FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
THE ARC OF WASHINGTON STATE
INC., a Washington Corporation on
behalf of its members; GUADALUPE
E. CANO, by and through her
guardian Delia C. Cano; OLIVIA
MURGUIA, by and through her
guardian Teri L. Hewett; LORIANNE
V. LUDWIGSON, by and through her
guardians Donald and Sheryl
Ludwigson,
Plaintiffs-Appellants,
v. No. 03-35605
D.C. No.
DENNIS BRADDOCK, in his official
capacity as the Secretary of the CV-99-05577-FDB
Washington Department of Social ORDER AND
and Health Services;* DEPARTMENT OPINION
OF SOCIAL & HEALTH SERVICES
STATE OF WASHINGTON; FINANCIAL
MANAGEMENT OFFICE OF THE
STATE OF WASHINGTON; MARTY
BROWN, in his official capacity as
Director of the Washington Office
of Financial Management;
TIMOTHY R. BROWN, in his official
capacity as the Director of the
Washington State Division of
Developmental Disabilities;
*Dennis Braddock is substituted for his predecessor, Lyle Quasim, as
Secretary of the Washington Department of Social and Health Services.
Fed. R. App. P. 43(c)(2).
14111
14112 ARC OF WASHINGTON v. BRADDOCK
DEVELOPMENTAL DISABILITIES
DIVISION; CHRISTINE GREGOIRE,** in
her capacity as Governor of the
State of Washington,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Washington
Franklin D. Burgess, District Judge, Presiding
Argued October 4, 2004
Submitted March 29, 2005
Seattle, Washington
Filed October 14, 2005
Before: Alex Kozinski, Ferdinand F. Fernandez, and
Richard R. Clifton, Circuit Judges.
Opinion by Judge Kozinski;
Concurrence by Judge Fernandez
**Christine Gregoire is substituted for her predecessor, Gary Locke, as
Governor of the State of Washington. Fed. R. App. P. 43(c)(2).
14116 ARC OF WASHINGTON v. BRADDOCK
COUNSEL
Susan Delanty Jones, Preston Gates & Ellis LLP, and Larry
A. Jones and Christine Thompson Ibrahim, Seattle, Washing-
ton, for the plaintiffs-appellants.
Rob McKenna, Attorney General, and William M. Van Hook
and Edward J. Dee, Assistant Attorneys General, Olympia,
Washington, for the defendants-appellees.
ORDER
The petition for rehearing is GRANTED. The petition for
rehearing en banc is DENIED as moot. The opinion filed
March 29, 2005, and reported at 403 F.3d 641, is withdrawn,
and is replaced by the Opinion and concurrence, 03-35605.
Further petitions for rehearing and rehearing en banc will be
accepted. See Fed. R. App. P. 35; Fed. R. App. P. 40.
OPINION
KOZINSKI, Circuit Judge:
We navigate once again the murky waters between two
statutory bodies: Medicaid and the Americans with Disabili-
ties Act (ADA). Specifically, we examine whether a state vio-
lates the ADA when it limits the number of people that can
participate in a Medicaid waiver program providing disabled
persons with alternatives to institutionalization.
Facts
Medicaid is a program under which the federal government
provides financial assistance to participating states to help
them furnish care to low-income persons. If a state chooses to
ARC OF WASHINGTON v. BRADDOCK 14117
participate—which all fifty do—it must submit a plan for
approval by the federal regulators. See Children’s Hosp. &
Health Ctr. v. Belshe, 188 F.3d 1090, 1093 (9th Cir. 1999).
Washington State Department of Social and Health Ser-
vices (the Department) devised a plan which provided for two
types of services to certain Medicaid-eligible developmentally
disabled individuals. First, it funded Intermediate Care Facili-
ties for the Mentally Retarded (ICF/MR), which are generally
large public institutions made available to any person who
meets the eligibility requirements for admission. See 42
U.S.C. § 1396d(a)(15), (d). In addition, the plan used some
ICF/MR funds to support smaller, privately operated resi-
dences that serve between six and forty individuals each. Sec-
ond, in an effort to offer alternatives to institutionalization,
the Department sought and received a waiver of certain ICF/
MR rules. See id. § 1396n(c)(1); 42 C.F.R. § 441.300. That
waiver program is known as the Home and Community-Based
Services waiver (HCBS).1 HCBS provides a variety of nonin-
stitutional care options for qualified persons, enabling them to
remain more integrated in the community than if they were
institutionalized.
