Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 1 of 30 PageID #:503 EXHIBIT A

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1 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 1 of 30 PageID #:503 EXHIBIT A

2 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 2 of 30 PageID #:504 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION ALMA KOSS, et al., ) ) No. 17 CV 2762 Plaintiffs, ) ) v. ) Judge Gottschall ) FELICIA NORWOOD and JAMES DIMAS, ) ) Magistrate Judge Kim Defendants. ) DEFENDANTS MEMORANDUM IN SUPPORT OF THEIR MOTION TO RECONSIDER THE ORDER ON PLAINTIFFS MOTION FOR PRELIMINARY INJUNCTION Defendants Felicia Norwood, Director of the Illinois Department of Healthcare and Family Services, and James Dimas, Secretary of the Illinois Department of Human Services, by and through their attorney, Lisa Madigan, Attorney General of the State of Illinois, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, respectfully request that this Court reconsider its order on Plaintiffs motion for preliminary injunction. INTRODUCTION On March 29, 2018, this Court entered an order ( the Order ) granting in part Plaintiffs motion for preliminary injunction. ECF No. 56. Specifically, the Order requires Defendants to: Id. at p. 43. (a) determine, on or before June 28, 2018, the eligibility of Class Members for the longterm care Medicaid benefits for which they have applied; (b) implement policies and processes to ensure that the Defendants prospectively comply with the Medicaid Act s deadlines for eligibility determination found in 42 U.S.C. 1396a(a)(8) and 42 C.F.R ; (c) beginning June 28, 2018, pay the long-term care and other Medicaid benefits to (or for the benefit of) Class Members while their applications remain pending beyond the Medicaid Act s deadlines for eligibility determination.

3 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 3 of 30 PageID #:505 Moreover, the Order prospectively requires Defendants to presume that applicants for long-term care Medicaid benefits be presumptively eligible after the expiration of the deadlines to decide their applications set forth in governing federal regulations. Id. at p. 2, citing 42 C.F.R Defendants have carefully reviewed this Court s order and have concluded that: (1) compliance with paragraph (c) will necessarily violate the Eleventh Amendment and the Medicaid Act; (2) the balance of harms weighs in favor of Defendants; and (3) the injunction does not serve the public interest. Thus, for the reasons stated below, Defendants respectfully request that this Court reconsider its order on Plaintiffs motion for preliminary injunction. LEGAL STANDARD Motions to reconsider interlocutory orders are governed by Federal Rule of Civil Procedure 54(b). Saccameno v. Ocwen Loan Servicing, LLC, 2018 WL , at *2 (N.D. Ill. March 9, 2018). Rule 54(b) provides that any order that does not resolve all claims as to all parties may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties rights and liabilities. Patrick v. City of Chicago, 103 F.Supp.3d 907, 911 (N.D. Ill. Apr. 23, 2015), quoting Fed. R. Civ. P. 54(b); see also Galvan v. Norberg, 678 F.3d 581, 587 (7th Cir. 2012) ( Rule 54(b) governs non-final orders and permits revision at any time prior to the entry of judgment, thereby bestowing sweeping authority upon the district court to reconsider [interlocutory orders]. ). While it is true that motions for reconsideration are generally disfavored, they are appropriate where: (1) the court has misunderstood a party; (2) the court has made a decision outside the adversarial issues presented; (3) the court has made an error of apprehension; (4) a significant change in the law has occurred; or (5) significant new facts have been discovered. Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Page 2 of 18

