SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO
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1 SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO DATE: JUDGE: January 6, :00 a.m. HON. SHELLEYANNE W. L. CHANG DEPT. NO.: CLERK: 24 E. HIGGINBOTHAM CALIFORNIA DISABILITY SERVICES ASSOCIATION, a California Nonprofit Corporation; HOME OF GUIDING HANDS, a California Nonprofit Corporation; NORTHERN CALIFORNIA INALLIANCE, a California Nonprofit Corporation; PARENTS & FRIENDS, INC., A California Nonprofit Corporation; PROJECT INDEPENDENCE, a California Nonprofit Corporation; and SOCIAL VOCATIONAL SERVICES, INC., California Nonprofit Corporation; Petitioners and Plaintiffs, Case No.: v. NANCY BARGMANN, as Director of the California Department of Developmental Services; CALIFORNIA DEPARTMENT OF DEVELOPMENTAL SERVICES; and DOES 1 through 25, Inclusive; Respondents and Defendants. Nature of Proceedings: PETITION FOR WRIT OF MANDATE AND DAMAGES AND COMPLAINT FOR DECLARATORY RELIEF The following shall constitute the Court s tentative ruling on the above matter, set for hearing in Department 24, on Friday, January 6, 2017, at 10:00 a.m. The tentative ruling shall become the final ruling of the Court unless a party wishing to be heard so advises the clerk of this Department no later than 4:00 p.m. on the court day preceding the hearing, and further advises the clerk that such party has notified the other side of its intention to appear. Petitioners seek a writ of mandate directing Respondents to reimburse Petitioners for services provided between October 13, 2015 and December 1, 2015, at a rate that reflects the statutorily-mandated 5.82% rate increase, and other related relief. The Petition is GRANTED. I. BACKGROUND Petitioners are community-based nonprofit agencies that provide services to persons with disabilities, including in-home respite services, personal assistance services, and Page of 9
2 supported living services. Petitioner California Disability Services Association (CDSA) is a statewide trade association representing service providers for persons with intellectual and developmental disabilities. Respondent Department of Developmental Services (DDS) has jurisdiction over the execution of laws relating to the care, custody, and treatment of developmentally disabled persons. (Harbor Regional Center v. Office of Admin. Hearings (Harbor Regional Ctr.) (2012) 210 Cal.App.4 th 293, 306 [citing Welf. & Inst. Code, 4416].) DDS contracts with a statewide network of nonprofit corporations known as regional centers, which determine what services should be provided to developmentally disabled persons, and contract with vendors to provide these services. (Ibid. [citing Welf. & Inst. Code, 4620, 4630, 4648, 4651].) Regional centers reimburse vendors providing those services if a rate for payment of those services has been established by DDS. (Harbor Regional Center, supra, 210 Cal.App.4 th at pp ) DDS has rate-setting authority for residential services provided to developmentally disabled persons who reside in community living facilities, and nonresidential services provided to those who live at home. (Id. at p. 309 [citing Welf. & Inst. Code, 4680, 4690].) The material facts are largely undisputed. On October 1, 2013, the United States Department of Labor issued the Application of the Fair Labor Standards Act to Domestic Services; Home Care Final Rule, 78 Federal Register 60,454 (Final Rule). (Home Care Ass n of Am. v. Weil (D.D.C. 2015) 799 F.3d 1084, 1089.) The Final Rule amended domestic service employment regulations under the Fair Labor Standards Act, which regulations are contained at 29 Code of Federal Regulations Part 552. The effect of the Final Rule was to make the services at issue here subject to minimum wage and overtime protections of the Fair Labor Standards Act. Pertinent here, the Final Rule prompted the California Legislature to enact SB 856, adding sections (h) and (c) to the Welfare and Institutions Code, 1 authorizing a 5.82 % rate increase for personal assistance, supported living and in-home respite services. The Final Rule was the subject of much litigation. In December 2014, a federal district court issued an order vacating 29 C.R.R (governing application of minimum wage and overtime protections to domestic or companionship employees), and the Final Rule did not take effect as scheduled. (Home Care Ass n of Am. v. Weil (D.D.C. 2014) 76 F. Supp. 3d 138.) On August 21, 2015, the district court s judgment was reversed. (Home Care Ass n of Am. v. Weil (D.D.C. 2015) 79 F. Supp. 3d 123.) The opinion upholding the Final Rule became effective on October 13, 2015, when the Court of Appeals issued its mandate. (Respondent s Request for Judicial Notice, Exhs. 2-3.) DDS did not implement the rate increase mandated by Welfare and Institutions Code 1 Unless specified, all further statutory references shall be to the Welfare & Institutions Code. Page of 9
