G. v. Hawaii, Department of Human Services (676 F. Supp. 2d 1046, 2009)

ORDER (1) GRANTING IN PART AND DENYING IN PART THE STATE DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT, AND THE JOINDERS THEREIN, AS TO COUNTS VI, VII, VIII, AND IX, (2) GRANTING THE STATE DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT, AND THE JOINDERS THEREIN, REGARDING THE LICENSE QUESTION, AND (3) DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT ON LICENSURE AND SOLVENCY

ALAN C. KAY, Senior District Judge.

PROCEDURAL HISTORY

I. Prior Proceedings

On December 8, 2008, in Civil No. 08-00551 ACK-BMK,. Plaintiffs filed a complaint against Defendants the State of Hawaii, Department of Human Services (“State DHS”), and Lillian B. Koller, in her official capacity as the Director of the State DHS (collectively, “State Defendants”). At that point, the Plaintiffs were comprised of Medicaid beneficiaries who were part of the aged, blind, and disabled (“ABD”) population (“ABD Plaintiffs”). Their principal allegation is that the State Defendants have violated certain provisions of Title XIX of the Social Security Act, commonly known as the Medicaid Act, 42 U.S.C. § 1396 et seq., by requiring ABD beneficiaries to enroll with one of two healthcare entities as a condition of receiving Medicaid benefits in connection with the agency’s managed care program for ABD beneficiaries, the QUEST Expanded Access (“QExA”) Program.

Those two entities were the only ones awarded contracts to provide the care for ABD beneficiaries under the QExA Program (“QExA Contracts”). They are WellCare Health Insurance of Arizona, Inc. d/b/a Ohana Health Plan (“WellCare of Arizona”) and United Healthcare Insurance Company d/b/a Evercare (“Ever-care”) (collectively, “QExA Contractors”), and they have intervened in this matter.

On January 30, 2009, in Civil No. 09-00044 ACK-BMK, Plaintiffs filed a complaint against the United States Department of Health and Human Services (“Federal DHHS”) and the Secretary of the Federal DHHS (“Secretary”) (collectively, “Federal Defendants”). On February 4, 2009, Plaintiffs filed a first amended complaint against the Federal Defendants. “At the federal level, Congress has entrusted the Secretary of [the Federal DHHS] with administering Medicaid, and the Secretary, in turn, exercises that delegated authority through the [Centers for Medicare and Medicaid Services (‘CMS’)].” Wong v. Door, 571 F.3d 247, 250 (2d Cir.2009). Plaintiffs contend that the CMS acted arbitrarily and capriciously by granting a waiver of the “freedom of choice” provision, 42 U.S.C. § 1396a(a)(23), for the QExA Program pursuant to 42 U.S.C. § 1315(a), and by thereafter approving the QExA Contracts.

On February 19, 2009, Civil Nos. 08-00551 and 09-00044 were consolidated. This is the third case brought in this Court challenging the QExA Program. See AlohaCare v. Hawaii, Dep’t of Human Servs., 567 F.Supp.2d 1238 (D.Haw.2008), aff'd, 572 F.3d 740 (9th Cir.2009) (upholding the district court’s decision that a disappointed bidder for a QExA Contract did not have statutory standing to enforce certain provisions of the Medicaid Act); Hawaii Coalition for Health v. Hawaii, Dep’t of Human Servs., 576 F.Supp.2d 1114 (D.Haw.2008) (dismissing a health advocacy organization’s complaint because, among other things, the organization did not have statutory standing to enforce certain provisions of the Medicaid Act).

On May 11, 2009, the Court entered an order granting in part and denying in part a motion to dismiss filed by the State Defendants and joinders therein. See G. v. Hawaii, Dep’t of Human Servs., Civ. Nos. 08-00551 ACK-BMK & 09-00044 ACK-BMK, 2009 WL 1322354, 2009 U.S. Dist. LEXIS 39851 (D.Haw. May 11, 2009). The Court thereafter granted Plaintiffs leave to amend their complaints in certain respects. They subsequently filed a first amended complaint against the State Defendants and a second amended complaint against the Federal Defendants.

On June 2, 2009, Plaintiffs filed a motion for a preliminary injunction against the Federal Defendants. On August 7, 2009, Plaintiffs filed a motion for a temporary restraining order against the Federal Defendants. On August 10, 2009, Plaintiffs filed a motion for a temporary restraining order and a preliminary injunction against the State Defendants. The Court denied Plaintiffs’ motions for temporary restraining orders. Plaintiffs subsequently withdrew their motions for preliminary injunctions.