4 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 4 of 30 PageID #:506 Cir. 1990); In re Abbott Depakote Shareholder Derivative Litigation, 2013 WL , at *1 (N.D. Ill. Sept. 12, 2013). ARGUMENT I. COMPLIANCE WITH THE ORDER WILL VIOLATE THE ELEVENTH AMENDMENT Pursuant to this Court s order, Defendants are required to presume that applicants for long-term care Medicaid benefits be presumptively eligible after the expiration of the deadlines to decide their applications set forth in governing federal regulations. ECF No. 56 at p. 2. Beginning June 28, 2018, Defendants are also required to pay the long-term care and other Medicaid benefits to (or for the benefit of) Class Members while their applications remain pending beyond the Medicaid Act s deadlines for eligibility determination. Id. at p. 43. This relief runs afoul of the Eleventh Amendment. Suits against state officials in their official capacity are generally barred by the Eleventh Amendment. MSA Realty Corp. v. State of Ill., 990 F.2d 288, 291 (7th Cir. 1993). The doctrine of Ex parte Young provides an exception for suits brought against a state official in his or her official capacity for prospective injunctive or declaratory relief. Id., citing Ex parte Young, 209 U.S. 123 (1908)). However, Ex parte Young cannot be used to obtain an injunction requiring the payment of funds from the State s treasury...or an order for specific performance of a State s contract... Virginia Office for Protection & Advocacy v. Stewart, 563 U.S. 247, 257 (2011) (internal quotations omitted); see also MSA Realty Corp., 990 F.2d at 294 ( Even after Ex parte Young was decided in 1908, the Supreme Court has never approved a lower court order requiring officials of a state to take actions that constitute performance by a state of obligations that are the state s in its political capacity. ); Zych v. Wrecked Vessel Believed to be the Lady Elgin, 960 F.2d 665, 669 (7th Cir. 1992) ( Edelman holds that courts may command public officials to obey the Page 3 of 18

5 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 5 of 30 PageID #:507 Constitution and federal statutes as they carry out their duties in the future but may not direct them to invade the state treasury to make good for past misdeeds. ). By ordering Defendants to pay the long-term care and other Medicaid benefits to (or for the benefit of) Class Members while their applicants remain pending beyond the Medicaid Act s deadlines for eligibility determination, ECF No. 56 at p. 43, this Court s order exceeds the Ex parte Young exception to the State of Illinois Eleventh Amendment immunity by explicitly requiring the payment of funds from the State s treasury. Edelman v. Jordan, 415 U.S. 651 (1974); Quern v. Jordan, 440 U.S. 332 (1979); McDonough Associates, Inc. v. Grunloh, 722 F.3d 1043 (7th Cir. 2013). Edelman is particularly relevant here. The Edelman Plaintiffs, like Plaintiffs here, alleged that state officials were noncompliant with federal time limits for the payment of welfare benefits. The lower courts approved entry of an injunction requiring the State to retroactively release and pay benefits to satisfy the State s debt. 415 U.S. at But labeling the remedy as equitable restitution did not change the essential character of the award: a very substantial amount of money had to come out of the state treasury. Id. at 664. The same is true with respect to the remedy fashioned by this Court, made all the more compelling by the fact that the federal claim which actually sought the payment has been dismissed. Likewise, in McDonough, the Plaintiff characterized the relief sought against the Illinois Department of Transportation as purely prospective, the processing of paperwork similar to the situation here, the processing of Medicaid applications. Yet the Court held that the real relief behind the processing was a payment of money: Here the relief sought, processing of paperwork, was tantamount to signing a check made out to Plaintiff, as all parties and the district court understood. Such relief clearly violates Edelman and thus cannot be saved by reliance on Ex parte Young. Casting this relief in terms of the act of signing as opposed to the act Page 4 of 18

6 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 6 of 30 PageID #:508 of paying does not make the payment, though second in time, ancillary. 722 F.3d at Further, as explained below, the relief granted here conflicts with Ex Parte Young to the extent this Court s order actually requires Defendants to act in violation of the Medicaid Act. II. THE ORDER REQUIRES THE DEFENDANTS TO ACT IN VIOLATION OF THE MEDICAID ACT A. By strictly misapplying the timeliness standards for the determination of Medicaid eligibility generally, as outlined in 42 C.F.R , to eligibility determinations for long-term care services, the Order requires Defendants to disregard and violate other provisions of the Medicaid Act. [B]eginning June 28, 2018, [Defendants must] pay the long-term care and other Medicaid benefits to (or for the benefit of) Class Members while their applications remain pending beyond the Medicaid Act s deadlines for eligibility determination. ECF No. 56 at p. 43. While the Medicaid Act itself does not provide any timeframes for eligibility decisions longterm care or otherwise the Order appears to apply the timeliness standards for the determination of Medicaid eligibility generally, as outlined in the federal regulations found in 42 C.F.R , to the determination of eligibility for long-term care services. These regulatory timelines neither supplant the more general concept of reasonable promptness of medical assistance to eligible individuals, nor are they realistically applicable to determinations related to long-term care services and therefore are not properly analyzed under or held to the time periods set forth in 42 C.F.R By strictly misapplying these general eligibility timeliness standards to long-term care eligibility determinations, the Order fails to account for what may be reasonably prompt in the context of applying for long-term care services and effectively requires Defendants to disregard the extensive requirements of the Medicaid Act that govern the provision of long-term care services. This will invariably require payment for services to individuals who have not been found eligible within the meaning of the Medicaid Act. Page 5 of 18

