Free Declaration in Support - District Court of California - California

Case 3:07-cv-05086-WHA Document 68-20 Filed 09/04/2007 Page 1 1 of 8 Case 3:06-cv-04095-MHP Document 38 Filed 09/11/2008 Page of 8

1 EDMUND G. BROWN JR. Attorney General of the State of California 2 SUSAN M. CARSON Supervising Deputy Attorney General 3 GEORGE PRINCE, State Bar No. 133877 Deputy Attorney General 455 Golden Gate Avenue, Suite 11000 4 San Francisco, CA 94102-7004 Telephone: (415) 703-5749 5 Fax: (415) 703-5480 6 7 Attorneys for Department of Social Services 8 9 10 11 12 13 14 15 16 17 18 19 Defendants. 20 21 22 INTRODUCTION Plaintiff's motion for summary judgment altogether fails to present any basis upon v. JOHN WAGNER, Director of the California Department of Social Services, in his official capacity; MARY AULT, Deputy Director of the Children and Family Services Division of the California Department of Social Services, in her official capacity, Hearing: September 24, 2007 Time: 2:00 p.m. Courtroom: 15, 18th floor Judge: The Hon. Marilyn H. Patel CALIFORNIA ALLIANCE OF CHILD AND FAMILY SERVICES, Plaintiff, C 06-4095 MHP DEFENDANTS' OPPOSITION TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

23 which this Court can enter judgment for it. While plaintiff contends that the California 24 Department of Social Services (DSS) "has failed to make foster care maintenance payments that 25 meet the Child Welfare Act's specific requirements" (Plaintiff's Motion for Summary Judgment, 26 p. 1:17-18), the simple fact is that DSS's rate classification level system is fully compliant with 27 federal law. Plaintiff's inability to show otherwise dooms its motion. Accordingly, judgment 28 must be entered on behalf of defendants.
Opposition to Plaintiff's Motion for Summary Judgment California Alliance, etc., v. Wagner, et al. C 06-4095 MHP

1

Case 3:07-cv-05086-WHA Document 68-20 Filed 09/04/2007 Page 2 2 of 8 Case 3:06-cv-04095-MHP Document 38 Filed 09/11/2008 Page of 8

1

Curiously, plaintiff uses nearly six pages of text in its motion for summary judgment to

2 rehash arguments it presented in its opposition to defendants' motion to dismiss for failure to 3 state a claim of nearly a year ago. As this Court concluded in its order of October 26, 2006, the 4 Child Welfare Act "confers an individual right on plaintiff's members for enforcement of foster 5 care maintenance payments pursuant to section 675(4)(A)." (Order, entered October 27, 2006, at 6 p. 8:4-5.) 7 Revisiting that day in Court is all well and good. However, securing the opportunity to

8 bring a lawsuit by surviving a motion to dismiss is one matter; prevailing on a motion for 9 summary judgment is quite another. 10 11 12 13 ARGUMENT I. CALIFORNIA'S RCL SYSTEM COMPLIES WITH THE CHILD WELFARE ACT More than 17 years ago California's Legislature enacted Welfare and Institutions Code

14 section 11462, a comprehensive and detailed statute that created the "rate classification level" 15 (RCL) system for setting payment rates for foster care group homes. The statute charged DSS 16 with the implementation and administration of the system, which established 14 different rate 17 classification levels at which group home programs would be paid for the provision of care and 18 services to foster children.1/ 19 Under federal law, a state may receive reimbursement from the federal government for

20 allowable foster care payments pursuant to Title IV-E of the Social Security Act, 42 U.S.C. 21 sections 670-679b, the Child Welfare Act (CWA), for foster children who meet federal eligibility 22 requirements. In order to receive federal monies a state must submit a detailed plan to the 23 Secretary of the Department of Health and Human Services (DHHS) setting forth its system for 24 implementing and administering the program, which is subject to review and approval by the 25 Secretary. (42 U.S.C. § 671. ) 26 27 1. Details of the creation and history of the RCL system are set forth at pp. 3-6 of 28 defendants' Cross Motion for Summary Judgment.
Opposition to Plaintiff's Motion for Summary Judgment California Alliance, etc., v. Wagner, et al. C 06-4095 MHP

The point that plaintiff's motion for summary judgment tries unsuccessfully to make is

2

Case 3:07-cv-05086-WHA Document 68-20 Filed 09/04/2007 Page 3 3 of 8 Case 3:06-cv-04095-MHP Document 38 Filed 09/11/2008 Page of 8

1 that the RCL system used by California fails to pass muster under the CWA. Not so. All state 2 plans relating to the setting of rates for foster care group by DHHS at any time in which the RCL 3 system has been in place have been approved, and plaintiff has not refuted and can not refute this 4 fact.2/ Accordingly, plaintiff's motion for summary judgment must be denied and that of the 5 State must be granted. 6 7 8 9 10 A. California's Statute and Regulations are Consistent with Federal Law. At the bottom of page 11 of its motion, plaintiff finally begins discussing the RCL with II. PLAINTIFF'S EFFORT TO SHOW THAT THE RCL SYSTEM FAILS TO COMPLY WITH THE CHILD WELFARE ACT LACKS SUPPORT.

