Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 1 of 23

UNITED STATES DISTRICT COURT

District of New Mexico

GRACE REQUIRES UNDERSTANDING, INC., )

)
Plaintiff )
)
v. ) Civil Action 6:10-CV-00528
)
MIKKI ROGERS, Director of the Developmental )
Disabilities Services Division of the New Mexico )
Department of Health, in her official capacity; )
ALFREDO VIGIL, Secretary of the New Mexico )
Department of Health, in his official capacity; )
KATHRYN FALLS, Secretary of the New Mexico )
Human Services Department, in her official )
capacity; GARY KING, Attorney General of New )
Mexico, in his official capacity; and BILL )
RICHARDSON, Governor of the State of New )
Mexico, in his official capacity, )
)
Defendants )

MOTION FOR PRELIMINARY INJUNCTION, DECLARATORY JUDGMENT,

AND PERMANENT INJUNCTIVE RELIEF

Plaintiff, Grace Requires Understanding, Inc., by and through its counsel of record Marina A. Cordova, of the

Cordova Law Firm, LLC, move this Court (1) pursuant to Rule 65 of the Federal Rules of Civil Procedures and

Rule 1-066 NMRA seek preliminary and permanent injunctive relief preventing Defendants from applying the

$5.00 per hour reduction to the family living daily unit rate in respite billing and reimbursement procedure rules

issued by Mikki Rogers, Director of the Developmental Disabilities Division of the New Mexico Department of

Health; and (2) pursuant to Rule 57 of the Federal Rules of Civil Procedure and Rule 1-057 NMRA, seek

declaratory judgment that the New Mexico Department of Health lack the authority to issue a rate change in

reimbursement rules and standards without following proper state and federal procedural guidelines; (3) such

other injunctive and declaratory relief as the Court deems appropriate; and (4) fees and costs as deemed

appropriate.

As grounds for their motion Plaintiff states as follows:

1
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 2 of 23

STANDING

1. The Plaintiff, Grace Requires Understanding, Inc., (hereinafter “Plaintiff” or “Provider”) has standing to bring

this action as a family living provider agency (referred to as “FLPA”) contracting with the New Mexico

Department of Health to service persons eligible (hereinafter “recipient” or “individual”) for Medicaid

reimbursed services through the Medically Fragile and/or Developmental Disabilities Waiver service

program.

2. The Plaintiff, Grace Requires Understanding, Inc., also has standing to bring this action, in that every family

living provider (hereinafter “caregiver”) the Plaintiff serves is a shareholder with an ownership interest in the

corporation, who would otherwise have standing to bring this action in their own right and the interests they

seek to protect are germane to their own organizational purpose.

3. The Defendant, Mikki Rogers, in her official capacity, as Director of the Developmental Disabilities Services

Division of the New Mexico Department of Health; Secretary Alfredo Vigil, in his official capacity, acting by

and through the New Mexico Department of Health; and Secretary Kathryn Falls, New Mexico Human

Services Department, acting under color of law, are executive agencies established under the laws of the State

of New Mexico. This action is against the individual Defendants in their official capacities, and not the State

of New Mexico. However, as a courtesy and to provide notice Defendants Gary King, Attorney General of

New Mexico, in his official capacity, and Bill Richardson, in his official capacity, were issued a summons

with this petition attached by means of personal service pursuant to Rule 1-057(b) NMRA..

4. This Court is authorized to grant preliminary and permanent injunctive relief under the Federal Rules of Civil

Procedure Rule 65 and the New Mexico Rules of Civil Procedure 1-1066. This Court is authorized to grant

declaratory relief according to the Federal Rules of Civil Procedure New Mexico Rules of Civil Procedure 1-

1060 and the New Mexico Administrative Procedures Act, N.M. Stat. Ann. 1978, § 12-8-8.

5. This Court has jurisdiction, which includes the power to hear and rule on a petition for a preliminary

injunction. N.M. Const. art. Williams v. Rio Rancho Public Schools, 2008, 145 N.M. 214, 195 P.3d 879.

6. This Court has federal question jurisdiction over this matter which concerns Defendant’s violation of the

Medicaid provisions of the Social Security Act. 42 USCA § 1396 et seq.

2
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 3 of 23

7. Venue is proper in this Court because: (a) all Defendants are officers and employees of the State of New

Mexico and its agencies and were at all relevant times acting in their official capacities and under color of

legal authority; (b) at least one Defendant officially resides in this district; and (c) the cause of action arose in

this district.

8. Petitioner requests the Court to waive security under NMRA, Rule 1-066, for good cause shown. A bond is

unnecessary as there is no conceivable harm Defendants will suffer if the Court rules against Plaintiff and it is

unlikely Defendants will suffer harm as a result of injunctive relief.

BACKGROUND

1. Petitioner brings this case pursuant to the Social Security Act of 1935, 42 USCA § 1396 et seq. (hereinafter

“Medicaid Act” and “Boren Amendment”) allowing federal Medicaid funding to states to provide “a waiver .

. . [to] provide medical assistance to individuals for case management services, homemaker/home health aide

services and personal care services, adult day health services, respite care, and other medical and social

services that can contribute to the health and well-being of individuals and their ability to reside in a

community-based care setting.” 42 U.S.C.A. § 1396n(d)(C)(4).

2. Medicaid is a federal/state program through which the federal government offers financial assistance to

enable needy individuals to obtain health care. The federal government only provides a portion of the

necessary funding, with the remainder to be made up by the states and localities. Rye Psychiatric Hosp.

Center, Inc. v. Surles, 768 F.Supp. 82 (U.S.D.C. 1991).