7 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 7 of 30 PageID #:509 The Medicaid Act requires that the State of Illinois provide services available under its state plan to all individuals who apply for and are determined eligible to participate in the Medicaid program generally. See 42 U.S.C. 1396a(a)(8). Specifically, 42 U.S.C. 1396a(a)(8) states as follows: [The State plan must] provide that all individuals wishing to make application for medical assistance under the plan shall have opportunity to do so, and that such assistance shall be furnished with reasonable promptness to all eligible individuals[.] Under this statutory provision, reasonable promptness is the measure by which a state must provide medical assistance to eligible individuals and is completely separate from the requirement that the state provide the opportunity to apply for such assistance. The statutory distinction between the opportunity to make application for medical assistance under the plan and furnishing medical assistance to eligible individuals with reasonable promptness is an important one. To the extent the issue in this case is what reasonable promptness means when long-term care services are being sought as medical assistance, the statute does not establish a timeframe for determining eligibility for such services/assistance or for the provision of the same. Indeed, the standards that govern applications for Medicaid eligibility generally are incompatible with the requirements for determining eligibility for long-term care services. To begin, before an individual can found eligible for long-term care benefits, they must initially be found eligible to participate in the Medicaid program generally based on an application to the program. See 42 U.S.C The federal rules which themselves do not create enforceable rights establish timeliness standards for these initial, general applications for Medicaid. See 42 C.F.R These rules provide that the time spent determining Medicaid eligibility may not exceed ninety days for applicants who apply for Medicaid based on disability and forty-five Page 6 of 18

8 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 8 of 30 PageID #:510 days for all other applicants. 42 C.F.R (c)(3)(i) and (ii). The basis for an applicant s Medicaid eligibility is membership in one of several categories of covered groups as enumerated in Subparts B, C, and D of Part 435. While disabled is a term used to define various coverage groups (see 42 C.F.R , , ), there is no such thing as a long-term care eligibility group under federal law. Rather, long-term care is a service (or benefit), not an eligibility group. See 42 C.F.R. Part 440; see also, e.g., 42 C.F.R Because long-term care is not a basis for Medicaid eligibility, the timeliness provisions of 42 C.F.R (c) are inapplicable to the determination of eligibility for long-term care services. Thus, even assuming, arguendo, that 42 U.S.C. 1396a(a)(8) creates an enforceable right to have long-term care services provided to eligible individuals with reasonable promptness, taken out of their proper context, the timeliness standards for the determination of Medicaid eligibility generally are not an appropriate proxy for reasonable promptness in the context of long-term care services because any such right is a concept separate and apart from the initial determination of whether an applicant is eligible for Medicaid generally. Long-term care services, in particular, have been treated differently by Congress due to concerns that individuals seeking long-term care benefits may attempt to deplete or shelter their assets, to the benefit of their heirs, in order to obtain long-term care benefits under Medicaid. See Hobbs v. Zenderman, 542 F.Supp.2d 1220, 1231 (D.N.M. March 31, 2008) (Congress had the perception that wealthy people who could afford to pay for their own medical care had been sheltering income in trusts in order to qualify for Medicaid); Gillmore v. Department of Human Services, 218 Ill.2d 302, 306 (2006) (Congress enacted statutory provisions to ensure that persons who could pay for their own care did not receive assistance); Allen v. Wessman, 542 N.W.2d 748, (N.D. 1996) (against public policy to allow the social safety net to be Page 7 of 18