With leave of Court, on August 31, 2009, Plaintiffs filed a second amended sixty-seven-page complaint against the State Defendants (“State Second Amended Complaint”) and, on September 1, 2009, they filed a third amended fifty-eight-page complaint against the Federal Defendants. Those complaints added claims on behalf of certain Medicaid healthcare providers (“Provider Plaintiffs”) and new ABD beneficiaries. The Provider Plaintiffs are physicians, pharmacists, and ancillary care providers who accepted ABD beneficiaries as patients and clients under the prior fee-, for-service program and who have provided care and services.to ABD beneficiaries under the QExA Program. The State Second Amended Complaint asserts the following nine counts: (I) deprivation of rights under federal law and 42 U.S.C. § 1983; (II) violations of preemptive federal law by virtue of the Supremacy Clause; (III) further specific violations of preemptive federal law and regulations; (IV) insufficient assurances of solvency and evidence of poor performance in other states; (V) insufficient range of services and provider networks; (VI) violation of the Americans with Disabilities Act (“ADA”); (VII) violation of the Rehabilitation Act of 1973; (VIII) violation of 42 U.S.C. § 1396a(a)(30)(A) and 42 C.F.R. § 447.204; and (IX) unlawful taking.

On September 8, 2009, the Federal Defendants filed the administrative record (“AR”), which is roughly 5,200 pages in length. At Plaintiffs’ request, the administrative record includes documents from 2004 onwards. 7/18/09 Transcript of Proceedings (“Tr.”) 28:3-22. Plaintiffs did not ask for any documents that were created prior to 2004. Id.

II. Motions for Summary Judgment in the Action Against the State Defendants

Presently before the Court are three motions for summary judgment in the action against the State Defendants.

A. The State Defendants’ Multicount Motion for Summary Judgment

On October 23, 2009, the State Defendants filed a motion for summary judgment as to Counts VI, VII, VIII, and IX of the State Second Amended Complaint (“St. Defs.’ Multi-count MSJ” or “State Defendants’ multi-count motion for summary judgment”). The motion was accompanied by a memorandum in support (“St. Defs.’ Multi-count MSJ Mem.”) and a concise statement of facts (“St. Defs.’ Multi-count MSJ CSF”). On October 26, 2009, Well-Care of Arizona filed a joinder in the motion. On November 3, 2009, Evercare filed a joinder in the motion.

On November 25, 2009, Plaintiffs filed an opposition (“Pis.’ Opp’n to St. Defs.’ Multi-count MSJ”) and a concise statement of facts (“Pis.’ Opp’n to St. Defs.’ Multicount MSJ CSF”). The same day, they filed an errata to their opposition. On November 29, 2009, Plaintiffs filed an errata to their concise statement of facts (“Pis.’ Errata to their Opp’n to St. Defs.’ Multicount MSJ CSF”).

On December 3, 2009, the State Defendants filed a reply (“St. Defs.’ Multi-count MSJ Reply”). On December 7, 2009, Well-care of Arizona filed a joinder in the reply.

On December 10, 2009, 2009 WL 4798144, Plaintiffs filed a declaration of counsel.

On December 11, 2009, Evercare filed a joinder in the State Defendants’ reply.

B. The State Defendants’ Licensure Motion for Summary Judgment

On November 13, 2009, the State Defendants filed a motion for summary judgment on the issue of whether the QExA Contractors are properly licensed to qualify as managed care organizations under the Medicaid Act (“St. Defs.’ Licensure MSJ” or “State Defendants’ licensure motion for summary judgment”). The motion was filed along with a memorandum in support (“St. Defs.’ Licensure MSJ Mem.”) and a concise statement of facts (“St. Defs.’ Licensure MSJ CSF”). The licensure issue is raised in Counts I through IV of the State Second Amended Complaint. On November 13, 2009, Ever-care and WellCare of Arizona filed joinders in the motion.

Plaintiffs did not file an opposition to the motion, apparently because they previously filed a cross-motion, which is discussed in the following subsection. However, on November 25, 2009, Plaintiffs did file an opposition to the State Defendants’ motion for a stay (“Pis.’ Opp’n to St. Defs.’ Mot. for a Stay”), despite the fact that the motion for a stay was withdrawn by the State Defendants on November 13, 2009.

The State Defendants construed certain arguments in Plaintiffs’ opposition to the withdrawn motion for a stay as opposing their licensure motion for summary judgment. Therefore, on December 2, 2009, the State Defendants filed a reply in support of their licensure motion for summary judgment to address those contentions (“St. Defs.’ Licensure MSJ Reply”). The same day, Evercare and WellCare of Arizona filed joinders in the State Defendants’ reply.

