction should be
expanded.

    Nor is it necessary to review the adequacy of the 2013
Proposed Notice to “ensure meaningful review” of the order
expanding the preliminary injunction. We construe the
related “necessary to ensure meaningful review” prong
narrowly. See Poulos, 379 F.3d at 669 (stating that the
second prong is “restrictive” and “requires that the pendent
decision have much more than a tangential relationship to the
decision properly before us on interlocutory appeal”).
Pursuant to our narrow construction of “ensure meaningful
review,” we may exercise pendent jurisdiction to consider
issues that “call[] into question the district court’s ‘authority
to rule on a party’s motion for a preliminary injunction.’”
Hendricks v. Bank of Am. N.A., 408 F.3d 1127, 1135 (9th Cir.
2005) (emphasis omitted) (quoting Meredith, 321 F.3d at
816). But “we have declined to exercise pendent jurisdiction
over rulings . . . that were ‘not a logical predicate to the’
issues properly raised on appeal and did not ‘implicate the
very power of the district court to issue the rulings on
appeal.’” Id. (quoting Wong v. United States, 373 F.3d 952,
960–61 (9th Cir. 2004)).

    The district court’s ruling on the 2013 Proposed Notice
did not affect its authority to expand the preliminary
injunction. Even if the Department was willing to circulate
a notice the district court found adequate, a preliminary
28                  K.W. V. ARMSTRONG

injunction still would have been necessary to protect the
status quo until that notice was circulated. Therefore, ruling
on the proposed notice was not a “logical predicate” to ruling
on the preliminary injunction. See Wong, 373 F.3d at
960–61. We accordingly decline to exercise jurisdiction to
review the district court’s order denying the motion to
approve the 2013 Proposed Notice. If the Department
believes that the district court erred in denying approval of
that notice, it may seek a final judgment from the district
court in this litigation and appeal that order under § 1291.
But the Department cannot have it both ways–continue to
litigate this case in the district court and simultaneously seek
appellate review of an interlocutory order about the 2013
Proposed Notice. If, as the Department contends, the
adequacy of the 2013 Proposed Notice is the only real issue
in this case, agreeing to a final judgment will allow prompt
appellate review of that issue independent of our
determination today that the district court did not abuse its
discretion in expanding the prior preliminary injunction to
protect class members from losing benefits “unless and until
the defendants . . . provide adequate advance notice . . . and
the opportunity for a fair hearing.”

                      CONCLUSION

    We affirm the order expanding the preliminary injunction
to cover the class for the reasons stated above.

     AFFIRMED.
                    K.W. V. ARMSTRONG                       29

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

    I fully concur in Parts I–III of the majority opinion. I
regret, however, that I must dissent from Part IV, in which the
majority concludes that we lack pendant jurisdiction over the
district court’s denial of the Department’s motion to approve
a proposed revised notice to program participants. It is clear
to me that we do have jurisdiction and should address that
issue on the merits.

    I agree that we would not have jurisdiction over an appeal
from the denial that motion if it were standing by itself,
unless, of course, it was brought as an interlocutory appeal
under 28 U.S.C. § 1292(b). But it is not standing by itself. It
comes to us because it is directly connected to the appeal by
the Department of the district court’s expansion of the
preliminary injunction, over which the majority opinion
acknowledges our jurisdiction.

    The district court recognized the connection between the
two motions. It dealt with both in the same memorandum
decision and order. It expressly noted in that order that
before it could deal with the motion to extend the preliminary
injunction, it was “require[d]” to address the Department’s
motion to approve the revised notice:

           Plaintiffs move to extend the preliminary
       injunction entered on behalf of the named
       plaintiffs to the entire class. Before reaching
       the merits of that motion, the Court must
       consider two arguments IDHW raises in
       opposition. . . . Second, IDHW claims that the
       motion to extend is moot because IDHW’s
30                 K.W. V. ARMSTRONG

       latest proposed Notice satisfies the Medicaid
       regulations and due process. Resolution of the
       latter argument requires the Court to decide
       IDHW’s motion to approve their proposed
       budget notice.

Similarly, the district court explicitly noted that it was the
denial of the Department’s motion to approve the revised
notice that opened the door to granting the motion to extend
the preliminary injunction:

           For these reasons, the Court holds that
       IDHW’s notice does not comport with due
       process, and will deny IDHW’s motion to
       approve the Notice. Furthermore, because the
       notice is not sufficient, Plaintiffs have
       established an ongoing violation for the
       purposes of the preliminary injunction.

     The logic is clear. If the revised notice were adequate –
if it was held to comport with due process – then Plaintiffs
would not have “established an ongoing violation,” and there
would be no good reason to extend the preliminary
injunction. The district court understood and said as much.