Central to the question presented to us is the limitation on
HCBS services to a particular number of individuals—9,977
when this action was filed. Such a cap is expressly contem-
plated by the Medicaid waiver provisions, see 42 U.S.C.
§ 1396n(c)(9), (10); 42 C.F.R. § 441.303(f)(6), and there is no
indication that Washington is failing to use all of its allocated
slots. The Arc of Washington State, Inc., and three develop-
mentally disabled individuals (collectively the Arc), complain
1
Since this lawsuit was initiated, the HCBS program has been replaced
by four new Medicaid waiver programs. Because of the similarities
between the HCBS program and the new programs, we will refer to the
HCBS program in the present tense. In a separate memorandum disposi-
tion, we reject the Department’s argument that these programmatic
changes have rendered the case moot.
14118 ARC OF WASHINGTON v. BRADDOCK
that because the program is full, eligible individuals must
await openings before they can be enrolled. The Arc asserts
that Title II of the ADA, Pub. L. No. 101-336, § 202, 104
Stat. 327, 337 (codified at 42 U.S.C. § 12132), prevents
Washington from maintaining any fixed HCBS cap. Instead,
it argues, the state must make the HCBS waiver program
available to every developmentally disabled person who could
qualify for an ICF/MR setting, but who prefers HCBS. The
district court disagreed, and granted partial summary judg-
ment against the Arc.2
Discussion
[1] 1. As an alternative to institutionalized care for the
disabled, the Medicaid statute and regulations allow states to
apply for waiver programs for home and community-based
care. However, Congress envisioned such programs as limited
in scope, and therefore included the following language in 42
U.S.C. § 1396n(c), the waiver portion of the statute:
(9) In the case of any waiver under this subsection
which contains a limit on the number of individuals
who shall receive home or community-based ser-
vices, the State may substitute additional individuals
to receive such services to replace any individuals
who die or become ineligible for services under the
State plan.
(10) The Secretary shall not limit to fewer than
200 the number of individuals in the State who may
receive home and community-based services under a
waiver under this subsection.
The regulations implementing the statute go farther, requiring
2
The Arc also appeals the decertification of its class, and the dismissal
of its action against the Department and others. We dispose of those
claims in a separate memorandum disposition.
ARC OF WASHINGTON v. BRADDOCK 14119
states to place a limit on the number of waiver program par-
ticipants, and requiring states to adhere to the limitation:
The State must indicate the number of unduplicated
beneficiaries to which it intends to provide waiver
services in each year of its program. This number
will constitute a limit on the size of the waiver pro-
gram unless the State requests and the Secretary
approves a greater number of waiver participants in
a waiver amendment.
42 C.F.R. § 441.303(f)(6).
[2] Approaching the problem from the opposite direction,
the ADA provides that “no qualified individual with a disabil-
ity shall, by reason of such disability, be excluded from par-
ticipation in or be denied the benefits of the services,
programs, or activities of a public entity, or be subjected to
discrimination by any such entity.” 42 U.S.C. § 12132. The
regulations that flesh out that provision state: “A public entity
shall administer services, programs, and activities in the most
integrated setting appropriate to the needs of qualified indi-
viduals with disabilities.” 28 C.F.R. § 35.130(d).
[3] We have previously described the ADA as containing
an “integration mandate.” See Townsend v. Quasim, 328 F.3d
511, 515-18 (9th Cir. 2003). Under this mandate, states are
required to provide care in integrated environments for as
many disabled persons as is reasonably feasible, so long as
such an environment is appropriate to their mental-health
needs. See id.; see also Olmstead v. L.C. ex rel. Zimring, 527
U.S. 581, 592, 600-01 (1999). This requirement serves one of
the principal purposes of Title II of the ADA: ending the iso-
lation and segregation of disabled persons. See 42 U.S.C.