3. The Centers for Medicare and Medicaid (hereinafter “CMS”), under the authority of the U.S. Health and

Human Services Department, oversee and administer funding for the Medicaid and Medicare medical

programs to each state, on the condition the state’s plan, amendments, and guidelines are evaluated and

approved by CMS. 42 USCA § 1396a, § 1396n.

4. The New Mexico Developmental Disabilities Waiver Home and Community-Based Services, Control

Number 0173.90.R3 (hereinafter “DD Waiver”) is authorized and funded through section 1915(c) of the

Social Security Act, as amended by the Boren Amendment, 42 USCA § 1396a-n.

3
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 4 of 23

5. The summary for New Mexico’s DD Waiver plan, NM - 0173.90.R2.01, date originally approved February

24, 1991, on the CMS website1 has funding appropriated [verbatim] “to provide case management, personal

care, respite, habilitation (residential, day, day care, community membership, supported employ.,) environ

mods., transportation, private duty nursing, adult residential care including supported living, assisted living,

supervised living, home based supports, PT, OT, S/H/L services, and other services including nurtitional

counseling, behavior therapy, adaptation consultant, children';s support services to MR and MR/DD.”

7. Respite is defined in the Developmental Disabilities Waiver Standards (2007) (hereinafter “DDWS”) as ”a

support service to allow the primary caregiver to take a break from care giving responsibilities while

maintaining adequate supervision and support to the individual during the absence of the primary caregiver.”

8. Plaintiff provides family living home and community based services to 108 families. From October 2009 to

present, there were 30 to 40 families that use respite services on a monthly basis. A range must be provided,

because the amount of respite used fluctuates each month. Plaintiff pays out directly to respite providers,

families do not pay respite providers directly.

9. Plaintiff is reimbursed by Defendant for respite $14.84 per hour. Plaintiff pays $11.00 per hour to six (6)

respite providers, and the rest, between 24 to 34 respite providers, are paid between $10.00 and $11.00 per

hour. The average is $11.00 per hour paid to most respite provider workers.

10. On the date of October 23, 2009. Defendant, Mikki Rogers issued a Director’s Release with the subject

“Family Living and Supported Living Reimbursement & Transition Budget Procedure” (hereinafter referred

to as the “Release”). Plaintiff’s Exhibit A.

11. The Release directs that when an “ARA Respite is used by an Individual in Family Living, the reimbursement

for Family Living will be subject to the $5 per hour reduction to the Family Living daily unit rate for each

hour of Respite used under the terms described in the DDW Standards.”

1
http://www.cms.gov/MedicaidStWaivProgDemoPGI/MWDL/itemdetail.asp?filterType=dual, data&filterValue=New
Mexico&filterByDID=2&sortByDID=2&sortOrder=ascending&itemID=CMS057305&intNumPerPage=10

4
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 5 of 23

12. The DDWS does not provide for or authorize a reduction in the dollar amount applied per unit hour for

respite. Plaintiff’s Exhibit B. 2

13. Family living caregivers are allowed 600 hours of respite per year. Caregiver clients of Plaintiff earn

$2,150.00 per month to care for recipients of the DD Waiver program, which is $2.98 per hour from their

family living check. Defendant’s policy is to apply the $5.00 per hour reduction for each hour of respite

provided by deducting it from the caregiver’s family living check. However, Defendant reimburses Plaintiff

for paying respite providers. Applying Defendant’s $5.00 per hour penalty, results in caregivers losing

significant amounts from their check, going into the negative $2.02 per hour ($2.98-$5.00= -$2.02). When

Applying Defendant’s $5.00 per hour reduction rule through Plaintiff would require Plaintiff to go into the

negative -$1.16 per hour for each hour of respite provided to caregivers. All family living providers

contracting with family living provider agencies contracting with the New Mexico Department of Health

providing family living services to recipients of the Developmental Disabilities Waiver are required to follow

this rule when applying for reimbursement for respite services.

ARGUMENT

I. Standard of Decision

The function of a preliminary injunction is to preserve the status quo pending a final determination of the

rights of the parties. Insure New Mexico, LLC v. McGonigle, 2000-NMCA-018, ¶ 9, 128 N.M. 611, 995 P.2d

1053. An injunction is an equitable remedy, left to the sound discretion of the district court so long as the

exercise of discretion is consistent with “reasonably well established standards” of fairness and equity. Cafeteria

Operators, L.P. v. Coronado-Santa Fe Associates, L.P., 1998-NMCA-005, 124 N.M. 440, 446, 952 P.2d 435, 441.

The test for granting a preliminary injunction includes four elements:

(1) the Plaintiff will suffer irreparable harm unless the injunction issues; (2) there is a substantial

likelihood the Plaintiff ultimately will prevail on the merits; (3) the threatened injury to the

2
Developmental Disabilities Waiver Standards of 2007, ¶¶ 89-91, 127-129.

5
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 6 of 23

Plaintiff outweighs any harm the proposed injunction may cause the opposing party; and (4) the

injunction would not be contrary to the public interest.

Lobalbo v. Hymes, 115 N.M. 314, 318, 850 P.2d 1017, 1021 (Ct. App. 7993); see also Rule 1-066 NMRA (2010).

In the present matter, each of these elements supports the issuance of a preliminary injunction.

II. There is a Substantial Likelihood the Injunction Will Prevail on the Merits

A preliminary injunction is appropriate where there is a likelihood of success on the merits that Defendant has

violated federal and state statutory procedural requirements. If a state wishes to participate in the Medicaid

program, it must comply with federal regulations promulgated by the Department of Health and Human Services

(“HHS”). Rye Psychiatric Hospital Center, Inc. v. Surles, 768 F.Supp. 82, 83 (S.D.D.C. 1991). Included among

these regulations is the mandate that the state establish a State Plan, a comprehensive reimbursement scheme for

health care providers. Reimbursement methodologies have undergone significant changes since the inception of

the Medicaid Act, in 1980 the Boren Amendment commenced the requirement inter alia “State plan for medical

assistance must provide for payment ... provided under the plan through the use of rates ... which the State finds,

and makes assurances satisfactory to the Secretary [of HHS], are reasonable and adequate to meet the costs which

must be incurred by efficiently and economically operated facilities.” 42 U.S.C. § 1396a(a)(13)(A).