    The majority opinion offers only one explanation for its
different approach. It observes that the proposed notice had
not yet been circulated at the time that the motions came
before the district court and the preliminary injunction was
issued. That is hardly surprising, because no interest would
have been served by the Department sending out a revised
notice that was inadequate. Doing so would have been
wasteful and likely confusing to the recipients.
                    K.W. V. ARMSTRONG                       31

    Nonetheless, the majority opinion, at 27, infers that
“[e]ven if the district court had approved the 2013 Proposed
Notice, it still would have been appropriate to expand the
preliminary injunction to protect the status quo until that
notice was circulated.”

    But the district court never said that. Notably, its
discussion of the motions, as quoted above, contradicts the
majority opinion’s assertion that the preliminary injunction
would in fact have been extended if the revised notice had
been deemed sufficient. It is both logical and clear from the
words used by the district court that if it had concluded that
the revised notice was sufficient, it would not have extended
the preliminary injunction as it did.

    The extension of the preliminary injunction was not a
simple thing. The “order” portion of the preliminary
injunction as extended by the district court takes up six pages
of the court’s order. If the district court had concluded that
the revised order were sufficient, it would have put the
preliminary injunction on hold until the Department had
accomplished what it promised to do – distribute the revised
notice to the participants – and then dissolved it. The
majority opinion’s premise to the contrary is both illogical
and contrary to what the district court actually said.

    Instead, the district court extended the preliminary
injunction and refused to modify or dissolve it, as sought by
the Department. We are allowed to review the denial of the
Department’s request that the injunction be modified,
conditioned upon the new notice, or dissolved, after the new
notice had been distributed. The statute could not be clearer:
32                  K.W. V. ARMSTRONG

       Interlocutory orders of the district courts of
       the United States . . . granting, continuing,
       modifying, refusing or dissolving injunctions,
       or refusing to dissolve or modify injunctions,
       except where a direct review may be had in
       the Supreme Court;

28 U.S.C. § 1292(a)(1) (emphasis added).

    Similarly, as the majority opinion acknowledges, we may
exercise pendant appellate jurisdiction if the denial of the
Department’s revised notice motion if it is “inextricably
intertwined with” or “necessary to ensure meaningful review
of” the order extending (and refusing to modify or dissolve)
the preliminary injunction. Meredith v. Oregon, 321 F.3d
807, 813 (9th Cir. 2003) (citing Swint v. Chambers Cnty.
Comm’n, 514 U.S. 35, 51 (1995)). For the reasons already
discussed, the denial of the revised notice motion fits both
descriptions.

     The approach of the majority opinion exalts form over
substance and does so in a way that, in the future, could cause
harm. The Department could, for example, jump the barrier
imposed by the majority opinion by sending a revised notice
out without waiting for any approval by the district court,
then moving to dissolve or modify the injunction. There is no
doubt that a denial of that motion would be immediately
appealable. What sense is there in motivating the Department
– or any party in a similar position in the future – to proceed
without consulting with the district court, with other possibly
ill effects, simply to permit an immediate appeal it should be
entitled to bring?
                     K.W. V. ARMSTRONG                         33

     It is not hard to see how that barrier could thwart
appropriate appellate review in the future, especially if a
district court could avoid immediate review simply by ruling
separately on related motions and declining to acknowledge
the connections. The district court here made no effort to do
that. To the contrary, and to its credit, it explicitly recognized
that the motion to approve the revised notice needed to be
dealt with before the motion to extend the injunction, because
the second rested upon the resolution of the first. We should
not put blinders on by disregarding what was obvious to the
district court. And, to mix metaphors, it does not make sense
to tie our own hands as the majority opinion has done here.

    The majority opinion says that the Department should just
agree to final judgment on the case and appeal under 28
U.S.C. § 1291. I fail to see why the Department should be
forced to give up whatever other issues might be addressed by
the district court before a final judgment is entered. The
statute does not require that – preliminary injunctions are
immediately appealable. Nor would that alternative route
always be available to parties in the future. There could well
be issues outstanding in a case that would need to be resolved
before a final judgment could be entered, unless the party
simply abandoned its claims or confessed judgment on
whatever might remain. That would hardly be a realistic
alternative in those circumstances, and it should not be the
price to obtain review of a decision that undergirds the
district court’s order regarding a preliminary injunction.

   The district court recognized that the revised motion order
needed to be taken up and resolved before the court could
34                    K.W. V. ARMSTRONG

address the preliminary injunction motion. We should do the
same.

     I respectfully dissent, in part.