11 respect to federal law.3/ Plaintiff cites one case, Orthopaedic Hospital v. Belshe, 103 F.3d 1491 12 (9th Cir.1997), for the proposition that a reviewing court should be concerned that state law and 13 regulations are consistent with federal law. (Plaintiff's Motion, p. 12:2-3, citing Id. at 1496.) 14 Contrary to plaintiff's view, that case actually illustrates the fact that the state law and 15 regulations at issue here are consistent with federal law. 16 In Orthopaedic, the court found that the California Department of Health Services

17 acted arbitrarily and capriciously, and contrary to law, in setting hospital outpatient 18 reimbursement rates under Medicaid based on factors that did not consider hospitals' costs. 19 However, that case was decided when the now-repealed Boren amendment was still in effect.4/ 20 Moreover, Orthopaedic held that a state agency's interpretation of federal statutes is not entitled 21 2. An electronic copy of California' currently operative, 50-page Title IV-E plan can be found at http://www.childsworld.ca.gov/res/pdf/2002TitleIV-EStatePlan4_03.pdf. Plaintiff inaptly 23 places an unsupported statement the "standardized schedule of rates used to make payments to group homes under California's RCL system is inadequate, fails to comply with the Child Welfare Act" 24 within its "Statement of Undisputed Facts" (Plaintiff's Motion, p. 3:25-27). While the placement is amusing, the statement is not only unsupported, but, more importantly, simply wrong. 25 22 26 27 4. The federal Balanced Budget Act of 1997 repealed the Boren Amendment, giving states 28 far greater freedom in setting nursing home payment rates.
Opposition to Plaintiff's Motion for Summary Judgment California Alliance, etc., v. Wagner, et al. C 06-4095 MHP

3. As the issue of plaintiff's right to bring this action was decided last year and is not germane to the issue now before this Court, defendants will not address that matter here.

3

Case 3:07-cv-05086-WHA Document 68-20 Filed 09/04/2007 Page 4 4 of 8 Case 3:06-cv-04095-MHP Document 38 Filed 09/11/2008 Page of 8

1 to the deference afforded a federal agency's interpretation of its own statutes. (103 F.3d at 2 1495.) This is not the situation before this Court. Here, the Secretary of DHHS, empowered to 3 disapprove a state's IV-E plan, has never denied California's plan. Additionally, Orthopaedic 4 held that the violation of Medi-Cal rates there was due to the California Department of Health 5 Services' failure to set hospitals' costs based on reliable information when setting reimbursement 6 rates. (Id. at 1499.) In the instant case there is no dispute that the statute that created the RCL 7 system was itself based on thorough cost studies ­ in which group home program service 8 providers participated and were instrumental (see Welf. and Inst. Code section 11462 (a)(1), and 9 11462 (c)) ­ putting to rest any suggestion that DSS did not take into account reliable 10 information when creating the RCL system. 11 12 B. The CWA Does Not Require the Payment of Actual Costs. Plaintiff also makes much ado about "actual" costs and the lack of reference in

13 Welfare and Institutions Code section 11460 (b) to the CWA's reference to payments to "cover 14 the cost of (and the cost of providing)" the required services to children when those children are 15 in group homes. (Plaintiff's Motion, at p. 12:14-22, citing 42 U.S.C. § 675(4)(A).) This is a 16 specious argument. 17 Despite plaintiff's statement to the contrary, there is no reference in federal or state

18 law to "actual" costs. The CWA requires that reimbursement rates cover the allowable and 19 reasonable costs, rather than the actual costs, of foster care maintenance. (See 42 U.S.C. § 20 675(4)(A).) (Only allowable costs can be reimbursed because foster care maintenance payments 21 cover the cost of -- and the cost of providing -- generally described services, including "food, 22 clothing, shelter, daily supervision, school supplies, a child's personal incidentals, liability 23 insurance with respect to a child, and reasonable travel to and from the child's home for 24 visitation." (42 U.S.C. § 675(4)(A).) In the case of institutional foster care providers, only 25 reasonable costs can be reimbursed because the CWA limits the coverage of institutional foster 26 care "to the reasonable costs of administration and operation of an institution to the extent that 27 // 28 //
Opposition to Plaintiff's Motion for Summary Judgment California Alliance, etc., v. Wagner, et al. C 06-4095 MHP