C. Plaintiffs’ Solvency Motion for Summary Judgment

On November 17, 2009, Plaintiffs filed a motion for summary judgment on issues pertaining to the QExA Contractors’ licensure and solvency (“Pis.’ Solvency MSJ” or “Plaintiffs’ solvency motion for summary judgment”), along with a memorandum in support (“Pis.’ Solvency MSJ Mem.”) and a concise statement of facts (“Pis.’ Solvency MSJ CSF”). This motion is, to a certain extent, a cross-motion to the State Defendants licensure motion for summary judgment.

On December 1, 2009, the State Defendants filed an opposition to the motion (“St. Defs.’ Opp’n to Pis.’ Solvency MSJ”) and a concise statement of facts (“St. Defs.’ Opp’n to Pis.’ Solvency MSJ CSF”). The same day, they filed an errata to their concise statement of facts. In addition, Evercare filed a substantive joinder in the opposition (“Evercare’s Substantive Joinder in St. Defs.’ Opp’n”), and WellCare of Arizona filed a joinder in the State Defendants’ opposition and Evercare’s substantive joinder.

On December 7, 2009, Plaintiffs filed a reply. On December 9, 2009, Plaintiffs filed a declaration of counsel.

D. Hearing

On December 14, 2009, the Court held a hearing on the motions for summary judgment in the action against the State Defendants.

FACTUAL BACKGROUND

I. The Medicaid Act

The Medicaid Act “provides federal funding to ‘enabl[e] each State, as far as practicable ... to furnish ... medical assistance on behalf of families with dependent children and of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.’ ” AlohaCare, 572 F.3d at 742 (quoting 42 U.S.C. § 1396-1) (brackets in original). The Medicaid program is “a jointly financed federal-state program that is administered by the States in accordance with federal guidelines.” Id. Each state that elects to participate in the program must submit a plan to the CMS. 42 U.S.C. §§ 1396, 1396a. If the plan is approved, the state is entitled to Medicaid funds from the federal government for a percentage of the money spent by the state in providing covered medical care to eligible individuals. Id. § 1396b (a)(1).

“The Act, among other things, outlines detailed requirements for [state] plan eligibility, [42 U.S.C.] § 1396a, erects a complex scheme for allocating and receiving federal funds, id. § 1396b, and imposes detailed requirements on States that wish to delegate the provision of health care services through contracts with managed care organizations (‘MCOs’), id. § 1396u~ 2.” AlohaCare, 572 F.3d at 742-43. “Medicaid generally requires a State to conform with federal guidelines prior to receiving federal funds; however, under 42 U.S.C. § 1315, CMS may waive compliance for certain ‘experimental, pilot, or demonstration project[s].’ ” Id. at 743 (quoting 42 U.S.C. § 1315(a)) (brackets in original).

II. The QExA Program

Pursuant to 42 U.S.C. § 1315, in July of 1993, the CMS granted a waiver of various provisions of the Medicaid Act to the State of Hawai’i to allow the state to conduct a demonstration project that would transform its fee-for-service Medicaid program into a managed care model for most Medicaid beneficiaries. AR 49. The demonstration project, called Hawaii Health QUEST (“QUEST Program”), excluded ABD beneficiaries. Id. at 49-50. ABD beneficiaries instead continued to receive benefits on a fee-for-service basis. Id. at 22.

In a fee-for-service system, the traditional framework for state Medicaid programs, the state contracts directly with and pays healthcare providers, such as physicians, hospitals, and clinics, for services they provide to Medicaid beneficiaries. G., 2009 WL 1322354, at *2, 2009 U.S. Dist. LEXIS 39851, at *6. By contrast, under a managed care model, the state contracts with MCOs, which assume the responsibility of providing Medicaid services through their own employees or by contracting with independent providers of such services. Id. at *2, 2009 U.S. Dist. LEXIS 39851 at *6-*7. The state pays each MCO on a capitated or fixed-amount-per-enrollee basis. Id.

In February of 1997, the State DHS submitted a waiver application to the CMS so that it could mandatorily enroll portions of the ABD populations into its managed care demonstration project, the QUEST Program, but the request was subsequently withdrawn. Fed. Defs.’ Mem. in Support of their Mot. for Summ. J. (“Fed. Defs.’ MSJ Mem.”), filed 10/14/09, at 8. In January and August of 2005, the State DHS submitted respectively a second and third waiver request. AR 1, 43. The CMS asked the State DHS to withdraw its second request because there was a lack of detail to warrant further consideration at that time, and the CMS took no action on the third request. Fed. Defs.’ MSJ Mem. 8-9.