3 4691.6(h) and (c) until December 1, 2015 (rate increase). Petitioners contend that DDS issued a number of conflicting statements as to when it would actually implement the rate increase. Petitioners contend that DDS decided that it would not implement the rate increase until February (Declaration of Andrea Croom, 8.) When Petitioners learned of DDS decision, CDSA sent a letter to the Joint Legislative Budget Committee on November 12, 2015, demanding that the rate increase be applied immediately. (Petitioners Request for Judicial Notice (RJN), Exh. 8.) On November 24, 2015, California Senator Holly Mitchell wrote to DDS expressing her concerns that DDS did not plan to implement the rate increase until February (Petitioners RJN, Exh. 9.) One day later, on November 25, 2015, DDS issued a memorandum notifying providers that it would implement the rate increase beginning December 1, (Petitioners RJN, Exh. 10.) II. DISCUSSION a. Standard of Review Petitioners seek a writ of mandate pursuant to Code of Civil Procedure section The Court may issue a writ to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station... and correct abuses of discretion. (Code Civ. Proc., 1085(a); Mooney v. Garcia (2012) 207 Cal.App.4 th 229, , 235.) Petitioners must demonstrate that DDS has failed to perform a clear, present, and usually ministerial duty. (See Loder v. Municipal Ct. (1976) 17 Cal.3d 859, 863; Mooney v. Garcia, supra, 2017 Cal.App.4 th at p ) When the Court interprets statutes against a backdrop of undisputed facts, this presents a question of law, which the Court determines independently. (County of Colusa v. Douglas (2014) 227 Cal.App.4 th 1123, 1129.) b. Requests for Judicial Notice; Evidentiary Objections Petitioners and Respondents requests for judicial notice submitted in support of and in opposition to the Petition are granted. The Court rules on Petitioners objections to Respondents declaration of Jim Knight in support of Respondents Opposition Brief as follows: objections 1-5 are OVERRULED. c. Whether DDS Abused its Discretion i. Standing Respondents argue that some of the Petitioners lack standing to bring this action. The Court rejects this argument. Page of 9
4 Respondents argue that some Petitioners lack a beneficial interest as they did not provide the services in question. Respondents note that (1) CDSA is a trade association, and some of its members may not have standing to sue in their own right, as they may not provide the services in question, and that (2) Petitioner, Home of Guiding Hands, did not provide eligible services for the Fiscal-Year As an initial matter, it is undisputed that some of the Petitioners have provided the services at issue here and are beneficially interested in the rate increase, and have standing. Additionally, assuming that Respondent s contentions regarding CDSA and Home of Guiding Hands are true, these entities certainly have public interest standing. To meet the standing requirement for a petition for writ of mandate, a petitioner must show that he is beneficially interested in the outcome. As a general rule, a party must be beneficially interested to seek a writ of mandate. (Code Civ. Proc., 1086.) The requirement that a petitioner be beneficially interested has been interpreted to mean that one may obtain the writ only if the person has some special interest to be served or some particular right to be preserved or protected over and above the interest held in common with the public at large. (Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52 Cal.4 th 155, 165.) The beneficial interest must be direct and substantial. (Ibid.) Under the public interest exception to the standing requirement of beneficial interest, if the matter concerns a public right and the object of the mandamus petition is to procure the enforcement of a public duty, the petitioner does not need to show any legal or special interest. It is sufficient that he or she is interested as a citizen in having the laws executed and the duty in question enforced. (Save the Plastic Bag Coalition v. City of Manhattan Beach, supra, 52 Cal.4 th at p. 166; Rialto Citizens for Responsible Growth v. City of Rialto (2012) 208 Cal.App.4th 899, 913.) Public interest standing is permissible if the object of the mandamus is to procure the enforcement of a public duty, which Petitioners are attempting to do by having DDS implement the rate increase. (Board of Social Welfare v. County of Los Angeles (1945) 27 Cal.2d 98, ) Petitioners have alleged that they either provide services to persons with disabilities or represent providers of those services, which services are subject to reimbursement as determined by DDS. All Petitioners have an interest in seeing the proper and lawful administration of laws affecting persons with disabilities, and have public interest standing. 