A. Approval of a State Plan Amendment by CMS is Required Prior to Approval of Implementing the
Reimbursement Rule at the State Level

The plain language of the Grants to States for Medical Programs section of the Medicaid Act require that

before a state may change reimbursement methods and standards used to pay Medicaid providers, a State must (1)

submit a State Plan Amendment (hereinafter “SPA”) to the Centers for Medicare and Medicaid for CMS to

review and approve; (2) prior to the effective date of the amendment, a state is required to issue a public notice of

any change in the methods and standards for setting the state plan payment rates for services; (3) the state’s plan

must be consistent with the provisions of the Act.

1. CMS Must Review and Approve the Amendment to the State Plan Prior to the Reimbursement Method
Taking Effect

Although state participation in Medicaid is optional, when the state elects to take part in the Medicaid

program, it must comply with federal statutory requirements. Rye Psychiatric Hosp. Center, Inc. v. Surles, 777

6
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 7 of 23

F.Supp. 1142 (US S.D. NY 1991). The Social Security Act requires that a participating state submit an SPA to

CMS for review and approval before changing reimbursement rates and standards used to pay Medicaid

providers. 42 USCA § 1396. An interpretive change in a state's Medicaid plan need not be "significant" as a

predicate to triggering the plan amendment regulations. 79 Am. Jur. 2d Welfare § 34.

The rule in Defendant’s Release constitutes a change in reimbursement rates and standards, because it

requires that providers be reimbursed at a reduced amount for each hour of respite used. Defendant has not

submitted a State Plan Amendment to CMS concerning this particular reduction in reimbursement for respite

providers. Therefore, Defendant failed to comply with federal statutory and procedural guidelines by altering the

reimbursement rate in the state plan without prior authorization or approval from CMS.

2. The State is Required to Issue Public Notice of Any Change and Provide the Opportunity for Public Comment
Prior to Changes in the Rates Taking Effect

According to the Federal Register, the State is required to issue public notice describing the proposed change

in methods and standards; give an estimate of any expected increase or decrease, explain why the agency is

changing its methods and standards, give an address where written comments may be sent and reviewed by the

public, and if there are public hearings, give the location, date and time for hearings. 42 C.F.R. § 447.205(a).

Notice of the change is also required to be published before the proposed effective date of the change in a State

register similar to the Federal Register, the newspaper of widest circulation in each city, or newspaper with the

widest circulation in the state. 42 C.F.R. § 447.205(b).

Plaintiff’s counsel made numerous requests, but was not provided documentation of public notice provided or

publication concerning the proposed rule change, explanation of the methods and standards on the proposed

change, public comment solicited or received, or any public hearings held. Apparently, Defendant failed to

provide public notice to members of the public or stake holders prior to the proposed rule change. A thorough

search of the New Mexico Register and newspapers reveals that Defendant did not publish the proposed change in

the New Mexico Register or newspapers to provide proper notice to the public, including providers of Medicaid

services. The CMS website states that public notice is “intended to widely inform providers and other affected

7
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 8 of 23

parties of changes to Medicaid payment rates.”3 Defendant failed to inform members of the public, providers,

including Plaintiff, and affected parties, while the rule was in the proposal phase, provide estimates of expected

increases or decreases in annual aggregate expenditures, or provide the opportunity for members of the public to

submit comment prior to the change taking effect.

B. States Must Conduct Formal Studies Concerning Reimbursement Methodologies to Ensure that the
Assurances States Make to HHS are Reasonable and Adequate to Meet the Costs of Operating Provider
Facilities

The requirement that findings, such as formal studies, be made by the state before the state amends its

reimbursement methodology is clear. Pinnacle Nursing Home v. Axelrod, 928 F.2d 1306 (2d Cir.1991). The

court in Pinnacle Nursing Home seemed particularly influenced by the mandatory rather than precatory language

of the Medicaid regulations, “the state ‘must’ provide for payment of rates which the state finds to be reasonable

and adequate.” Pinnacle, 928 F.2d 1306, 1314 (quoting 42 U.S.C. § 1396a(a)(13)(A)); see also Wilder v. Virginia

Hospital Association, 496 U.S. 498, 110 S.Ct. 2510 at 2518, 110 L.Ed.2d 455 (1990). The court noted that the

procedural process requires a state to engage in a formal findings process prior to making assurances in the State

Plan to CMS that the requisite statutes and regulations have been complied with. Pinnacle Nursing Home v.

Axelrod, 928 F.2d 1306 (2d Cir.1991 at 1313 (citing AMISUB (PSL), Inc. v. Colorado Dep't of Social Servs., 879

F.2d 789, 796 (10th Cir.1989) (“court must determine whether the plan is procedurally and substantively in

compliance with the requirements of the Federal Medicaid Act and its implementing regulations”), cert. denied,

496 U.S. 935, 110 S.Ct. 3212, 110 L.Ed.2d 660 (1990); see also Wilder, 110 S.Ct. at 2519 n. 11 (“[t]he

requirement that a State make such a finding is a necessary prerequisite to the subsequent requirement that the

State provide ‘assurances' to the Secretary”). The court in Rye Psychiatric Hospital ruled that, although the New

York Office of Mental Health published the proposed rate provisions in the New York State Register and solicited

comments of the private psychiatric hospitals in the state, because the state did not conduct formal studies to

evaluate the rates and ensure that they were reasonable and adequate to meet the costs of provider facilities the

3
http://www.cms.gov

8
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 9 of 23

rate provisions were rendered null and void. Rye Psychiatric Hospital Center, Inc. v. Surles, 768 F.Supp. 82, 88

(S.D.D.C. 1991).