9 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 9 of 30 PageID #:511 exploited by those who are affluent). Congress did not intend for the Medicaid program to be used as an estate planning tool, and the program would be in financial jeopardy if individuals were permitted to preserve assets for their heirs while simultaneously receiving Medicaid benefits from the state. Id.; see also Gillmore, 218 Ill.2d at 325. As a result, the Medicaid Act treats long-term care as a concept separate and apart from that of Medicaid eligibility generally, and federal law requires states to perform specific asset-related inquiries in order to determine and individual s eligibility for long-term care services. See, e.g., 42 U.S.C. 1396p(c)-(f) (restricting Medicaid financial eligibility for long-term care based on inquiry into transfers of assets in the 5 years prior to seeking long-term care services, sheltering assets in trusts, sheltering funds in annuities, and sheltering money in their home s equity), 42 U.S.C.1396r-5 (restricting Medicaid financial eligibility in long-term care situations where an institutionalized spouse is receiving long-term care). Clearly, eligibility for long-term care services is a separate concept under federal law and states are required to undertake additional and separate eligibility reviews of individuals seeking long-term care services who may otherwise be eligible for Medicaid. See 42 U.S.C. 1396a(a) (50), 1396a(q), 1396d(f), 1396r; 42 C.F.R (f), , , For example, pursuant to 42 U.S.C. 1396a(a)(18), the state plan must comply with 42 U.S.C. 1396p(c)(1)(A). Under Section 1396p(c)(1), if an institutionalized individual or spouse of the individual disposes of their assets for less than fair market value during a look-back period established by the statute, that individual is ineligible for long-term care services for a statutory penalty period based on the value of the assets transferred. 42 U.S.C. 1396p(c)(1)(A). For nursing home residents, the statutory look-back period is generally thirty-six months before an individual applies for Medicaid. 42 U.S.C. 1396p(c)(B)(i), (ii)(i). However, in the case of Page 8 of 18

10 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 10 of 30 PageID #:512 payments from a trust or portions of a trust that are treated as assets disposed of by the individual, the look-back period is sixty months. 42 U.S.C. 1396p(c)(B)(i). Again, separate and apart from Medicaid eligibility generally, this provision of federal law requires that states, in determining an applicant s eligibility for long-term care services, perform an additional analysis of the applicant s assets when the applicant is seeking (1) nursing facility services, (2) a level of care in any institution equivalent to a nursing facility, or (3) home or community-based services furnished under a waiver granted under 42 U.S.C. 1396n(c) USC 1396p(c)(1)(C). In short, Congress requires states to perform specific asset-related inquiries, like those mandated by 42 U.S.C. 1396p, with respect to the transfer of certain assets and the treatment of certain trusts in order to prevent fraud and abuse. Supra; see also 42 U.S.C. 1396a(a)(18). In addition to the provisions of 42 U.S.C. 1396p, federal law contains additional provisions that require special treatment vis-à-vis income and resources of spouses who are institutionalized. 42 U.S.C. 1396r-5. These provisions for reviewing spousal income and resources supersede all other provisions of the statute. 42 U.S.C. 1396r-5(a)(1). A cursory review of these provisions clearly shows that significant additional inquiry must be undertaken in cases where eligibility issues related to long-term care services exist. These additional inquiries are clearly not contemplated by the timeliness standards applicable to the determination of Medicaid eligibility generally, and a strict application of those standards to the determination of eligibility for long-term care services is not reasonable within the meaning of 42 U.S.C. 1396a(a)(8). Thus, while the forty-five and ninety day timeliness standards set forth in 42 C.F.R are applicable to determinations on Medicaid applications seeking general eligibility as a member of a covered group (such as the disabled and other groups listed in 42 C.F.R. Part B), 1 Supportive Living Facilities are provided pursuant to such a waiver. See Page 9 of 18

11 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 11 of 30 PageID #:513 those standards are inapplicable to these separate financial inquiries that must be performed pursuant to federal law for individuals seeking long-term care services. As such, it is impractical and unreasonable to apply the forty-five and ninety day timeliness standards in 42 C.F.R to long-term care applications. For these reasons, this Court s order also violates federal law insofar as it aims to enforce an unenforceable federal regulation, specifically 42 C.F.R (c)(3). As argued above, because long-term care is not a basis for Medicaid eligibility, the timeliness provisions of 42 C.F.R (c)(3) are inapplicable to the separate functional reviews and financial inquiries that must be done pursuant to federal law for individuals seeking long-term care services. Moreover, by ordering Defendants to presume eligibility for any applicant seeking long-term care services who, as of June 28, 2018, has not received an eligibility determination within fortyfive or ninety days, this Court has attempted to create a bright-line deadline that must without exception be met. In doing so, this Court appears to have adopted Plaintiffs argument that the timeliness standards for eligibility determinations outlined in 42 C.F.R (c)(3) are, by definition, the outer limits of what constitutes reasonable promptness under 1396a(a)(8). However, 42 C.F.R (e) explicitly allows for the possibility that the State may not be able to determine eligibility within the specified time periods because, for example, of delays occasioned by the applicant. As such, this Court s order legitimizes Defendants concerns that applicants will have an incentive to file incomplete applications, leave out documents, drag their feet on document requests, and otherwise game the system, relying on the certainty that they will start to receive medical benefits in forty-five or ninety days. ECF No. 56 at p. 41. While this Court explained that the relief fashioned in its order was designed to avoid dragging it into the day-to-day administration of the State s Medicaid program, and while the public may Page 10 of 18