2 Petitioners assert upon reply that Home of Guiding Hands does provide the services at issue here. The Court concludes that whether or not Home of Guiding Hands provided eligible services for Fiscal Year , Home of Guiding Hands and the remaining Petitioners have standing to bring this Petition. Page of 9
5 ii. DDS Had a Mandatory Duty to Implement the Rate Increase The Lanterman Developmental Disabilities Services Act (Welf. & Inst. Code, 4500, et seq.) defines the rights of persons with developmental disabilities and establishes how services to those persons shall be delivered. The Court of Appeal in Harbor Regional Center discussed the Lanterman Developmental Disabilities Services Act and DDS role in effectuating the provision of services under that Act at length. The state has a responsibility for persons with developmental disabilities and an obligation to them which it must discharge. [Citation.] Given the complexities of providing services and supports to the developmentally disabled, [a]n array of services and supports should be established which is sufficiently complete to meet the needs and choices of each person with developmental disabilities. To the maximum extent feasible, services and supports should be available throughout the state to prevent the dislocation of persons with developmental disabilities from their home communities. (Harbor Regional Ctr., supra, 210 Cal.App.4 th 293, [citing Section 4501].) The Legislature has directed that services and supports be available so those with developmental disabilities can approximate the daily living patterns of the nondisabled. Those receiving services (or their parents or guardians) should be empowered to make choices in all life areas and should participate in decisions affecting their own lives, including where and with whom they live. (Harbor Regional Ctr., supra, 210 Cal.App.4 th at p. 306 [citing Section 4501]. The mere existence or delivery of services and supports is not enough to show that programs for the developmentally disabled are effective, the Legislature found. Instead, the Legislature intends that agencies serving such persons produce evidence that their services have resulted in empowerment and in more independent, productive, and normal lives for the persons served. (Id. at p. 306 [citing Section 4501].) DDS is the state agency charged with executing the laws related to the care, custody, and treatment of developmentally disabled persons in this state. (Welf. & Inst. Code, 4415; Harbor Regional Ctr., supra, 210 Cal.App.4 th at pp ) Whether DDS has a mandatory duty to implement the rate increase depends upon the interpretation of the statutes requiring the rate increase. In interpreting a statute, the court s primary task is to determine the Legislature's intent. The Court first examine the words used in the statute and give them a plain and commonsense meaning. If the language is clear and unambiguous, there is no need for construction or for resort to indicators of the Legislature's intent. (Harbor Regional Ctr., supra, 210 Cal.App.4 th at p. 310.) The existence of such mandatory duty is evident from the plain language of the statute itself. (See Mooney v. Garcia, supra, 207 Cal.App.4 th at p. 233 [whether a statute imposes a ministerial duty, for which mandamus will lie, or a mere obligation to perform a discretionary function is a question of statutory interpretation].) For each of the services Page of 9