On February 21, 2007, the State DHS submitted its fourth request for a waiver under 42 U.S.C. § 1315(a), seeking approval from the CMS to implement the QExA Program. AR 210. The QExA Program was intended to provide primary, acute, and long-term care services, including home- and community-based services (“HCBS”), to ABD beneficiaries state-wide using a managed care model. Id. The program would replace the fee-for-services system that was then in place for the ABD population.

On October 10, 2007, the State DHS issued a request for proposals (“RFP”) to procure the services of two managed care organizations that would be responsible for providing all of the Medicaid care for ABD beneficiaries as part of the QExA Program. Id. at 3942. On December 7, 2007, the State DHS submitted the RFP to the CMS for its review. Id. at 1016. On February 1, 2008, the State DHS awarded the QExA Contracts to Evercare and Ohana Health Plan, Inc. (“Ohana”), a subsidiary of WellCare Health Plans, Inc. (‘Well-Care Inc.”). Id. at 1558. The RFP, with amendments, became part of the contracts. Id. at 3953.

On February 7, 2008, the CMS approved the State DHS’s fourth waiver application for the QExA Program. Id. at 1565. In doing so, the CMS granted the State DHS a 42 U.S.C. § 1315(a) waiver of the “freedom of choice” provision. Id. at 1570.

On May 15, 2008, Ohana was merged into WellCare of Arizona, another subsidiary of WellCare Inc., and WellCare of Arizona assumed Ohana’s QExA Contract. See id. at 2059-68; St. Defs.’ Licensure MSJ CSF, Decl. of Patricia M. Bazin (“Bazin’s Decl.”) ¶ 8.

On January 30, 2009, the CMS approved the QExA Contracts. AR at 3925-26.

On February, 1, 2009, the QExA Program went into full effect. Since then, ABD beneficiaries have had to enroll with one of the QExA Contractors as a condition of receiving Medicaid benefits. However, the State DHS provided a transition period so that some 40,000 ABD beneficiaries could smoothly transition from the fee-for-service system to the managed care program. Id. at 3696. During the transition period, beneficiaries could receive services from healthcare providers even if the providers had not participated in the QExA Contractors’ plans. The transition period came to a close on July 31, 2009. In order to maintain the status quo for purposes of this litigation, the QExA Contractors have essentially extended the transition period for the ABD Plaintiffs in this case until the time of trial, such that they may continue to see healthcare providers even if those providers have not decided to participate in the program. 9/4/09 Tr. 17:2-6, 25:3-6 (Evereare’s counsel).

LEGAL STANDARD

The purpose of summary judgment is to identify and dispose of factually unsupported claims and defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is therefore appropriate if the “pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). “A fact is ‘material’ when, under the governing substantive law, it could affect the outcome of the case. A ‘genuine issue’ of material fact arises if ‘the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ ” Thrifty Oil Co. v. Bank of Am. Nat’l Trust & Sav. Ass’n, 322 F.3d 1039, 1046 (9th Cir.2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)) (citation omitted). Conversely, where the evidence could not lead a rational trier of fact to find for the nonmoving party, no genuine issue exists for trial. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). “Only admissible evidence may be considered in deciding a motion for summary judgment.” Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir.2006).

The moving party has the burden of persuading the court as to the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548; Miller, 454 F.3d at 987. The moving party may do so with affirmative evidence or by “ ‘showing’ — that is pointing out to the district court — that there is an absence of evidence to support the nonmoving party’s case.” Celotex, 477 U.S. at 325, 106 S.Ct. 2548. Once the moving party satisfies its burden, the nonmoving party cannot simply rest on the pleadings or argue that any disagreement or “metaphysical doubt” about a material issue of fact precludes summary judgment. See id. at 323, 106 5.Ct. 2548; Matsushita Elec., 475 U.S. at 586, 106 S.Ct. 1348; California Arch. Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir.1987). The nonmoving party must instead set forth “significant probative evidence” in support of its position. T.W. Elec. Serv. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir.1987). Summary judgment will thus be granted against a party who fails to demonstrate facts sufficient to establish an element essential to his case when that party will ultimately bear the burden of proof at trial. See Celotex, 477 U.S. at 322,106 S.Ct. 2548.

When evaluating a motion for summary judgment, the court must construe all evidence and reasonable inferences drawn therefrom in the light most favorable to the nonmoving party. See T.W. Elec. Serv., 809 F.2d at 630-31. Accordingly, if “reasonable minds could differ as to the import of the evidence,” summary judgment will be denied. Anderson, 477 U.S. at 250-51, 106 S.Ct. 2505.