12 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 12 of 30 PageID #:514 have an interest in ensuring that Medicaid-eligible individuals promptly receive necessary medical services, the harm caused by this Court s order will be significant. To the extent the Order currently utilizes an improper timeliness standard that will require the Defendants to pay for long-term care services on behalf of individuals who have not been found eligible under federal law for long-term care services, the remedy here requires Defendants to violate federal law and must be reconsidered. B. Federal law recognizes presumptive eligibility only pursuant to specific statutory provisions and does not permit presumptive eligibility for individuals seeking long-term care services. The Medicaid Act only recognizes presumptive eligibility in expressly limited circumstances. See 42 U.S.C. 1396a(a)(47). Under the terms of 42 U.S.C. 1396a(a)(47)(A) and (B), federal law only permits application of presumptive eligibility in five categories: pregnant women, 42 U.S.C. 1396r-1; children, 42 U.S.C. 1396r-1a; certain breast cancer or cervical cancer patients, 42 U.S.C. 1396r-1b; family planning services, 42 U.S.C. 1396r-1c; and certain hospital services, 42 U.S.C. 1396a(a)(47)(B). In other words, Congress expressly limited the use of presumptive eligibility to specific providers, for specific beneficiaries, and for specified circumstances to the exclusion of others. Thus, by ordering Defendants to presume that applicants for long-term care Medicaid benefits be presumptively eligible after the expiration of the deadlines to decide their applications set forth in governing federal regulations, ECF No. 56 at p. 2, this Court s order goes far beyond bringing Defendants into prospective compliance with federal law. Instead, the order forces Defendants to act in violation of federal law by: (1) creating a category of presumptive eligibility that is not recognized under federal law Page 11 of 18

13 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 13 of 30 PageID #:515 and (2) obligating Defendants to provide Medicaid benefits in the form of payments to providers on behalf individuals whose eligibility has not been determined in compliance with federal law. 2 As described below, because presumptive eligibility is not recognized by federal law with respect to long-term care services, the costs to the State will likely be significant and the State risks the loss of federal matching funding for the disbursement of long-term care services to those who are deemed automatically presumptively eligible as of June 28, 2018, per the Court s order. For this reason, Defendants respectfully request that this Court reconsider its order on Plaintiffs motion for preliminary injunction. To the extent an evidentiary hearing may be appropriate, Defendants request the opportunity as they did in their response to Plaintiffs motion for preliminary injunction to conduct discovery in advance of an evidentiary hearing on Plaintiffs motion. 3 ECF No. 28 at p. 17. III. PLAINTIFFS FAILED TO MEET THEIR BURDEN TO ESTABLISH THE ELEMENTS REQUIRED FOR THE INUNCTION TO ISSUE The issuance of a mandatory preliminary injunction is an extraordinary remedy that should only be granted in cases in which the moving party has established the following: (1) a likelihood of success on the merits; (2) that they will suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities is in their favor; and (4) that the granting of the 2 While this Court found that the Seventh Circuit s decision in Smith v. Miller, 665 F.2d 172 (7th Cir. 1981) created a precedent for approving the use of presumptive eligibility in a statewide class, it should be noted that unlike the case at bar, that decision rested on a far different factual and legal situation, which included an explicit preexisting recognition by the Department of Health, Education, and Welfare that such a remedy was appropriate in certain situations. The present case does not involve a simple prior authorization process arguably committed to the State s discretion. Here, there are statutory limitations on presumptive eligibility and other federal requirements that the Defendants are being required to violate or ignore in order to comply with the remedy mandated by the Preliminary Injunction. Further, to the extent the remedy affirmatively requires payments to providers on behalf of individuals who have not been found eligible for long-term care services, the relief ordered in the Preliminary Injunction exceeds the relief affirmed by Smith v. Miller, and the type of prospective injunctive relief contemplated by Ex Parte Young, to the extent it requires the Defendants to act in a manner that is not in compliance with federal law. 3 On page 7 of its order, this Court erroneously stated that [t]he parties have agreed to forego a preliminary injunction hearing and submit the motion for a decision on the papers. ECF No. 56 at p. 7. Page 12 of 18

