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Arkansas Department of Human Services v. Ledgerwood

Supreme Court of Arkansas

November 9, 2017



          David Sterling and Richard Rosen, Office of Chief Counsel, for appellant.

          Kevin De Liban, Legal Aid of Arkansas, West Memphis; and Amy Pritchard, Legal Aid of Arkansas, Jonesboro, for appellees.


         Appellant Arkansas Department of Human Services (DHS) has filed an interlocutory appeal from an order entered by the Pulaski County Circuit Court granting a motion for temporary restraining order (TRO) in favor of appellees Bradley Ledgerwood, Louella Jones, Peggy Sanders, Marcus Strope, Winnie Winston, Dana Wolf, and Michael Yarra. For reversal, DHS argues that the circuit court abused its discretion in finding that appellees demonstrated a likelihood of success on the merits of their claims and that they would suffer irreparable harm in the absence of a TRO. We affirm.

         I. Facts

         Appellees, who are low-income individuals with profound physical disabilities, are the beneficiaries of the ARChoices in Homecare Program[1] ("ARChoices" or "waiver program"), a state Medicaid program that provides home-based and community-based services to eligible and enrolled participants. Appellees receive these services through a program called Attendant Care that pays caregivers to assist appellees with daily tasks such as bathing, dressing, preparing food, eating, ambulating, toileting, taking medication, shopping, and maintaining personal care, nutrition, and hygiene.

         For approximately seventeen years, DHS determined a beneficiary's number of attendant-care hours based on the professional discretion of a DHS registered nurse who assessed the beneficiary. Under this specific assessment, known as ArPath, DHS nurses determined that appellees required attendant care with a maximum of fifty-six hours per week. DHS later planned to implement a new reassessment system, known as the Resource Utilization Groups system ("RUGs"), that was based solely on a set of complex computer algorithms. These algorithms took patient information gathered from a 286-question ArPath assessment and placed the beneficiary into one of twenty-three RUGs tiers. Each RUGs tier is associated with an allocation of attendant-care hours that is determined by DHS. These possible allocations of weekly attendant-care hours span from six hours to eighty-one hours. Once an individual is assigned to a RUGs tier, DHS nurses do not have the discretion to move a beneficiary to another tier based on his or her specific needs.

         In August 2015, DHS promulgated a 242-page packet, which included a Notice of Rulemaking along with a proposed RUGs rule and final RUGs rule. Dawn Stehle, director of the Division of Medical Services, issued the Notice of Rulemaking, stating, Effective January 1, 2016, [DHS] is renewing the ElderChoices 1915(c) HCBS waiver. The renewal combines the ElderChoices and Alternatives for Adults with Physical Disabilities (AADP) waivers into one waiver to be called the ARChoices in Homecare waiver covering participants 21 and older with a physical disability and individuals aged 65 and older. Effective January 1, 2016, the Department is also increasing the rate for Personal Care Services from $4.19 to $4.50 per 15 minute unit. The estimated annualized budget impact of the rate increase for the State Plan Personal Care Services is $11, 439, 689.

         The proposed policy is available for review at the Division of Medical Services . . . . You may also access it on the Medicaid website ( and download it from the "Proposed Rules for Public Comment" section of the Website's General menu. . . . All comments must be submitted in writing, at the above address, no later than September 1, 2015.

         On December 1, 2015, Craig Cloud, director of the Division of Aging and Adult Services, sent a letter to the waiver-program beneficiaries, stating,

Effective January 1, 2016, the ElderChoices waiver program will be renamed ARChoices in Homecare. Your services and provider will remain the same way. When your reassessment is due, the DAAS Nurse will explain how your services will have a new name and will explain new options and choices available to you under ARChoices.
For now, just know that the name of your current services is being changed to ARChoices in Homecare. You will continue to receive the same services[, ] and the DAAS Nurse will provide more information at your next reassessment.