DISCUSSION

The State Defendants seek summary judgment as to Counts VI, VII, VIII, and IX of the State Second Amended Complaint. In addition, the State Defendants and Plaintiffs have filed motions for summary judgment as to Plaintiffs’ claim that the QExA Contractors do not meet the Medicaid Act’s solvency requirements. This claim is asserted throughout Counts I through IV of the State Second Amended Complaint. The Court will consider these matters in turn.

I. Counts VI and VII of the State Second Amended Complaint: Violation of the ADA and the Rehabilitation Act

In Counts VI and VII of the State Second Amended Complaint, Plaintiffs allege that the State Defendants’ conduct in connection with the QExA Program violates the ADA and the Rehabilitation Act. St.2d Am. Compl. ¶¶ 105, 113. The ADA claim is asserted on behalf of all of the ABD Plaintiffs, and the Rehabilitation Act claim is advanced on behalf of ABD Plaintiffs K., J., and L.P. The State Defendants seek summary judgment as to Counts VI and VII.

A. Introduction

Title II of the ADA declares that “no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs, or activities of a public entity, or be subjected to discrimination by any such entity.” 42 U.S.C. § 12132. This title was “expressly modeled after § 504 of the Rehabilitation Act ... and essentially extends coverage to state and local government entities that do not receive federal funds.” Pierce v. County of Orange, 526 F.3d 1190, 1216 n. 27 (9th Cir.2008). Section 504 of the Rehabilitation Act provides that “[n]o otherwise qualified individual with a disability in the United States, as defined in [29 U.S.C. § 705(20) ], shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.” 29 U.S.C. § 794(a). Consequently, “‘[tjhere is no significant difference in analysis of the rights and obligations created by the ADA and the Rehabilitation Act.’ ” Pierce, 526 F.3d at 1216 n. 27 (quoting Zukle v. Regents of Univ. of California, 166 F.3d 1041, 1045 n. 11 (9th Cir.1999)).

In order to establish a violation of Title II of the ADA, a plaintiff must show that:

'll) he is an individual with a disability; (2) he is otherwise qualified to participate in or receive the benefit of some public entity’s services, programs, or activities; (3) he was either excluded from participation in or denied the benefits of the public entity’s services, programs, or activities, or was otherwise discriminated against by the public entity; and (4) such exclusion, denial of benefits, or discrimination was by reason of his disability.”

O’Guinn v. Lovelock Corr. Ctr., 502 F.3d 1056, 1060 (9th Cir.2007) (quoting McGary v. City of Portland, 386 F.3d 1259, 1265 (9th Cir.2004)). The elements of a claim under Section 504 of the Rehabilitation Act are essentially the same, except that the plaintiff must also show that “the program receives federal financial assistance.” Id. (quoting Duvall v. County of Kitsap, 260 F.3d 1124, 1135 (9th Cir.2001)).

Once the basic elements have been established, the question is generally whether the plaintiff can identify reasonable modifications to avoid discrimination on the basis of his disability. Vinson v. Thomas, 288 F.3d 1145, 1154 (9th Cir.2002) (“[The plaintiff] bore the initial burden of producing evidence that a reasonable accommodation was possible.”); Martin v. Taft, 222 F.Supp.2d 940, 972 n. 26 (S.D.Ohio 2002) (“The plaintiff in an ADA Title II action bears the burden of showing that a reasonable modification is available.”). As the Ninth Circuit has explained,

when a state’s policies, practices or procedures discriminate against the disabled in violation of the ADA, Department of Justice regulations require reasonable modifications in such policies, practices or procedures “when the modifications are necessary to avoid discrimination on the basis of disability, unless the public entity can demonstrate that making the modifications would fundamentally alter the nature of the service, program, or activity.”

Crowder v. Kitagawa, 81 F.3d 1480, 1485 (9th Cir.1996) (quoting 28 C.F.R. § 35.130(b)(7)). The “fundamental alteration” defense is, however, limited to instances of disparate impact discrimination; it “has no application to cases of facial discrimination.” Lovell v. Chandler, 303 F.3d 1039, 1054 (9th Cir.2002); see also Townsend v. Quasim, 328 F.3d 511, 518 n. 2 (9th Cir.2003) (noting “the fundamental alteration defense does not apply to cases of facial discrimination”).

In the case at bar, Plaintiffs advance two basic theories of liability. The first is that the QExA Program puts ABD beneficiaries at a greater risk of institutionalization than did the prior fee-for-service system that the program replaced. St.2d Am. Compl. ¶¶ 105-09. On that basis, Plaintiffs claim that the QExA Program violates the integration mandate set forth in the ADA and the Rehabilitation Act. Their second theory of liability is that the QExA Program is providing disabled recipients with less access to Medicaid benefits than the QUEST Program provides to non-disabled recipients. See Pis.’ Opp’n to St. Defs.’ Multi-count MSJ 22; St.2d Am. Comp. ¶¶ 94, 103, 111. Plaintiffs assert that they are being denied equal access to Medicaid benefits on the basis of their disability. The Court will consider each theory in turn.