Defendants did not conduct formal studies prior to changing the reimbursement methodologies for respite.

Defendants failed to follow the requirement that the state conduct thorough and formal evaluations concerning

reimbursement methodologies before changing reimbursement rates, so that, if the state were to introduce a state

plan amendment to the Secretary of HHS, DOH could make appropriate assurances that the changes in

reimbursement methodologies were “reasonable and adequate to meet the costs which must be incurred by

efficiently and economically operated facilities.” 42 U.S.C. § 1396a(a)(13)(A). According to the ruling in Rye,

Defendant’s failure to conduct formal studies is a significant procedural violation of the Medicaid Act and its

implementing regulations, rendering the rate provisions null and void. Rye Psych. Hosp., 768 F.Supp. 82, 88

(S.D.D.C. 1991).

C. New Mexico Law Requires Public Notice and the Opportunity for All Interested Persons to Submit Comment
Prior to the Adoption of a New Rule

Consistent with the Medicaid Act, the New Mexico Procedures Act (NMAPA) requires that prior to the

adoption, amendment or repeal of any rule, the agency shall publish notice of its proposed action, provide notice

to any person filing a written request for notice, and provide the opportunity for all interested persons to submit

data, views, or arguments orally or in writing and examine witnesses. NMSA 1978, § 12-8-4.

Certain Medi-Cal regulations promulgated by the state Director of Health Care Services without a public

hearing rendered invalid. California Med. Assn. v. Brian, 30 Cal. App. 3d 637, 657, 106 Cal. Rptr. 555 (Cal. Ct.

App. 1973). The New Mexico Department of Health failed to publish notice and to provide the opportunity for all

stakeholders to submit comment and arguments prior to adoption or amendment of the respite reimbursement

rule. This Court should render the rule invalid, as a result of Defendant’s failure to provide public notice and

solicit public comment

III. Plaintiffs will Suffer Ongoing Irreparable Harm if a Preliminary Injunction is Not Issued

In New Mexico, injunctions are granted to prevent irreparable harm for which there is no adequate and

complete remedy at law. Kennedy v. Bond, 80 N.M. 734, 460 P.2d 809 (1969). By reason of Defendant’s

9
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 10 of 23

actions, Plaintiff has suffered and will continue to suffer unless the injunction is issued. In the present case, a stay

is appropriate for several reasons: (1) the NMDOH’s rule constitutes per se irreparable harm because it violates

the Medicaid provisions of the Social Security Act; (2) staying a rule is appropriate when the rule causes

potentially fatal consequences to a business; (3) an injunction is appropriate when Plaintiff’s loss can only be

remedied by staying the rule; (4) Irreparable harm can be found when an injury is difficult to ascertain; and (5)

Plaintiffs will continue to suffer injury which cannot be compensated.

1. Defendant’s Unlawful Actions Constitute Per Se Irreparable Harm Upon Plaintiff

Defendant, without approval from CMS, lacked the authority to promulgate the rule, and failure of Defendant

to follow the proper rulemaking process violates both the Social Security Act and New Mexico Administrative

Code. While New Mexico courts have not ruled on the subject, courts in other jurisdictions have consistently

held that an action that violates a statute constitutes per se irreparable harm. For example, the Indiana courts have

explained:

[W]here the action to be enjoined is unlawful, the unlawful act constitutes per se "irreparable

harm" for purposes of the preliminary injunction analysis. When the per se rule is invoked, the

trial court has determined that the Defendant's actions have violated a statute and, thus, that the

public interest is so great that the injunction should issue regardless of whether the plaintiff has

actually incurred irreparable harm or whether the plaintiff will suffer greater injury than the

defendant.

Short on Cash.Net of New Castle, Inc. v. Dep't of Fin. Inst., 811 N.E.2d 819,823 (Ind. Ct. App. 2004). Other

jurisdictions concur. See, e.g., Stilp v. Commonwealth of Pennsylvania, 9l0 A.2d 775,787 (Penn. 2006)

("violation of an express statutory provision per se constitutes irreparable harm"); Huges v. Muckelroy, 700 So.2d

995 (La. Ct. App. 1st Cir. 1997) (not necessary to show irreparable injury when the act complained of is

unlawful); see also SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1100-01 (10th Cir. 1991).

Defendant’s actions violated the procedural provisions of the Medicaid Act, 42 USCA §1396, by

promulgating a change in a Medicaid reimbursement rate without conducting formal evaluative studies, failing to

provide public notice and opportunity for Medicaid providers to submit comment, failing to submit amendment

10
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 11 of 23

to the state plan concerning the rate change, and failing to wait for review and approval by CMS prior to

instituting the rate change, constitutes per se irreparable harm.

2. Defendant’s Rule Causes Potentially Fatal Consequences to Plaintiff’s Business

Applying Defendant’s $5.00 per hour reduction in respite reimbursement rate causes significant economic

damage to Plaintiff’s business, causing Plaintiff significant losses to provide necessary respite services for

caregivers of developmentally delayed recipients. Plaintiff provides family living services to a total of 108

families in the southwestern region of New Mexico. Between the month of October 2009 to present, there were

30 to 40 families that use respite services each month on a monthly basis. The amount of respite used fluctuates

each month from family to family, depending on the needs of the recipient and the caregiver. Plaintiff agency

pays out directly to respite providers, families do not pay respite providers directly. Plaintiff is supposed to be

reimbursed by Defendant for respite $14.84 per hour. Plaintiff pays $11.00 per hour to six (6) respite providers,

and the rest of the respite providers, between 24 to 34 are paid between $10.00 and $11.00 per hour. The most

common average is $11.00 per hour paid for respite.