4

Case 3:07-cv-05086-WHA Document 68-20 Filed 09/04/2007 Page 5 5 of 8 Case 3:06-cv-04095-MHP Document 38 Filed 09/11/2008 Page of 8

1 2 3

they are "necessarily required to provide" specific services. (Id.)5/ C. California's RCL Covers the Costs It Is Required to Cover Under the CWA. To support its fundamental contention that the RCL is non-compliant with the CWA,

4 plaintiff relies largely on a case from the district court in the Western District of Missouri, 5 Missouri Child Care Association v. Martin, 241 F.Supp.1032 (WD Mo. 2003). In that case, the 6 district court found that under the CWA the state was obligated to have a process for determining 7 rates for foster care maintenance payments that took into account statutory criteria specifically 8 mandated by the CWA, and that Missouri's failure to consider these statutory criteria, by instead 9 basing its reimbursement rates solely on budgetary concerns, violated the CWA. 10 As the Missouri court noted: "At a minimum, the State is obligated to have a process

11 for determining rates that takes into account the statutory criteria mandated by the CWA." (241 12 F.Supp. at 1045, citations omitted.) That is not akin to the situation here, where California's 13 system did just what the CWA required by creating a complex rate classification level system 14 based on detailed costs analyses done in concert with group home providers. (See Welf. & Inst. 15 Code § 11462 (a)(1), and 11462 (c).) California's effort far exceeds this minimum. 16 Moreover, the Missouri court further noted that a state need only to be in "substantial

17 compliance" with the CWA to meet its obligation (Id. at 1046, note 7), and that budget 18 considerations may be taken into account in the creation of a reimbursement methodology (Id.). 19 This comment is germane here, in recognition of the California statute's proviso that the 20 statutory annual increases in funding for foster care maintenance payments is "subject to the 21 availability of funds." (Welf. & Inst. Code § 11462 9g)(2).) 22 The final word of the Missouri court is noteworthy: "This Court is not holding that the

23 [Missouri state] Defendants need a certain or particular methodology, just that the Defendants 24 25 5. Office and Management Budget Circular A-87, which is used to define the term "reasonable" for purposes of "foster care maintenance payment" in the administration of the CWA, 26 provides that costs are "reasonable" if they do not exceed those that would be incurred by a "prudent 27 person." See http://www.whitehouse.gov/omb/circulars/a087/a87_2004.html at Attachment A, General Principles for Determining Allowable Costs, Section C ("Basic Guidelines"), Item 2, 28 "Reasonable Costs."
Opposition to Plaintiff's Motion for Summary Judgment California Alliance, etc., v. Wagner, et al. C 06-4095 MHP

5

Case 3:07-cv-05086-WHA Document 68-20 Filed 09/04/2007 Page 6 6 of 8 Case 3:06-cv-04095-MHP Document 38 Filed 09/11/2008 Page of 8

1 need a methodology that considers the required factors."

(241 F.Supp. at 1046.) California has

2 such a methodology, and thus its RCL is more than in "substantial compliance" with the CWA. 3 4 D. Plaintiff's "Lack of Funds" Contention is Misplaced. Finally, plaintiff cites Blanco v. Anderson, 39 F.3d 969 (9th Cir. 1994) for the

5 proposition that "lack of funds" is no excuse for failing to provide required payments. 6 (Plaintiff's Motion, p. 14:15-25.) Plaintiff's "see"citation to Blanco does not help its case. 7 In Blanco, plaintiffs sought injunctive relief from defendants -- state social welfare

8 officials sued in their official capacities ­ alleging that defendants violated the federal Food 9 Stamp Act, Aid to Families with Dependent Children, and federal Medicaid law because they 10 had approved weekday closings of county welfare offices that administered those programs in 11 several California counties. (39 F.3d at 970.) The real point of Blanco differs from "lack of 12 funds" argument that plaintiff tries to mount. (Plaintiff's Motion, p. 14:24-25), 13 In Blanco, plaintiffs contended that the federal laws at issue required that the county

14 welfare offices be open on certain days or hours, a demand the Court addressed by commenting 15 that "plaintiffs ask for too much." (Id., 39 F.3d at 971.) The Court noted that "we can find