B. The Integration Mandate

1. Olmstead

Plaintiffs’ first theory of liability is based on the Supreme Court’s decision in Olmstead v. L.C., 527 U.S. 581, 119 S.Ct. 2176, 144 L.Ed.2d 540 (1999). There, “the Supreme Court interpreted the failure to provide Medicaid services in a community-based setting as a form of discrimination on the basis of disability,” in contravention of Title II of the ADA. Townsend v. Quasim, 328 F.3d 511, 517 (9th Cir.2003); accord McGary, 386 F.3d at 1266 (observing that “the [Olmstead ] Court held that undue institutionalization of persons with mental disabilities qualifies as discrimination ‘by reason of disability’ under the ADA”). “ ‘Unjustified isolation,’ the Court held, ‘is properly regarded as discrimination based on disability.’ ” Sanchez v. Johnson, 416 F.3d 1051, 1063 (9th Cir.2005) (quoting Olmstead, 527 U.S. at 597, 119 S.Ct. 2176). Specifically, the Court explained that:

“States are required to provide community-based treatment for persons with mental disabilities when the State’s treatment professionals determine that such placement is appropriate, the affected persons do not oppose such treatment, and the placement can be reasonably accommodated, taking into account the resources available to the state and the needs of others with mental disabilities.”

Townsend v. Quasim, 328 F.3d at 519 (quoting Olmstead, 527 U.S. at 607, 119 S.Ct. 2176).

The Olmstead Court relied in part on the ADA’s regulations, which direct that “[a] public entity shall administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities.” 28 C.F.R. § 35.130(d), quoted in Olmstead, 527 U.S. at 592, 119 S.Ct. 2176. The Rehabilitation Act’s regulations similarly provide that “[rjecipients [of federal financial assistance] shall administer programs and activities in the most integrated setting appropriate to the needs of qualified handicapped persons.” 28 C.F.R. § 41.51(d). In this respect, the ADA and the Rehabilitation Act have been read to contain an “integration mandate.” Arc of Washington State Inc. v. Braddock, 427 F.3d 615, 618 (9th Cir.2005); Pennsylvania Prot. & Advocacy, Inc. v. Pa. Dep’t of Pub. Welfare, 402 F.3d 374, 379 (3d Cir.2005).

A state’s reduction in services may violate the integration mandate where it unjustifiably forces or will likely force beneficiaries from an integrated environment into institutional care. See Fisher v. Oklahoma Health Care Auth., 335 F.3d 1175, 1184 (10th Cir.2003) (holding that Medicaid participants not currently institutionalized, but at “high risk for premature entry into a nursing home,” could bring claims for violation of the integration mandate); Gaines v. Hadi No. 06-60129-CIV., 2006 WL 6035742, at *28 (S.D.Fla. Jan. 30, 2006) (observing that a plaintiff may state an integration claim by asserting that a “reduction in services will force [him] into an institutional setting against their will”); Brantley v. Maxwell-Jolly, 656 F.Supp.2d 1161, 1170 (N.D.Cal.2009) (noting that “cases involving ADA integration claims have recognized that the risk of institutionalization is sufficient to demonstrate a violation of Title II,” and enjoining the implementation and enforcement of a law that would reduce the number of Adult Day Health Care days available to certain Medicaid beneficiaries from five to three days per week because the reduction would place the plaintiffs at serious risk of institutionalization); Mental Disability Law Clinic v. Hogan, CV-06-6320 (CPS)(JO), 2008 WL 4104460, at *15, 2008 U.S. Dist. LEXIS 70684, at *50 (E.D.N.Y. Aug. 29, 2008) (“[E]ven the risk of unjustified segregation may be sufficient under Olmstead.”).