Defendant’s rule requires that Plaintiff’s business lose money for each hour of respite provided to families

that need the service. When Plaintiff pays $11.00, and if Plaintiff applies Defendant’s rule, Plaintiff loses $1.16

per hour of respite provided. Without Defendant’s rule, Plaintiff would normally receive $3.84 per hour to cover

the company’s administrative expenses associated with recruiting, hiring and supervising respite providers,

background checks, fingerprinting, training of respite providers, paperwork, payroll, and other necessary business

expenses associated with providing the service. However, applying Defendant’s $5.00 per hour penalty requires

Plaintiff to lose $0.16 to $1.16 to pay 24 to 34 respite providers, and lose $1.16 per hour for six respite providers

per month. The amounts reflected do not account for the extensive administrative costs and expenditures

associated with providing and administering the respite services.

As a result, Plaintiff is not receiving funding to cover the administrative costs and losing money each time the

respite services are provided. At the same time, Plaintiff is paying significant costs for providing the service,

requiring tremendous losses to provide this crucial service. The rule is causing Plaintiff significantly fatal losses

11
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 12 of 23

within its business and the potential for bankruptcy. Therefore, Plaintiff will suffer irreparable injury, unless the

injunction issues to stay the rule.

3. Plaintiff is Bound by Federal and State Law to Provide Respite Services, Thus Plaintiff’s Loss Can Only Be
Remedied By Injunctive Relief

In New Mexico, the Developmental Disabilities (DD) Medicaid Home and Community-Based Services

Waiver plan, effective July 1, 2006 through June 30, 2011,4 approved by CMS, requires Defendant and Plaintiff to

provide respite services to caregivers on behalf of recipients of the Developmental Disabilities Waiver program.

Defendant state agency and Plaintiff Medicaid provider are required to administer the services as described in the

state comprehensive reimbursement plan submitted by the Defendants and as approved by CMS, as a condition of

Medicaid funding. 42 U.S.C.A. § 1396a-n. In order for Plaintiff to follow federal guidelines, Plaintiff is put in

detriment by Defendant’s rule. When a state rule is inconsistent with federal law, the federal law prevails. The

most equitable means of resolving Plaintiff’s injuries is to impose injunctive relief and render the rule invalid.

In addition, Plaintiff is legally bound by its provider agreement with the New Mexico Department of Health5

under the Scope of Services provision of the contract to provide respite services. All Family Living Provider

Agency’s contracting with the New Mexico Department of Health providing services under the Medicaid Home

and Community-Based Services Waiver plan are required to provide respite services and follow Defendant’s

$5.00 per hour reduction in reimbursement when respite is provided. Section B1 of Plaintiff’s Provider

Agreement says the “Provider shall provide . . . respite services,” listing respite as the second service in the

specific scope of services. Appendix A of the provider agreement shows Plaintiff as CARF Accredited for three

years beginning October 31, 2008. Section B1 says the provider “shall provide services . . . referenced in

Appendix A,” which requires respite for each geographic area listed Catron, Dona Ana, Grant, Hidalgo, Luna,

Otero, Sierra, and Socorro. Therefore, Plaintiff is contractually bound by Defendant to provide respite services,

although it places Plaintiff’s business in serious detriment.

4
New Mexico Developmentally Disabled Medicaid Waiver Home and Community-Based Services Request for Evidence
Centers for Medicare & Medicaid Services Control Number 0173.90.R3, ¶ 1.
5
State of New Mexico Department of Healh Developmental Disabilities Supports Division Provider Agreement No.
08.2008.665.0007.3316, § B1(2), ¶ 1, and Appendix A CARF Accredited for 3 years, ¶ 2.

12
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 13 of 23

Moreover, the provider agreement is consistent with the New Mexico Administrative Code § 8.314.5 and the

New Mexico Department of Health’s DD Waiver Standards requiring Plaintiff to follow the respite guidelines

promulgated by Defendant. Defendant’s own reduction in reimbursement for respite is inconsistent with the

agency’s requirements, because it places all family living providers in financial detriment. Defendant places

Plaintiff and all family living providers in a very difficult position. If Plaintiff decides to no longer provide

respite services to avoid significant harm it will be violating state and federal law, but if Plaintiff provides respite

services as it is required to do, then Plaintiff would suffer financial ruin. Therefore, the most equitable and

appropriate remedy for Plaintiff is to stay the rule and grant Plaintiff injunctive relief.

4. Plaintiff’s Injury is Difficult to Ascertain and Cannot be Compensated

“Irreparable harm can be found when an injury is ‘difficult to ascertain.’" Dominion Video Satellite, Inc. v.

EchoStar Satellite Corp., 269 F.3d 1149, 1156 (10th Cir. 2001); see also State ex rel State Highway & Transp.

Dept. of N.M. v. City of Sunland Park, 2000-NMCA-044, n 19, I29 N.M. 151, 3 P.3d 128 (describing irreparable

harm as "an injury which cannot be compensated"). Plaintiff’s injuries are difficult to ascertain. It is difficult to

assess the entire current and ongoing damage to Plaintiff, because the number of families requiring respite

fluctuates each month; causing the number of respite providers to be paid for services to fluctuate each month; the

amount paid from 24 to 34 of 40 respite providers ranges from $10.00 to $11.00; and the company’s costs

associated with finding respite providers, supervising, issuing payroll, and other administrative costs changes each

month.