16 nothing in federal law imposing a federal obligation as to the hours the county welfare offices 17 must stay open to the public." (Id.) As the Ninth Circuit explained, the implementing 18 regulations at issue were clear: "`State agencies shall be responsible for determining the hours 19 that food stamp offices shall be open.' [citation]" (Id.) After further discussion of the analogous 20 AFDC and Medicaid regulations, the Court stated: "We find nothing in the statute or the 21 regulations requiring county welfare offices be open on certain days or hours." (Id.) The 22 unstated but unmistakable message of the Court was, of course, that where the State is given 23 responsibility to implement a directive, the State is afforded the discretion to implement it 24 25 6. In Blanco, the Ninth Circuit also noted that the State's role in implementation these statutes and regulations required that it exercise its duty in supervising county welfare offices so that the purposes of the statutes would not be frustrated (39 F.3d at 971-972), and remanded the matter 27 to the district court and the parties "to fashion a decree consistent with its opinion" to that effect. 28 (Id. at 973.) However, this did not change the character of the Court's ruling as to the (cont.) 26
Opposition to Plaintiff's Motion for Summary Judgment California Alliance, etc., v. Wagner, et al. C 06-4095 MHP

without the micro management of the federal government.6/

6

Case 3:07-cv-05086-WHA Document 68-20 Filed 09/04/2007 Page 7 7 of 8 Case 3:06-cv-04095-MHP Document 38 Filed 09/11/2008 Page of 8

1

If the federal government wished to direct the state to provide foster care group home

2 providers with the actual costs for operating their programs, it could choose to do so by specific 3 directives in the CWA to that effort, or by disapproving the California RCL system that has been 4 in place, without federal disapproval, for more than 17 years. The federal government has taken 5 neither step. Plaintiff may be unhappy with the level of payments its members receive from the 6 State of California, but they are not entitled to a judgment from this Court by a change in the 7 statutory scheme now in place, or otherwise. For this reason, too, plaintiff's motion should be 8 denied. 9 10 11 12 III. GIVEN PLAINTIFF'S INABILITY TO MAKE A FACTUAL SHOWING THAT THE RCL SYSTEM FAILS TO COMPLY WITH THE CHILD WELFARE ACT, DEFENDANTS' MOTION FOR SUMMARY JUDGMENT MUST BE GRANTED. A moving party is entitled to summary judgment "if the pleadings, depositions, answers

13 to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no 14 genuine issue as to any material fact and that the moving party is entitled to judgment as a matter 15 of law." Fed.R.Civ.P. 56(c). Once the moving party discharges this initial burden, the nonmoving 16 party may not rest upon the mere allegations or denials of the adverse party's pleading, but must set 17 forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 18 477 U.S. 242, 248 (1986). To establish a genuine issue of fact sufficient to warrant trial, the 19 nonmoving party "must do more than simply show that there is some metaphysical doubt as to the 20 material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). 21 Instead, the nonmoving party bears the burden of setting forth specific facts showing there is a 22 genuine issue for trial. Anderson, 477 U.S. at 248. 23 As demonstrated above, plaintiff has failed to make the showing required of it to win a

24 grant of summary judgment on its behalf. Its motion must thus be denied. 25 // 26 // 27 28 State's discretion to implement the law, as opposed to being directed how to implement the law.
Opposition to Plaintiff's Motion for Summary Judgment California Alliance, etc., v. Wagner, et al. C 06-4095 MHP

7

Case 3:07-cv-05086-WHA Document 68-20 Filed 09/04/2007 Page 8 8 of 8 Case 3:06-cv-04095-MHP Document 38 Filed 09/11/2008 Page of 8

1 2

CONCLUSION In this case there is no valid basis to plaintiff's contention that the RCL violates the

3 Child Welfare Act. For the reasons set forth above -- and contrary to plaintiff's contention -- the 4 RCL system does not violate the Child Welfare Act or any of its regulations or other provisions. 5 Thus, plaintiff's motion for summary judgment should be denied, defendants' cross motion for 6 summary judgment in their favor and against plaintiff should be granted, and this action should 7 be dismissed. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Opposition to Plaintiff's Motion for Summary Judgment California Alliance, etc., v. Wagner, et al. C 06-4095 MHP
SF2006401941

Dated: September 4, 2007 Respectfully submitted, EDMUND G. BROWN JR. Attorney General of the State of California SUSAN M. CARSON Supervising Deputy Attorney General /s/ George Prince GEORGE PRINCE Deputy Attorney General Attorneys for Department of Social Services

8