At the same time, the integration mandate must be balanced against “the States’ need to maintain a range of facilities for the care and treatment of persons with diverse mental disabilities, and the States’ obligation to administer services with an even hand.” Olmstead, 527 U.S. at 597, 119 S.Ct. 2176. “ ‘[T]he State’s responsibility, once it provides community-based treatment to qualified persons with disabilities, is not boundless.’ ” Sanchez, 416 F.3d at 1063 (quoting Olmstead, 527 U.S. at 603, 119 S.Ct. 2176). If the fundamental alteration defense is available, the state may show that it “has in place a comprehensive deinstitutionalization scheme, which, in light of existing budgetary constraints and the competing demands of other services that the State provides, including the maintenance of institutional care facilities, is ‘effectively working.’ ” Sanchez, 416 F.3d at 1067-68 (quoting Olmstead, 527 U.S. at 605, 119 S.Ct. 2176) (citation omitted); Arc of Washington State Inc., 427 F.3d at 618-20 (illustrating that this showing is a type of fundamental alteration defense). Courts “will not tinker with” such a plan. Sanchez, 416 F.3d at 1067-68. “Olmstead does not require the immediate, state-wide deinstutionalization of all eligible developmentally disabled persons, nor that a State’s plan be always and in all cases successful.” Id. at 1068. This type of plan is commonly referred to as an “Olmstead plan.” Id. at 1064; AR 25 (noting that the State of Hawai’i has an “Olmstead Plan”).

2. The State Second Amended Complaint

The ADA and Rehabilitation Act claims assert that the State Defendants have failed to provide for the ABD Plaintiffs, who have physical or mental impairments that substantially limit one or more of their major life activities, medical and ancillary care they must have to be maintained in the most integrated setting appropriate to their needs. St.2d Am. Compl. ¶ 105. The ABD Plaintiffs assert that, under the prior fee-for-service system, the State DHS placed qualified individuals with disabilities in the community, including the ABD Plaintiffs, with medical, attendant, and other services supplied, furnished, and paid for or arranged for by that system, so as to enable them to be integrated into their respective communities. Id. ¶ 109.

The ABD Plaintiffs maintain that, by replacing the fee-for-service system with the QExA Program, the State DHS must now justify and show reasonable grounds why the level, kinds, and quality of supporting services, assistance, and framework for independent living may be withdrawn. Id. Plaintiffs assert that the QExA Program has reduced access to services and reimbursements to healthcare providers, thereby discouraging them from providing care to ABD beneficiaries with disabilities. Id. ¶ 109. The ABD Plaintiffs claim that, as a result, they have been forced into institutions or are at a greater risk of being forced into institutions. See id. ¶¶ 105-09, 113. Plaintiffs contend that the QExA Program does not constitute a comprehensive, effective state program ensuring that the Medicaid Act’s standards will be met and that the program is therefore discriminatory. Id. ¶ 106.

3. Analysis

In their multi-count motion for summary judgment, the State Defendants point out as an initial matter that, contrary to the allegations in the State Second Amended Complaint, they do not carry the burden of justifying changes to services provided to qualified individuals in the community. See St. Defs.’ Multi-count MSJ Mem. 11; St.2d Am. Compl. ¶ 109. They contend that the ABD Plaintiffs are the ones who carry the burden of demonstrating that such changes violate the integration mandate. St. Defs.’ Multi-count MSJ Mem. 11. The Court agrees with the State Defendants and therefore concludes that the ABD Plaintiffs, and not the State Defendants, bear the burden of proving that the administration of the QExA Program has forced them into institutions or is likely to do so. See Summer H. v. Fukino, Civ. No. 09-00047 SOM7BMK, 2009 WL 1249306, at *8, 2009 U.S. Dist. LEXIS 38924, at *25 (D.Haw. May 6, 2009) (questioning the plaintiffs’ integration claims under the ADA and the Rehabilitation Act because they had “not shown that any actual benefit cut increases the risk of institutionalization”); Gaines, 2006 WL 6035742, at *28 (noting that, in order to prevail on an integration claim, the plaintiffs must show that “reductions will afford such inadequate services that it will likely force [them] to drop from the community-based program in order to seek proper care in an institutional setting”).

Turning to the elements of the Plaintiffs’ claims under the ADA and Rehabilitation Act, the State Defendants acknowledge that the ABD Plaintiffs are qualified to receive Medicaid benefits and that they therefore satisfy the first element of their ADA and Rehabilitation Act claims. St. Defs.’ Multi-count MSJ 8. The State Defendants also recognize that they receive federal funding for the QExA Program and, as such, the federal funding element of the Rehabilitation Act claims is met. Id. at 8. n. 2.