5. An Injunction is an Appropriate Remedy to Prevent Plaintiff’s Continued Injury Which Cannot be

Compensated

Plaintiff shows irreparable harm by demonstrating "a significant risk that he or she will experience harm that

cannot be compensated after the fact by monetary damages," Greater Yellowstone Coalition v. Flowers, 32l F.3d

1250, 1258 (1Oth Cir. 2003). Plaintiffs will continue to suffer ongoing and irreparable harm which cannot be

compensated if Defendant’s rule continues to be imposed upon Plaintiff and others like Plaintiff, unless a

permanent injunction is granted to prohibit reimbursement rates consistent with the rule. Incorporating all the

foregoing reasons stated above, including the fact that providing respite services is an ongoing part of Plaintiff’s

13
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 14 of 23

business, it is a necessary service provided to Plaintiff’s caregivers on behalf of recipients, and it is required as a

condition of federal funding Plaintiff will continue to suffer significant financial losses and maybe even a fatal

end to its business if Defendant is not prevented from imposing the reduced reimbursement rule by this equitable

Court.

IV. Issuance of an Injunction Will Not Harm Defendants, Nor Will it Adversely Impact the Public
Interest

An injunction will not harm the Defendants. Plaintiff is merely requesting that Defendants follow its own

respite reimbursement guidelines originally put in place by Defendants prior to the $5.00 per hour reduction.

The “defendants chose to obligate themselves . . . [then] there can be no legal defense to actions such as

these.” U.S. Customs, March 26, 1973 7 Cust. B. & Dec. 208 1973 WL 22790. According to a U.S. Customs and

Border Patrol decision it was the government’s position that because defendants chose to obligate themselves

unconditionally for payment of a foreign vessel, repair entry duties of up to $10,000 limit term bonds there can be

no legal defense to defendant’s actions to collect under the bonds. Similar to the present case, Defendants chose

to be in this financial position and obligate itself to the full respite reimbursement rate as set forth in its state plan

to CMS, and its contractual obligations to family living providers. Defendant bound itself by assuring CMS in its

state plan that rates for respite services would be reasonable and adequate for providers to provide the services

through the DD Waiver program, and Defendant did not amend the state plan in order to modify the terms at

which it is bound through CMS.

At the same time, Defendant does not have a defense when it violated federal law. Defendant failed to follow

federal procedural guidelines requiring documentation of methodology and formularies prior to a change in the

reimbursement rates, notice to the public, and other aforementioned violations of federal law. Therefore,

Defendant has no defense for harm and lacks the authority to continue reimbursing family living providers at the

reduced rate for respite services.

Moreover, not only did Defendant violate federal guidelines, but Defendant may be receiving federal funds

for the entire respite reimbursement rate from the federal government, while shortchanging New Mexico

Medicaid family living providers, and keeping the remainder of the federal funds for other agency uses.

14
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 15 of 23

Defendant receives federal funding to provide respite services in accordance with its state plan for Home and

Community-Based Waiver services. Where does that federal money allocated for respite go? These are the types

of questions which merit further examination during a full trial on the merits for permanent injunctive relief.

Therefore, Plaintiff meets the standard for a favorable decision because no substantial harm will result for

Defendant or other interested persons. Tenneco Oil Co. v. New Mexico Water Quality Control Comm'n, 105

N.M. 708, 736 P.2d 986 (N.M. Ct. App. 1986), NMSA 1978, §§ 12-8-1 et seq., 12-8-18, 74-6-1 et seq., 74-6-4,

74-6-6, 74-6-7; Civil Appellate Procedure Rule 5; Const. Art. 6, § 29; Rules Civ.Proc., Rule 62. Neither

Defendants or other interested persons will suffer harm as a result of the injunction.

V. The Injunction Will be in the Public Interest

Plaintiff meets the final requirement that the injunction would not be contrary to the public interest, because

staying Defendant’s rule will increase the likelihood that caregivers of individuals with developmental disabilities

will have access to necessary respite services they qualify for under the Medicaid provisions. Without the

injunction, the health and safety of recipients and caregivers in New Mexico are at risk, because Defendant’s rule

(1) requires caretakers to choose between the full amount of their family living check to support the family or a

reduced check and receive desperately needed respite services; (2) acts as a disincentive to family living provider

agencies from providing respite services, and (3) results in other FLPA’s paying respite workers less per hour,

reducing the number of workers willing to provide respite services, and increasing the turnover rate, overall

decreasing the availability of respite services to caregivers throughout the state.

1. Respite is a Medical Necessity for Caregivers and Recipients

“In a recent study of respite care services, families’ reasons for using respite included a family emergency, the

child was having a difficult time, the caregiver needed a break, and relaxation was needed for the caregiver.”

Regional Research Institute for Human Services (hereinafter “RRIHS”).6 Plaintiff’s Exhibit E.

6
Jivanjee, P. & Simpson, J. (2001). “Respite care for children with serious emotional disorders and their families: A way to
enrich family life.” Focal Point: A National Bulletin on Family Support and Children's Mental Health, 15(2), 26-31; Regional
Research Institute of Human Services, Portland State University, 2002; (citing Boothroyd, Kuppinger, Evans, Armstrong, &
Radigan, 1998). Plaintiff’s Exhibit E.

15
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 16 of 23

Caregivers frequently experience stress in the forms of physical fatigue psychological distress

(resentment, frustration, anxiety, guilt, depression), and disruption in relations with other family

members. The emotional aspects of caring for a family member are often more taxing than the

physical demands. Increased caregiver stress may result in health problems such as ulcers, high

blood pressure, difficulty sleeping, weight loss or gain, or breathing difficulties.7

A caregiver that has higher amounts of stress and health problems will be less able to adequately take care of the

individual with developmental disabilities. Respite is necessary for caregivers to take care of themselves in order

to care properly for their disabled family member. In accordance with this rationale, the Medicaid Act provides

that the needs of a person that is considered to be “essential” to another individual are taken into account when

determining the amount of aid or assistance furnished to such individual under a state plan approved under certain

provisions, and such person is determined under such a state plan to be essential to the well-being of such

individual. 42 U.S.C.A. § 1396d.

