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North Carolina Services for People with Disabilities at Heart of Class-Action Settlement

February 27, 2015

Five families settled a class-action suit against North Carolina’s Department of Health & Human Services and Piedmont Behavioral Health (now Cardinal Innovations Healthcare Solutions) originally filed in 2011.

The managed care organization had implemented a new version of the state’s “Innovations Waiver” - a Medicaid Waiver serving people with intellectual and developmental disabilities. The changes established 31 tiers of services (including services to support employment) each with their own budgetary limit. The tier assignment process, which resulted in substantial service cuts for a number of waiver recipients, was conducted without the benefit of any appeal or due process procedure that would allow the recipient to challenge their assignment. A judge issued a preliminary injunction in 2012 to restore services to their earlier level for all those affected. The plaintiffs agreed to a settlement in December 2014, but there will be a hearing in April 2015 to allow input from others who would be affected by the settlement. The court will then consider whether or not to approve the settlement. Advocates following the lawsuit hope it will prevent managed care organizations from setting arbitrary spending caps for whole groups of beneficiaries or budget limits based on cost ratings in the future. The families are represented by Disability Rights North Carolina, Legal Services of Southern Piedmont, and the National Health Law Program.

K.C. v. Cansler and PBH (U.S. District Court for the Eastern District of NC Case # 11-cv-0354-FL)