6 at issue, the Legislature directs DDS to increase the reimbursement rate for the services at issue by 5.82%, commencing January 1, DDS duty is conditioned on (1) the Legislature s appropriation of funds for this increase, due to (2) changes in federal law governing overtime. (h) Notwithstanding any other law or regulation, commencing January 1, 2015, the in-home respite service agency rate schedule authorized by the department and in operation December 31, 2014, shall be increased by 5.82 percent, subject to funds specifically appropriated for this increase for costs due to changes in federal regulations implementing the federal Fair Labor Standards Act of 1938 (29 U.S.C. Sec. 201 et seq.). The increase shall be applied as a percentage, and the percentage shall be the same for all applicable providers. (Welf. & Inst. Code, (h).) (c) Notwithstanding any other law or regulation, commencing January 1, 2015, rates for personal assistance and supported living services in effect on December 31, 2014, shall be increased by 5.82 percent, subject to funds specifically appropriated for this increase for costs due to changes in federal regulations implementing the federal Fair Labor Standards Act of 1938 (29 U.S.C. Sec. 201 et seq.). The increase shall be applied as a percentage, and the percentage shall be the same for all applicable providers. As used in this subdivision, both of the following definitions shall apply: (1) "Personal assistance" is limited only to those services provided by vendors classified by the regional center as personal assistance providers, pursuant to the miscellaneous services provisions contained in Title 17 of the California Code of Regulations. (2) "Supported living services" are limited only to those services defined as supported living services in Title 17 of the California Code of Regulations. (Welf. & Inst. Code, (c).) There is no dispute that these conditions were met on October 13, The Legislature had appropriated funds for the rate increase, and Respondents concede that the federal Final Rule governing overtime became effective October 13, (Opposition Brief, p. 7:7.) Accordingly, by this date, DDS had a mandatory duty to implement the rate increase. Respondents argue that when it became impossible to comply with Sections (h) and (c) because of the federal district court s decision regarding the Final Rule, DDS s mandatory duty to implement the rate increase became discretionary. This argument is meritless. First, DDS cites no authority for this specific assertion, and the Court is aware of none. Additionally, the plain language of Sections (h) and (c) affords DDS no Page of 9
7 discretion in deciding when to implement the rate increase. Additionally, the Legislature was well-aware of the litigation surrounding the Final Rule and any administrative difficulties DDS might face in implementing the rate increase. It could have amended the statutes or drafted language to account for any delay in implementation. It did not. The Court presumes that the Legislature s failure to amend these statutes signifies that the Legislature did not intend for DDS to exercise its discretion about when to implement the rate increase, notwithstanding the Final Rule litigation. (See People v. Leahy (1994) 8 Cal.4 th 587, 604.) The Court also finds that the cases cited by DDS in support of its argument that DDS s duty changed from mandatory to discretionary are distinguishable. In Fox v. County of Fresno, the Court of Appeal held that a statute and related ordinances did not impose a mandatory duty on the county to implement nuisance abatement procedures. (Fox v. County of Fresno (1985) 170 Cal.App3d 1238, ) In Creason v. Department of Health Services, the Supreme Court held that the department had no mandatory duty in developing appropriate testing and reporting procedures for congenital hypothyroidism. (Creason v. Department of Health Services (1998) 18 Cal.4 th 623.) The Court recognizes that agencies are afforded discretion in implementing programs. However, a statutorilymandated rate increase is not a program, nor is it factually akin to an agency s determinations as to whether and how to abate a nuisance or test for a disease. As of October 13, 2015, DDS had a duty to implement the 5.82% rate increase for all providers of the services encompassed in Sections (h) and (c). Accordingly, Petitioners are entitled to a writ of mandate directing DDS to reimburse Petitioners for services detailed in Sections (h) and (c) at the rate reflected in those statutes, for such services provided by Petitioners between October 13, 2015 and December 1, Respondents argue that because DDS was unable to implement rate increases in the middle of the month, it could not have acted prior to November 1, Respondents also contend that DDS acted reasonably in implementing the rate increase because of the difficulty in making administrative changes to its reimbursement system. The Court is not persuaded. Respondents were on