Respite care is seen as providing benefits to all members of the family, parents receive a break from care

giving, siblings of the child with a disability may have opportunities for more activities and interactions with

parents, and the child with a disability receive a positive social experience. RRIHS ¶ 26. Therefore, the

availability of respite services is a necessary and essential component when family members are caring for

individuals with developmental delays.

2. Defendant’s Rule is Not in the Public Interest Because it Requires Caregivers to Choose Between Respite and

Support for their Family

Caregivers that are more likely to need respite are also more likely to rely on the family living check as their

sole source of income for their families. Caregivers manage the every day, full time, care for the recipients of the

DD Waiver program, which means the caregivers do not have time to maintain employment to support their

families. The family living portion of the budget for DD Waiver recipients provides funding for the caregiver to

7
Website http://www.minddisorders.com/Py-Z/Respite.html#ixzz0oFTDmwph, Purpose, citing Ownby, Lisa L. Partners Plus:
Families and Caregivers in Partnerships: A Family-Centered Guide to Respite Care. Washington, DC: Child Development
Resources, U.S. Department of Education, Office of Educational Research and Improvement, Educational Resources Information
Center, 1999; and Tepper, Lynn M. and John A. Toner, eds. Respite Care: Programs, Problems, and Solutions. Philadelphia: The
Charles Press, 1993.

16
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 17 of 23

take care of the day-to-day needs of the developmentally disabled recipient. When caregivers utilize respite

services, Defendant’s rule requires that their family living check be reduced $5.00 per hour for every hour of

respite provided. Many caregivers rely on the family living support as their sole source of income, because they

may be a single parent or married to a disabled or elderly spouse unable to work. These same caregivers are even

more likely to need respite than other caregivers because they do not have a spouse or other family members that

can safely care for the recipient free of charge.

“Families who use respite tend to have higher levels of perceived stress, lower levels of support from others,

and fewer resources. In many of these families, the individuals in need of care have more severe disabilities,

problem behaviors such as aggression or self-injury, and communication difficulties; are school-aged; and are

more dependent for basic needs such as eating, toileting, and dressing.”8 In New Mexico, caregivers of

individuals with developmental disabilities that need to utilize respite care tend to be caring for recipients with the

highest need for care, such as the severely disabled or individuals with challenging behavior. The RRIHS study

also stated that “families who used respite care services were found to have fewer relatives or friends available to

provide respite compared to similar families who did not use respite services.” RRIHS ¶ 26.

3. Defendant’s Rule Discourages Family Living Provider Agencies from Providing Respite Services

If a family living provider agency provides respite, it must pay significantly less than $9.84 ($14.84 - $5.00 =

$9.84) to respite providers in order for their company to cover the costs of providing the service and to survive.

In addition, a low wage is disingenuous to attracting safe, competent, and reliable workers to a field that is

difficult and stressful to handle. The website minddisorders.com explains that “respite agencies may have

difficulty recruiting and retaining qualified employees, because limited funding prevents agencies from offering

desirable salaries. The high turnover and unavailability of employees may result in delays in service delivery or

family dissatisfaction with services.”

The advent of deinstitutionalization of individuals with disabilities has resulted in a new form of health

formulary necessary for disabled individuals cared for by family members. Respite is unnecessary in an

institution, where workers rotate shifts, receive breaks, and go home to separate their work from their home life.

17
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 18 of 23

In New Mexico, the family living caregiver of an individual with a developmental disability is technically on the

job 24 hours a day, 7 days a week, lives with the disabled individual(s), and does not get a break until respite and

other community based services are provided. Therefore, because respite services are essential to the health, well-

being, and safety of both the recipient and their caregiver, it is in the best interests of the public the injunction is

granted.

Plaintiff feels obligated to note that Defendant’s noncompliance jeopardizes all of New Mexico’s federal

Medicaid funding if Defendant is not enjoined from continuing to violate the Social Security Act and rectify its

violations, the Medicaid funding may be stopped or temporarily suspended. 42 U.S.C.A. § 1396c.

RELIEF REQUESTED

Plaintiff has no adequate or speedy remedy at law for the above-mentioned conduct of Defendant except to

enjoin Defendant from its reimbursement rule, and this action for injunctive relief is Plaintiff’s only means for

securing relief.

Defendants have been provided notice and a copy of this petition for injunctive relief. Wherefore, Plaintiff

requests this Court immediately issue a temporary restraining order and a preliminary injunction pursuant to Rule

65, Federal Rules of Civil Procedure, ordering Defendants, its Officers, and all those in active concert or

participation with them to:

1. Refrain immediately, and pending the final hearing and determination of this action, from reducing the

paychecks issued to family living providers by $5.00 per hour for every hour of respite provided;

2. Require Defendants immediately, and upon determination of this action, to provide notice to all family living

provider agencies, family living providers, caregivers, case managers, and other relevant stakeholders,

concerning suspension and status of the respite reimbursement rate pending final hearing and determination

by the Court;

3. Require Defendants immediately, and pending the final hearing and determination of this action, to repeal the

rule and put into place proper procedures for rescinding all methods used for implementing and enforcing the

$5.00 per hour reduction in the reimbursement for respite in the family living daily unit rate for each hour of

8
Website http://www.minddisorders.com/Py-Z/Respite.html#ixzz0oQaP1sCi, Barriers to using respite services.
18
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 19 of 23

respite provided when family living providers are reimbursed and/or paid for respite services;

4. Require Defendants immediately, and pending the final hearing and determination of this action, to reinstate

the family living respite reimbursement rate provided to family living providers prior to Defendant’s rule,

with the exception of any reimbursement or rate increases, consistent with federal guidelines, for each hour of

respite provided;

5. Refrain Defendants immediately from taking any retaliatory actions against Plaintiff, family living providers,

caretakers, case managers, and recipient clients of Plaintiff, including but not limited to, audits, inspection of

records, inspection of property, entrance of property, and taking of documentation or property, by the New

Mexico Department of Health, the Division of Health Improvement Quality Management Bureau (DHI), any

other governmental entity, its officers, employees, and all those in active concert or participation with them.