         On January 26, 2017, appellees filed a complaint, seeking a declaratory judgment challenging the validity of DHS's new RUGs rule. They alleged, inter alia, that the RUGs rule did not substantially comply with the Administrative Procedure Act ("APA"), codified at Arkansas Code Annotated sections 25-15-201 to -219 (Repl. 2014 & Supp. 2015), and sought injunctive relief. Specifically, they alleged that "the unlawful switch to the computer algorithm reduced [appellees'] Attendant Care hours by an average of 43%, with one [appellee's] cut reaching 56%." Appellees also made the following factual allegations concerning their specific health histories. Appellee Ledgerwood, diagnosed with cerebral palsy, requires attendant-care services to perform all life activities. Until 2016, he received fifty-six weekly attendant-care hours, and in February 2016, DHS reduced his hours to thirty-two weekly hours. Appellee Jones, diagnosed with cerebral palsy, multiple sclerosis, hiatal hernia, cardiac arrhythmia, obesity, and an acute gastric ulcer, received forty weekly attendant-care hours. From April to August 2016, her weekly attendant-care hours were reduced to nineteen. Appellee Sanders, who was diagnosed with congestive heart failure, atrial fibrillation, coronary-artery disease, stage three kidney disease, hypothyroidism, osteoarthritis, gout, depression, anxiety, anemia, allergies, urinary incontinence, and chronic pulmonary disease, received forty-eight weekly attendant-care hours; however, from April to November 2016, DHS reduced her attendant-care hours to twenty-one. Appellee Strope, who was diagnosed with incomplete tetraplegia after breaking his neck and is confined to a bed, had been authorized fifty-six weekly attendant-care hours. From April to September 2016, he received approximately thirty-two hours after his reassessment. Appellee Winston, who suffers severe spinal conditions, including bulging discs, fused vertebrae, and spinal lesions, was diagnosed with neuropathy and arthritis and suffers from severe pain. She had received forty-four weekly attendant-care hours, but after her reassessment, DHS reduced her hourly allotment to twenty-two hours. Appellee Wolf suffered serious injuries, resulting in quadriplegia after a car accident at the age of fifteen. He received fifty-six attendant-care hours, but from April to August 2016, DHS reduced his attendant-care hours to thirty-seven. Appellee Yarra, who was injured in a car accident, had one leg amputated, has severe bladder problems, has sustained nerve damage, and suffers from chronic infections. Confined to a wheelchair, he received forty-two hours, but DHS reduced those hours to thirty-three from September 2016 to January 2017. Appellees claim that DHS's reduction in their attendant-care weekly hours will be insufficient to meet their care needs.

         On January 31, 2017, appellees filed a motion for temporary restraining order and preliminary injunction. In their brief in support, appellees contended that DHS's switch from the nurses' assessment to RUGs "[a]s of May 1, 2016, the last date for which DHS has data, the shift to the RUGs system had resulted in cuts for a [sic] 47% of ARChoices beneficiaries, increases for 43%, and no change for the remainder[, ]" but that they, "the most acute beneficiaries[, ] have been hit the hardest." Appellees claimed that they (1) had been forced to go without food, (2) remained in soiled clothes or have gone without bathing, (3) missed key exercises, treatments, or turnings, (4) faced an increased risk of falling, (5) have become more isolated in their homes; (6) have suffered worsened medical conditions directly due to a lack of care; and (7) have considered moving to nursing homes. Appellees concluded that they had met the requirements for a TRO in proving that they faced irreparable injury and were likely to prevail on the merits of their claims. In their prayer for relief, they requested, inter alia, a temporary restraining order that would (1) enjoin DHS from conducting reassessments on the appellees and reducing their attendant-care hours under RUGs and (2) require DHS to maintain or restore appellees' attendant-care hours to the amounts determined as of December 31, 2015.

         The circuit court held a hearing on appellees' motion for TRO and preliminary injunction. After receiving evidence and hearing testimony and closing arguments, the circuit court made the following ruling from the bench:

[Appellees] . . . argue they suffered and will continue to suffer irreparable harm in the absence of a temporary restraining order.
. . . .
The court finds that the plaintiffs have presented evidence that shows there's a substantial likelihood they will be able to succeed, that the proposed rule was not given with notice with regard to the specific nature and significance of the change in assessment methodology.
. . . .
The court makes this recitation [of the evidence before it] to indicate the basis for its conclusion that [appellees] have demonstrated a substantial likelihood of success on the merits as to whether or not the notice required under Arkansas Code 25-15-204 has been adopted and filed in substantial compliance so as to be valid.
The second aspect or the second element that [appellees] must prevail on in order to obtain a temporary restraining order is to demonstrate irreparable harm, that irreparable harm will ensue as a result of the alleged conduct. [Appellees] alleged that they have suffered and will continue to ...

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