§ 12132; 28 C.F.R. § 35.130(d). In order to comply with the
integration mandate, states are required to make “reasonable
modifications in policies, practices, or procedures” that are
14120 ARC OF WASHINGTON v. BRADDOCK
“necessary to avoid discrimination on the basis of disability.”
Id. § 35.130(b)(7).
[4] The integration mandate has its own limitations. In
administering services, programs and activities, a state is not
required to make “modifications [that] would fundamentally
alter the nature of the service, program, or activity.” Id. The
Supreme Court has instructed courts to be sympathetic to fun-
damental alteration defenses, and to give states “leeway” in
administering services for the disabled. Olmstead, 527 U.S. at
605; see Townsend, 328 F.3d at 520. Despite the integration
mandate, therefore, we have held that we normally “will not
tinker with” comprehensive, effective state programs for pro-
viding care to the disabled. See Sanchez v. Johnson, 416 F.3d
1051, 1067-68 (9th Cir. 2005).
[5] 2. The Arc’s claim is that Washington’s HCBS pro-
gram is too small to accommodate the state’s population of
eligible participants. According to the Arc, Washington must
request federal authorization for an increase in the size of its
HCBS waiver program. Whether the state may be required to
seek such an increase depends on whether this would be a
“reasonable modification” (which is required) or a “funda-
mental alteration” (which is not).
[6] The Supreme Court has addressed this distinction in the
specific context of Medicaid waiver programs for the dis-
abled. In Olmstead v. L.C. ex rel. Zimring, the Court recog-
nized that “[t]he State’s responsibility, once it provides
community-based treatment to qualified persons with disabili-
ties, is not boundless.” 527 U.S. at 603.3 Although the “unjus-
3
“We have held that, while ‘[t]he section of Justice Ginsburg’s opinion
discussing the state’s fundamental alteration defense commanded only
four votes . . . [b]ecause it relied on narrower grounds than did Justice Ste-
vens’ concurrence or Justice Kennedy’s concurrence, both of which
reached the same result, Justice Ginsburg’s opinion controls.’ ” Sanchez,
416 F.3d at 1064 n.7 (quoting Townsend, 328 F.3d at 519 n.3) (alterations
in original).
ARC OF WASHINGTON v. BRADDOCK 14121
tified isolation” of disabled persons in institutions would
violate the ADA, the Court recognized certain state justifica-
tions that would defeat an ADA-based challenge, for example
“the States’ need to maintain a range of facilities for the care
and treatment of persons with diverse mental disabilities, and
the States’ obligation to administer services with an even
hand.” Id. at 597. Further, a state could avoid having to mod-
ify its waiver program if it “were to demonstrate that it had
a comprehensive, effectively working plan for placing quali-
fied persons with mental disabilities in less restrictive set-
tings, and a waiting list that moved at a reasonable pace.” Id.
at 605-06.
The Supreme Court in Olmstead did not consider whether
a forced change in the waiver program’s cap would constitute
a fundamental alteration, because the state’s program in that
case was far from full. See id. at 601. The modifications
requested by the plaintiffs could therefore be implemented
without requiring the state to request a higher program cap.
Thus, the case was remanded for consideration of the appro-
priate relief in light of the state’s reasons for refusing to
implement the modifications. See id. at 587.
We have also twice explored the boundary between “rea-
sonable modifications” and “fundamental alterations” in the
context of Medicaid waiver programs for the disabled. In
Townsend v. Quasim, we held that a state could not maintain
a waiver program that provided integrated care only for those
disabled persons falling below a certain income level (the
“categorically needy”), while forcing disabled persons with a
higher income level (the “medically needy”) to remain institu-
tionalized. See 328 F.3d at 520. The state’s program, we said,
which “explicitly provid[ed] only nursing-home based long
term care services to the medically needy, may be read to
facially discriminate against disabled persons.” Id. at 518 n.2.
