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Landmark Settlement Reached in Medicaid Class Action Lawsuit Against Idaho Health and Welfare

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KELSEY HAWES
  • Kelsey Hawes
Following a nearly five-year legal battle, attorneys representing the Idaho Department of Health and Welfare and ACLU of Idaho have received preliminary court approval for a settlement that is expected to affect about 4,000 Idahoans with developmental disabilities. 

The settlement is one of the final chapters in the case of K.W. v. Armstrong—"K.W." is a Idaho male with severe epilepsy and "Armstrong" is Idaho Department of Health and Welfare Director Dick Armstrong.

The lawsuit challenged policies and procedures that IDHW had applied to thousands of participants in its Adult Developmental Disability Services. The suit came in the wake of a 2012 announcement that indicated the department would reduce Medicaid reimbursement rates for supported living and residential rehabilitation provider agencies.

In effect, thousands of Idahoans with developmental disabilities saw massive cuts to their service levels, their attorneys argued. When asked to justify the cuts, IDHW officials declined, saying their reasoning constituted "trade secrets."

Ultimately, a federal court judge restored nearly $30 million in Medicaid assistance to the program and the Ninth Circuit Court of Appeals upheld the ruling. More important, Idaho Chief U.S. Judge B. Lynn Winmill earlier this year struck down IDHW's formula altogether, concluding it was unconstitutional in that it "arbitrarily deprived participants of their property rights and hence violated due process."

Some details of the class action settlement were announced Oct. 24, including an overhaul of IDHW's model for setting service levels, and new training and reimbursements for advocates who help the disabled with any possible appeal to their assistance levels.

"We're pleased to see a new era on the horizon for Idahoans with developmental disabilities," said ACLU of Idaho Executive Director Leo Morales. "Hopefully this settlement will bolster the voice of these Idahoans, while also permanently protecting their constitutional rights."

All of the parties are expected back in court on Jan. 12, 2017 to finalize the settlement agreement.