14 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 14 of 30 PageID #:516 injunction serves the public interest. Winter v. National Resources Defense Council, Inc., 555 U.S. 7, 20 (2008). A. The Balance of Harms Weighs in Favor of Defendants When the full effect of the Court s ruling and injunction are considered, especially in light of the issues addressed above, the balance of harms clearly weighs in favor of Defendants, and this Court should reconsider its ruling and order on Plaintiffs motion for preliminary injunction. As previously discussed, the requirements under federal law for reviewing long-term care applications are separate and apart from those that govern applications for Medicaid eligibility generally. This is largely due to concerns of waste, fraud and the improper transfer of assets to one s heirs in order to meet asset and income requirements for long-term care assistance. In contrast to a typical application for general Medicaid eligibility, when determining an applicant s eligibility for long-term care benefits, States must comply with 42 U.S.C. 1396p(c)-(f) (restricting Medicaid financial eligibility for long-term care based on inquiry into to transfers of assets) and 42 U.S.C. 1396r-5 (determining Medicaid financial eligibility in long-term care situations involving institutionalized spouses), among other provisions. There are also federal regulations that likewise require the States to conduct financial inquiries when reviewing applications for long-term care services, including 42 CFR (f) and 42 CFR Further, states must follow federal law regarding the financial methodologies for computing the financial resources the individual must pay towards the cost of his or her long-term care. See 42 U.S.C. 1396a(a)(50), 1396a(q); 42 C.F.R , As applied to this case, based on the data currently available, during calendar year 2017, Defendants received, on average, 5,946 long-term care applications (both individual applications Page 13 of 18

15 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 15 of 30 PageID #:517 and Admission Request packets submitted by nursing facilities) 4 each month, each of which require an extensive manual review to ensure eligibility is appropriately evaluated. Exhibit A, affidavit of Willie Rochelle Haywood, at 22, 23. This review often includes requests for additional financial information and requires a manual review of all pertinent records by Defendants staff. In the event the Court does not reconsider its order, the vast majority of the applicants will be deemed eligible for long-term care benefits and payment will follow, prior to the completion of the eligibility process. This includes hundreds of individuals whose applications are currently under review by the Department of Healthcare and Family Services Office of the Inspector General ( HFS OIG ) for potential fraud or improper disposal of assets. Id. at 15, 21. It also includes those who are later found not to be eligible, or who must first spend down certain assets or fulfill a penalty period, receiving near-immediate long-term care benefits when they should not. The figures are not insignificant: for the period of January 1 through April 11, 2018, of the 13,212 applications (again, individual applications and Admission Request packets combined) processed, 2,380 were denied or rejected. Id. at 25. While some of the denied applications may ultimately be approved through administrative procedures available to applicants, there is a significant risk that a substantial number of these applications are for individuals who are simply ineligible for long-term care services at all. An additional 3,184 were approved for benefits at a later date once spend-down requirements were met or after expiration of an applicable penalty period, essentially postponing eligibility for those individuals. Id. As nursing facility costs average between $122 and $154 per person per day, millions of dollars in state funds will be spent on otherwise ineligible or premature costs, with little likelihood of 4 For purposes of this argument, Defendants reference to applications includes both individual applications and Admission Request packets submitted by nursing facilities. Detail on each separate category is referenced in Ms. Haywood s affidavit. See Exhibit A. Page 14 of 18

