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NC Faces Potentially Massive Legal Settlement Over Housing for Mentally Ill

Negotiations with the US Department of Justice over North Carolina’s use of Adult Care Homes to house mental health patients are reaching a head after a year of negotiations. And the tab is likely to be large for the state.

By Rose Hoban

Close to a year of negotiations between the state Department of Health and Human Services and the US Department of Justice over North Carolina’s practice of housing people with mental health problems in adult care homes could mean the state is on the hook for tens, or even hundreds of millions of dollars.

DHHS General Counsel Emery Milliken and Secretary Al Delia listen to comments by lawmakers at Tuesday's Oversight Committee meeting

DHHS General Counsel Emery Milliken and Secretary Al Delia listen to comments by lawmakers at Tuesday's Oversight Committee meeting

State lawmakers attending a committee meeting Tuesday expressed dismay at the size of a possible settlement with the US DOJ that could “blow a hole in the budget we’ve developed,” according to Sen. Tommy Tucker (R-Waxhaw).

Department of Health and Human Services General Counsel Emery Milliken briefed lawmakers during the HHS Oversight committee meeting, telling them the US DOJ has instructed North Carolina to settle with them, or else face a lawsuit.

The situation dates back to 2010, when Disability Rights North Carolina wrote to the US Department of Justice, complaining about the state’s use of adult care homes to house thousands of people with mental health disabilities. Disability Rights alleged the state’s way of housing these mental health consumers was ‘biased’ towards putting people in institutions, such as adult care homes, rather than helping them move out into the community, as required by law.

“Right now what’s happening to those folks, is that they’re in a placement, where they’re getting no treatment, and there are no incentives to move them out,” said Vicki Smith, head of Disability Rights.

Federal officials investigated early last year and concluded in June, 2011 that North Carolina policies were in violation of the Americans with Disabilities Act. The DOJ also found that North Carolina had failed “to develop a sufficient quantity of community-based alternatives for individuals with mental illness.”

State officials have been negotiating with federal officials since.

“I was pretty optimistic about what I was hearing about moving forward,” Smith said about the discussion in Tuesday’s hearing.  “There is at least an acknowledgement that the pattern of practice needs to change.”

Smith’s organization has not been a part of the negotiations.

Chickens coming home to roost

Since 2000, at least three other reports by statewide organizations reached similar conclusions that adult care homes were the wrong places to house the mentally ill. But both former Gov. Mike Easley, and legislators in the General Assembly continued to delay action, and cut funds to be used to create more housing options for the mentally ill.

DHHS Secretary Al Delia (r) talks to Sen. Tommy Tucker after Tuesday's Oversight Committee Meeting (R-Waxhaw)

DHHS Secretary Al Delia (r) talks to Sen. Tommy Tucker after Tuesday's Oversight Committee Meeting (R-Waxhaw)

“Given other priorities and other pressures, I think the policy choice that was made was to continue to be able to fund residents in adult care homes,” said HHS Secretary Al Delia about the last decade of funding.

DHHS general counsel Emery Milliken told lawmakers that negotiations are reaching a conclusion.

“The expectation on part of the federal government is that there will be agreement reached with the state. and they have made it very clear, very emphatic, very unequivocal that should such an agreement fail to be reached, they will be filing a lawsuit in federal court,” Milliken told the committee.

“Negotiation is your last chance to control what happens to you. Once you are in front of a federal district court judge, you’ve lost that control to shape your own destiny,” Milliken advised.

Milliken and other HHS officials will be briefing lawmakers from the General Assembly this afternoon on terms of a proposed settlement.

At least ten other states have reached agreements with the Department of Justice over similar issues. One such state is Georgia, which reached an agreement in 2010 for a five year plan that, just this year, has Georgia spending $89.2 million to meet the requirements of the settlement.

“North Carolina has not been singled out, although it feels that way sometimes,” Millken said.

Some lawmakers expressed frustration that the problem with adult care homes had come to this conclusion.

“Would it be fair to say, based on this scenario, that we’ll no longer be able to sweep this issue under the rug and that North Carolina’s chickens have come home to roost?” Sen Tommy Tucker (R-Waxhaw) asked Milliken.

Many in the room laughed, but Milliken nodded and agreed with Tucker.

Still hurdles to overcome

One of the biggest challenges to reaching a settlement is likely to be the political situation in Raleigh.

“Are you able, as part of executive branch, to enter into a settlement agreement with the Department of Justice, and then come to the legislature and say, this is what you have to pay,” asked Senate President Pro Tempore Phil Berger. “Or is this something that you negotiate, and then you come and see if the legislature will fund it?”

Milliken explained that the executive and the legislative branches will have to work together to come to an agreement. She also said the Department of Justice expects a negotiated settlement should be reached during this legislative session, or else the government would probably sue.

Disability Rights NC head Vicki Smith

Disability Rights NC head Vicki Smith

“An end settlement… would necessarily require the involvement  and the approval of this body,” she responded, explaining that negotiators from the executive branch cannot obligate the General Assembly to pay without participation from the legislative branch.

And the settlement won’t be cheap, said Disability Rights’ Vicki Smith, but she maintained it will end up being cheaper in the long run. She estimated anywhere between 6,000 and 20,000 people with mental health issues would need to be accounted for in the agreement.

But Republicans in the legislature have repeatedly said they won’t be spending more.

“Given it’s likely this General Assembly is not going to raise revenue as part of the solution to fund this problem, are plans being developed on where cuts will take place to fund whatever the cost is of this settlement?” Berger asked.

HHS Secretary Delia deflected Berger’s question, asking him to defer judgment until after HHS officials meet with lawmakers today.

But Smith said that cutting other parts of Medicaid would trigger her organization getting involved in the settlement negotiations.

“If there was a sense to further discriminate against people with intellectual or developmental disabilities to pay for a DOJ settlement, not only would it be unacceptable from our point from view, I don’t think it would be acceptable from DOJ’s point of view,” Smith said. “It would just probably trigger more time in the state by the Department of Justice.”

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