6. Issue permanent injunctive relief perpetually enjoining and restraining Defendants, its Officers and all those

in active concert or participation with them from applying and enforcing the $5.00 per hour reduction in the

reimbursement and/or payment for respite in the family living daily unit rate for each hour of respite provided

when family living providers are reimbursed and/or paid for respite services.

7. Issue a declaratory judgment rendering Defendant’s reduced reimbursement rate invalid, because it was

promulgated in violation of federal procedural guidelines and inconsistent with federal law.

CONCLUSION

For the foregoing reasons, Plaintiff requests that the Court preserve the status quo by immediately granting a

preliminary injunction, and after a hearing on the merits, declaratory and permanent injunctive relief, enjoining

Defendant from applying the $5.00 per hour reduction in the reimbursement and/or payment for each hour of

respite used when family living providers are reimbursed and/or paid for respite services, and Defendant refrain

from taking any retaliatory or harmful actions against Plaintiff.

Respectfully Submitted,

THE CORDOVA LAW FIRM, LLC

19
Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 20 of 23

_______________________
Marina A. Cordova
Attorney for Plaintiff
702 Columbia Street, Suite A
Santa Fe, NM 87505
Phone: (505) 467-8395
Fax: (505) 467-8746
mcordova85@comcast.net

20
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 21 of 23

PLAINTIFF’S EXHIBIT LIST

A. Director’s Release, dated October 23, 2009, issued by Mikki Rogers, Director, Developmental
Disabilities Division of the New Mexico Department of Health.

B. Developmental Disabilities Waiver Standards of 2007, ¶¶ 89-91, 127-129.

C. Centers for Medicare and Medicaid Services “Overview, State Plan Medicaid Service
Reimbursement” see http://www.cms.hhs.gov/Medicaid/RF

D. State of New Mexico Department of Health Developmental Disabilities Supports Division

Provider Agreement No. 08.2008.665.0007.3316, ¶ 17 (from original agreement), ¶¶ 4-6.

E. Jivanjee, P. & Simpson, J. (2001). “Respite care for children with serious emotional disorders and
their families: A way to enrich family life.” Focal Point: A National Bulletin on Family Support
and Children's Mental Health, 15(2), 26-31; Regional Research Institute of Human Services,
Portland State University, 2002; (citing Boothroyd, Kuppinger, Evans, Armstrong, & Radigan,
1998).

PLAINTIFF’S ERRATA LIST

1. Rye Psychiatric Hosp. Center, Inc. v. Surles, 768 F.Supp. 82 (1991).

2. Pinnacle Nursing Home v. Axelrod, 928 F.2d 1306 (1991).

21
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 22 of 23

CERTIFICATE OF SERVICE

I hereby certify on June ____, 2010, a true and correct copy of the foregoing Plaintiff’s Motion for
Preliminary Injunction, Declaratory Judgment, and Permanent Injunctive Relief, Summons, and Notice and
Receipt of Summons and Complaint was delivered via electronic mail through the Electronic Court Filing
(ECF) system and mailed to the following Defendant:

MIKKI ROGERS, Director of the Developmental Disabilities Division

NM Department of Health
5301 Central Avenue, Suite 203
Albuquerque, NM 87108
Phone: (505) 841-5551
mikki.rogers@state.nm.us

I hereby certify on June ____, 2010, a true and correct copy of Plaintiff’s Motion for Preliminary Injunction,
Declaratory Judgment, and Permanent Injunctive Relief, Summons, and Notice and Receipt of Summons and
Complaint was delivered via electronic mail through the Electronic Court Filing (ECF) system and/or hand
delivery by the Santa Fe County Sheriff’s Department upon the following Defendants:

ALFREDO VIGIL, Secretary

New Mexico Department of Health
Greg Lauer, General Counsel
1190 S. St Francis Drive
Room N4095
P.O. Box 26110
Santa Fe, New Mexico 87502
Phone (505) 827-2997
Fax: (505) 827-2930
Gregory.lauer@state.nm.us
Christina Galvez, Paralegal
Christina.Galvez@state.nm.us

KATHRYN FALLS, Secretary

New Mexico Human Services Department
Mark Reynolds, Acting General Counsel
2009 S. Pacheco Street
P.O. Box 2348
Santa Fe, NM 87504
Phone: (505) 827-7701
Fax: (505) 827-7729
MarkH.reynolds@state.nm.us

GARY KING, Attorney General of New Mexico

Stuart M. Bluestone, Senior Counsel
408 Galisteo Street, Villagra Building
Santa Fe, NM 87501
Phone: (505) 827-6004
Fax: (505) 827-5826
Sbluestone@nmag.gov

22
 Case 2:10-cv-00528-BB-CG Document 1 Filed 05/31/10 Page 23 of 23

BILL RICHARDSON, Governor of New Mexico

Justin W. Miller, Chief Counsel
490 Old Santa Fe Trail, Suite 400
Santa Fe, NM 87501
Phone: (505) 476-2236
Fax: (505) 476-2207
Justin.miller@state.nm.us

________________
Marina A. Cordova

23