16 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 16 of 30 PageID #:518 recovery. Exhibit B, affidavit of Michael P. Casey, at 5, 6. The current data further indicates that there are over 1,500 applications that are identified as currently under review by the HFS OIG for improper disposal of assets. Id. at 21. These HFS OIG reviews are rarely resolved within the time frame imposed by the Court, as such a review requires extensive examination of the applicant s financial history and many such reviews conclude with either a penalty period or spend-down being required prior to the provision of long-term care benefits. It must be emphasized that in cases where the applications are ultimately denied after being deemed eligible under this Court s order, the State will have paid out funds that it cannot recoup from either the federal Medicaid program or the individual applicant. As noted above, there is also a risk to federal matching funds for applications approved in the manner required by the Order (i.e., presumptive eligibility for long-term care services). Exhibit C, affidavit of Teresa T. Hursey, at 9. The end result of this injunction could cost the State hundreds of millions of dollars, clearly tipping the balance of harms in Defendants favor. Ex. B at 5. If that were not enough, compliance with the Order within the mandated timeframe is virtually impossible. As of April 2, 2018, there were 17,477 applications and Admission Request packets for long-term care services that had been pending for more than forty-five days, less the approximately 5,500 that are subject to automatic review. 5 That means there are nearly 12,000 applicants whose personal, medical, and financial histories must, consistent with the requirements of the Medicaid Act, be reviewed before a proper eligibility determination may be made. Thus, in order to avoid non-compliance with the Order while also complying with federal law to prevent the loss of federal funding, Defendants would have to render 133 eligibility determinations per day (including weekends) between March 29, 2018 the date of the entry of 5 This number is an approximation, as some of the pending Admission Request packets may be for individuals who also have a pending individual application for long-term care services. Page 15 of 18

17 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 17 of 30 PageID #:519 the Order and June 27, 2018 the last day of the compliance period. This does not even take into account the annual eligibility re-determinations these same staff must perform for each and every individual currently receiving long-term care benefits. Without a re-determination on an annual basis, any long-term care services billed for these individuals would be rejected. Given the legal requirements that must be met when reviewing applications for long-term care services, it is simply not possible for Defendants to meet those requirements and comply with the Order due to the sheer number of applications that fall within the Order s scope. To be absolutely clear, this is not an attempt to avoid compliance with the Order; Defendants take seriously their obligation to comply with the Order. There is simply a practical limit to what Defendants can do given the State s limited human and financial resources. B. The Injunction Does Not Serve the Public Interest For the same reasons identified under the balancing of harms, the injunction does not serve the public interest. There is little risk that individuals will be evicted from a nursing home due to any delay in an application or Admission Request, as there are clear Federal and State requirements that such a facility must go through prior to discharging an individual for nonpayment. See 42 USC 1396r(c)(2); The Nursing Home Care Act, 210 ILCS 45/1-101, et seq., Nursing facilities, while understandably not pleased with any payment delay, are made whole once the individual is approved for long-term care services, as payments are retroactive to the date of the application. Likewise, individual applications, once approved, are done so retroactively to the application date. So, while the vast majority of individuals will not have their care adversely affected by the processing time, in the event this injunction stands, the State will likely be forced to spend hundreds of millions of dollars to pay for services for individuals who may ultimately be determined to not be eligible for any services at all. Moreover, if Defendants Page 16 of 18

18 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 18 of 30 PageID #:520 are required to extend presumptive eligibility to long-term care applications and Admission Requests, the massive expenditure required will seriously risk diverting significant funds from vital programs and services, and will be magnified by the potential loss of federal matching funds, neither of which serves the public interest. CONCLUSION For the reasons argued above, Defendants respectfully request that this Court reconsider its order on Plaintiffs motion for preliminary injunction. LISA MADIGAN Attorney General of the State of Illinois By: /s/ Brian F. Kolp BRIAN F. KOLP Assistant Attorney General General Law Bureau, Civil Rights Unit Office of the Illinois Attorney General 100 West Randolph Street, 13 th Floor Chicago, Illinois (T) (F) Page 17 of 18

19 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 19 of 30 PageID #:521 CERTIFICATE OF SERVICE I hereby certify that I have caused true and correct copies of the above and foregoing Defendants Motion to Reconsider the Order on Plaintiffs Motion for Preliminary Injunction to be served upon all parties of record via ECF on XX-XX, /s/ Brian F. Kolp BRIAN F. KOLP Assistant Attorney General Page 18 of 18

20 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 20 of 30 PageID #:522 EXHIBIT A

21 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 21 of 30 PageID #:523

22 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 22 of 30 PageID #:524

23 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 23 of 30 PageID #:525

24 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 24 of 30 PageID #:526

25 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 25 of 30 PageID #:527 EXHIBIT B

26 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 26 of 30 PageID #:528

27 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 27 of 30 PageID #:529

28 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 28 of 30 PageID #:530 EXHIBIT C

29 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 29 of 30 PageID #:531

30 Case: 1:17-cv Document #: 63-1 Filed: 04/30/18 Page 30 of 30 PageID #:532