Elimination of this facial discrimination, we determined, was
a reasonable modification that the ADA compelled the state
to undertake, unless the state could demonstrate that the rem-
14122 ARC OF WASHINGTON v. BRADDOCK
edy would constitute a fundamental alteration. See id. at 520.
One basis for finding a “fundamental alteration” would have
been for the state to demonstrate that the remedy would force
it “to apply for additional Medicaid waivers in order to pro-
vide community-based services to medically needy disabled
persons.” Id. at 519. Based on the record before us in Town-
send, however, it was impossible to determine whether
including the medically needy in the waiver program would
force the state to undertake a fundamental alteration—such as
requesting an increase in the program’s cap. We thus
remanded the case for further factual development. See id. at
520.
In Sanchez v. Johnson, it was the size of the waiver pro-
gram itself that the plaintiffs wanted modified, not the method
for determining eligibility. See 416 F.3d at 1063.4 We rejected
the claim outright, finding the state “already ha[d] in place an
acceptable plan for deinstitutionalization, the disruption of
which would involve a fundamental alteration of the State’s
current policies and practices in contravention of the Supreme
Court’s instructions in Olmstead.” Id. at 1063, 1067. In partic-
ular, we noted that the state’s “commitment to the deinstitu-
tionalization of those [disabled persons] for whom community
integration is desirable, achievable and unopposed, is genuine,
comprehensive and reasonable.” Id. at 1067. The record pro-
vided ample support for our holding: The state had repeatedly
applied for an increase in the size of the waiver program, state
expenditures for integrated community-based treatment had
consistently increased over the prior decade, and the state’s
institutionalized population had decreased by twenty percent
over the prior four years. See id. With such a program in
place, we held, the ADA did not impose a requirement that
the state quicken the pace of deinstitutionalization by expand-
ing the program.
4
The plaintiffs in Sanchez did not request an increase in the waiver pro-
gram’s cap. See id. at 1065. Instead, they requested an additional $1.4 bil-
lion in funding for developmentally disabled services. See id. at 1063.
ARC OF WASHINGTON v. BRADDOCK 14123
[7] In sum, our approach has been consistent with the
Supreme Court’s instructions: So long as states are genuinely
and effectively in the process of deinstitutionalizing disabled
persons “with an even hand,” we will not interfere. See Olm-
stead, 527 U.S. at 605-06. The state program at issue in San-
chez passed this test. The program was successfully integrat-
ing disabled persons into the community, and—once space
opened up—was available to every disabled person capable of
profiting from deinstitutionalized care. The mere existence of
a cap on the waiver program’s funding did not violate the
ADA. The Townsend program, however, failed the test
because the state there categorically refused—at any pace—to
integrate an entire segment of disabled persons into
community-based care programs. Only disabled persons
whose income qualified them as “categorically needy” were
eligible to enter the waiver program. See Townsend, 328 F.3d
at 514. The “medically needy” were forced to either remain
in institutionalized care forever or receive no care at all,
regardless of their mental-health needs.
[8] 3. Here, as in Sanchez, it is the waiver program’s size
itself that is under attack. Plaintiffs acknowledge that the
state’s HCBS program is capped at 9,977 disabled persons,
and the program is operating at capacity. Yet they argue the
program is not large enough. Thus, as in Sanchez, we must
determine whether the state’s HCBS program is “an accept-
able plan for deinstitutionalization, the disruption of which
would involve a fundamental alteration.” Sanchez, 416 F.3d
at 1063. And, as in Sanchez, the record in this case already
contains all we need to make this determination. There is thus
no need for further factual development as there was in Town-
send.
[9] The record reflects that Washington’s commitment to
deinstitutionalization is as “genuine, comprehensive and rea-
sonable” as the state’s commitment in Sanchez. Id. at 1067.
Washington’s HCBS program is substantial in size, providing
integrated care to nearly 10,000 Medicaid-eligible disabled
14124 ARC OF WASHINGTON v. BRADDOCK
persons in the state. See Decl. of Timothy Brown ¶ 5. The
waiver program is full, and there is a waiting list that admits
new participants when slots open up. See Dist. Court Order,
Nov. 17, 2000; cf. Olmstead, 527 U.S. at 605-06. Unlike in
Townsend, all Medicaid-eligible disabled persons will have an
opportunity to participate in the program once space becomes
available, based solely on their mental-health needs and posi-
tion on the waiting list.
