AmeriHealth's exit should curtail disabled residents' suit against Iowa, state lawyers say

The departure of a controversial Medicaid management company should block a federal lawsuit against Iowa’s human-services director, state lawyers say.

The lawsuit was filed in June on behalf of six Iowans with disabilities, who argue that the state’s shift to private management of Medicaid led to illegal cuts to their in-home care services. The plaintiffs say without those services, they could be forced to move into nursing homes, violating their constitutional rights. The lawsuit is being spearheaded by the advocacy group Disability Rights Iowa, which has asked a federal judge to declare the suit a class-action case on behalf of about 15,000 Iowans with disabilities.

But lawyers from the Iowa attorney general’s office contend the ground crumbled from beneath the lawsuit last week, when the management firm AmeriHealth Caritas announced it would withdraw from Iowa’s Medicaid program because of a contract dispute. The state lawyers noted in a court filing last week that AmeriHealth oversees Medicaid benefits for all six initial plaintiffs in the Disability Rights Iowa lawsuit. None have had their benefits overseen by the remaining two managed-care companies, UnitedHealthcare and Amerigroup.

“There is no evidence in the record that the issues complained of by the plaintiffs relate to other managed care organizations,” the state lawyers wrote. “… A showing that unconstitutional practices have taken place in the past is not enough. Plaintiffs must show that such practices are likely to affect them in the future.” The state lawyers asked the judge to deny the plaintiffs' requests for an injunction and a class-action declaration.

Iowa shifted its $4 billion Medicaid program to private management last year. Supporters, including Gov. Kim Reynolds, say the shift is saving the state millions of dollars while leading to more efficient care for the approximately 600,000 poor or disabled Iowans who use the Medicaid program. Critics say the change has led to red tape and arbitrary cuts in services, especially for people with disabilities.

AmeriHealth has more than 200,000 Iowa clients, including the bulk of Iowa Medicaid members who have serious disabilities. They are to be shifted to UnitedHealthcare or Amerigroup at the end of this month. Disability Rights lawyers declined comment Monday on the state’s contention that AmeriHealth’s departure from the state should lead to dismissal of their lawsuit. They said they would respond in court by Nov. 15.

The Disability Rights Iowa lawsuit was originally filed against Reynolds and Charles Palmer, who was then director of the Iowa Department of Human Services. Lawyers for the group later changed the suit. Its sole named defendant is now Jerry Foxhoven, who succeeded Palmer as department director in June.

The plaintiffs want U.S. District Judge Rebecca Goodgame Ebinger to order Foxhoven to step in and change the way the managed-care companies handle services for Iowans with disabilities. The attorney general’s office, which represents Foxhoven, has asked the judge to dismiss the suit.

Goodgame Ebinger recently presided over a daylong hearing on the suit that at times became emotional.

Disability Rights Iowa called several witnesses to testify about the effects of cuts in services paid for by Medicaid. One of them was Melinda Fisher of Cedar Rapids, who has a severe form of multiple sclerosis. “I cannot do anything by myself. I can only lay in bed or sit in a chair,” said Fisher, who testified from her wheelchair.

Fisher, 62, said she needs extensive in-home assistance, because she can’t eat, bathe or go to the bathroom by herself. But AmeriHealth ordered her daily in-home aide hours cut to two hours, she testified. “I would be forced to go into a nursing home, because I can’t function on two hours a day,” she said.

The judge also heard testimony from Beth Wargo of West Des Moines, whose boyfriend, Neil Siegel, is one of the six plaintiffs in the lawsuit. Siegel, 54, suffered a brain injury when a car hit him as he bicycled in 2013. “He’s 100 percent dependent on care for everything he does,” Wargo testified.

Wargo said she brought Siegel home after he was abused in a care facility. Medicaid pays for in-home aides. “He’s safe. He’s happier. He’s better,” she said. “… He knows who’s around him. He knows where he is.”

As she testified, Siegel sat in his wheelchair in the back of the courtroom, being comforted by supporters. He moaned, grunted and cried out as Wargo recounted the cuts AmeriHealth had ordered in the amount of in-home care it would finance under Iowa’s Medicaid program.

Later in the hearing, Assistant Attorney General Gretchen Kraemer tried to cast doubt on Wargo’s contention that all the in-home services her boyfriend receives under Medicaid are crucial to his health. Kraemer called to the stand Rebecca Cox, who worked as an aide for Siegel. Cox testified that she was paid $19.45 per hour, and spent much of her time at the home handling general chores, including cleaning, doing laundry and making meals for both Siegel and Wargo.

Near the end of the hearing, Assistant Attorney General Anagha Dixit summed up the state’s contention that its Medicaid program can’t afford to finance every service people with disabilities could use at home. “That’s an ideal world,” she told the judge. “…It’s a difference in want vs. need.”

But Roxanne Conlin, a lawyer for the disabled plaintiffs, asked the judge to let the suit against the state move forward as a class action. "The law is being ignored, and we have no other way in the world to fix it," she said.

The judge said she would rule later on the case.