notice of the rate increase since June 2014, when SB 856 passed, and State was prepared to implement the 5.82% increase on January 1, (Petitioners RJN, Exh. 6.) DDS had ample time to implement the rate increase. The Petition is GRANTED. Petitioners also seek a declaratory judgment that DDS is required to reimburse providers of services in Sections (h) and (c) at a rate reflecting the 5.82% increase for services provided from October 13, 2015 to December 1, Petitioners request is GRANTED. Petitioners allege that there is an actual controversy as to the rights and obligations of the parties regarding the application of the rate increase. Declaratory relief may be sought to determine the construction of a statute if the parties are in fundamental disagreement over Page of 9
8 the construction of the statute or where they dispute whether the public entity has engaged in conduct or established policies in violation of applicable law. (Guinn v. County of San Bernardino (2010) 184 Cal.App.4 th 941, 951.) Additionally, declaratory relief is designed in large part as a practical means of resolving controversies so that parties can conform their conduct to the law and prevent future litigation. (Ibid.) Here, there was actual controversy over the meaning and application of Sections (h) and (c). Accordingly, declaratory relief is appropriate. iii. Damages Petitioners initially appeared to seek damages arising from the fact that providers did not receive reimbursement reflecting the 5.82% increase for services provided between October 13, 2015 and December 1, Petitioners estimated damages in the amount of $5,890, This amount is based on the annual amount budgeted by the Legislature for the rate increase ($43 million) prorated by period from October 13, 2015 to December 1, Petitioners contend that the prorated amount of damages ($5.89 million) is an appropriate measure of damages, as it reflects the amount that should have been paid to providers. Upon Reply, Petitioners appear to withdraw their request for incidental damages, claiming that the $5.89 million is only an estimate of monies that should have been reimbursed, and that they are seeking reimbursement, not damages in this amount. To the extent that Petitioners seek additional monetary compensation arising from DDS failure to reimburse for services provided between October 13, 2015 and December 1, 2015, this request is rejected. 3 d. Attorney s Fees Petitioners also seek an award of attorney s fees. The Court will consider such award upon a separate noticed motion. (Cal. Rules Ct., Rule ) III. DISPOSITION The Petition is GRANTED, in part. Petitioners are entitled to a writ of mandate directing DDS to reimburse providers of the services encompassed in Sections (h) and (c), at the rate reflected in those statutes, for services from October 13, 2015 to December 1, Petitioners are also entitled to a declaratory judgment that all providers of services set forth in Sections (h) and (c) are entitled to be 3 Monetary compensation beyond reimbursement, such compensation is damages. (Civ. Code 3281 [defining damages as compensation in money to any person who suffers injury from any act or omission of another].) Any claims for damages against a public entity, are subject to the Government Claims Act. (See Gov. Code, ) Under the Act, no suit for money or damages may be brought against a public entity until a written claim has been presented to that entity and the claim either has been acted upon or is deemed to have been rejected. (Id.) Petitioners do not so allege compliance with the Government Claims Act and to the extent that Petitioners request additional damages, the Court rejects the request. Page of 9
9 reimbursed at a rate reflecting the 5.82% increase for services provided from October 13, 2015 to December 1, To the extent that Petitioners seek any other relief, all other claims are denied. Counsel for Petitioners is directed to prepare a formal order and judgment. The order and judgment shall each incorporate this ruling as an exhibit thereto. The Court further directs Petitioners to prepare a separate writ of mandate. Petitioners shall submit the orders, judgment and writ to opposing counsel for approval as to form, and thereafter submit them to the Court for approval in accordance with the California Rules of Court, rule The writ of mandate shall be prepared for the signature of the Clerk of the Court. Respondent shall file a return to the writ within 60 days of this order. Page of 9
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