Further, the size of Washington’s HCBS program increased
at the state’s request from 1,227 slots in 1983, to 7,597 slots
in 1997, to 9,977 slots beginning in 1998. Decl. of Susan E.
Poltl ¶ 7. The annual state budget for community-based dis-
ability programs such as HCBS more than doubled from $167
million in fiscal year 1994, to $350 million in fiscal year
2001, despite significant cutbacks or minimal budget growth
for many state agencies. See Decl. of Timothy Brown ¶ 7.
During the same period, the budget for institutional programs
remained constant, while the institutionalized population
declined by 20%. See id. Today, the statewide institutional-
ized population is less than 1,000.
[10] The Department’s Division of Developmental Disabil-
ities (DDD) has also seen its biennial budget grow steadily
from $750 million in 1995 to over $1 billion in 1999, making
it one of the fastest growing budgets within the Department.
See id. at ¶¶ 8-9. Family support services, given to families of
DDD clients living at home, have grown even faster, benefit-
ting from a 250% budget growth over five years. See id.
There is thus no indication that the state is neglecting its
responsibilities to the HCBS program relative to other pro-
grams.
[11] Washington’s commitment to deinstitutionalization in
this case appears as genuine as California’s commitment in
Sanchez. As we noted in Sanchez:
[W]hen there is evidence that a State has in place a
comprehensive deinstitutionalization scheme, which,
ARC OF WASHINGTON v. BRADDOCK 14125
in light of existing budgetary constraints and the
competing demands of other services that the State
provides, including the maintenance of institutional
care facilities, see Olmstead, 527 U.S. at 597, is “ef-
fectively working,” id. at 605, the courts will not tin-
ker with that scheme. Olmstead does not require the
immediate, state-wide deinstitutionalization of all
eligible developmentally disabled persons, nor that a
State’s plan be always and in all cases successful. Id.
at 606 (“It is reasonable for the State to ask someone
to wait until a community placement is available.”)
....
Sanchez, 416 F.3d at 1067-68. We see no cause for tinkering
with Washington’s HCBS program.
[12] 4. We do not hold that the forced expansion of a
state’s Medicaid waiver program can never be a reasonable
modification required by the ADA. What we do hold is that,
in this case, Washington has demonstrated it has a “compre-
hensive, effectively working plan,” Olmstead, 527 U.S. at
605, and that its commitment to deinstitutionalization is “gen-
uine, comprehensive and reasonable,” Sanchez, 416 F.3d at
1067. Washington’s HCBS program (1) is sizeable, with a cap
that has increased substantially over the past two decades; (2)
is full; (3) is available to all Medicaid-eligible disabled per-
sons as slots become available, based only on their mental-
health needs and position on the waiting list; (4) has already
significantly reduced the size of the state’s institutionalized
population; and (5) has experienced budget growth in line
with, or exceeding, other state agencies. Under such circum-
stances, forcing the state to apply for an increase in its Medic-
aid waiver program cap constitutes a fundamental alteration,
and is not required by the ADA.
* * *
14126 ARC OF WASHINGTON v. BRADDOCK
AFFIRMED on the issue discussed in this opinion.5 The
parties shall bear their own costs on appeal.
FERNANDEZ, Circuit Judge, concurring:
I do not generally disagree with the majority opinion, but
I continue to be of the opinion that the ADA must yield to the
specific cap provision discussed in the opinion. For that rea-
son, I incorporate here the opinion in The Arc of Washington
State Inc. v. Braddock, 403 F.3d 641 (9th Cir. 2005), which
is now mine alone. I believe that it says quite enough to prop-
erly resolve this case without placing a higher burden upon
the states than the law requires and without being unduly
obscurant.
Thus, I concur.
5
We reverse and remand on certain issues in this case, which are consid-
ered in a separate memorandum disposition.