They do, however, assert that the ABD Plaintiffs cannot raise a question of material fact as to whether the operation of the QExA Program actually increases their risk of institutionalization. St. Defs.’ Multi-count MSJ Mem. 12. The State Defendants argue, and the Plaintiffs concede, that none of the ABD Plaintiffs is currently institutionalized. See id. at 12; Pis.’ Opp’n to St. Defs.’ Multi-count MSJ 28 (conceding that “Plaintiffs are currently receiving Medicaid services in the community and none are institutionalized”). The question is whether there is any factual basis for a claim that the ABD Plaintiffs have suffered or are likely to suffer a reduction in their services as a result of the transition from the prior fee-for-service system to the QExA Program’s managed care delivery system that would likely lead to their institutionalization,

a. Harrison’s Declaration

In support of their integration claim, the ABD Plaintiffs cite to a declaration by Summer Harrison. Pis.’ Opp’n to St. Defs.’ Multi-count MSJ CSF ¶ h. Harrison states that she has an adopted daughter whose name is Hannah. Pis.’ Opp’n to St. Defs.’ Multi-count MSJ CSF, Decl. of Summer Harrison (“Harrison’s Deck”) ¶¶ 4-7. Hannah is an ABD beneficiary who is enrolled with Evercare. Id. She suffers from a serious seizure disorder, which, according to Harrison, necessitates skilled nursing care 24 hours a day. Id. ¶ 4. Harrison claims that, shortly after the commencement of the QExA Program, the State DHS imposed a 15% budget cut on Hannah’s services. Id. ¶ 7. Harrison also asserts that Evercare then challenged the medical necessity of Hannah’s 24/7 nursing care and denied coverage for other medically-necessary supplies and equipment. Id.

Harrison asserts that Hannah and other disabled children have been discriminated against by the State DHS and Evercare. Id. ¶ 8. According to Harrison, the State DHS and Evercare are using a “secret new assessment tool to determine home nursing services for children (under age 21).” Id. ¶ 8.a. The assessment tool, says Harrison, “has an institutional bias compared to the assessment tools used since at least 2002,” as it “has eliminated all points that used to be awarded for social and family considerations, leaving only the points related to institutionalization.” Id. (emphasis omitted).

Additionally, Harrison contends that “people with developmental disabilities have been targeted for two sets of budget cuts, based solely on their participation in the [42 U.S.C. § 1396n(c)] HCBS DD waiver program.” Id. She claims that “[a]ll cuts have been made only to the home and community-based services that allow people with developmental disabilities to remain at home rather than be institutionalized.” Id. ¶ 8.b. Harrison explains that “[c]uts to home based services for children are being made on a budget basis and not in relation to the medical needs of the individual child.” Id. ¶ 8.e. She asserts that the “first set of cuts targeted children with developmental disabilities under the age of 13 and receiving more than 29 hours of services per week,” and that the “second set of cuts was a uniform 15%, and parents/caregivers were forced to appear to acquiesce to the cuts because they were instructed to fill the forms out themselves or risk having the new schedule set for them by the state.” Id.

In their reply, the State Defendants address the budget cuts by explaining that the cuts related to services provided on a fee-for-service basis by the Hawaii Department of Health under a 42 U.S.C. § 1396n(c) waiver, which is not incorporated into the QExA Program. St. Defs.’ Multi-count MSJ Reply 13 n. 6. The State Defendants cite paragraph 28(e) of the Special Terms and Conditions for the QExA Program, which provides that:

Benefits Provided to the MR/DD [ (i.e., Mentally Retarded/Developmentally Disabled) ] Population. Medicaid eligibles with developmental disabilities will receive the full Medicaid State Plan primary and acute health care benefit package through QExA managed care plans. Case management, [42 U.S.C. § 1396n(c) ] HCBS and ICF/MR [ (i.e„ intermediate care facility for mentally retarded)] benefits for this group will remain carved out of the capitated benefit package. All QExA health plans will be required to coordinate the primary and acute health care benefits received by the DD/MR [sic] population with the HCBS that are provided on a fee-for-service basis from the Department of Health’s (DOH) Developmental Disabilities Division.

AR 1590-91. The Court agrees with the State Defendants that the alleged budget cuts cited by Harrison relate to a 42 U.S.C. § 1396n(c) waiver program that is provided in a fee-for-serviee program operated by the Hawai’i Department of Health, and not by the State DHS through the QExA Program. Thus, the alleged budget cuts, even if true, do not demonstrate that the QExA Program has reduced the ABD Plaintiffs’ services in a manner that would likely force them into institutions.

What remains is Harrison’s testimony regarding the State DHS’s “secret new assessment tool to determine home nursing services for children (under age 21).” Pis.’ Opp’n to St. Defs.’ Multi-count MSJ CSF, Harrison’s Decl. ¶ 8. The State Defendants assert that Harrison’s testimony regarding “institutional bias” is not properly raised in this case because neither she nor her daughter is a party to this lawsuit. St. Defs.’ Multi-count MSJ Reply 13 n. 6. They contend that Plaintiffs are not proceeding as representatives of a class and that Plaintiffs’ allegations as to anonymous non-parties are irrelevant. Id. at 2 n. 1. The Court notes that the ABD Plaintiffs in this case are comprised in part by disabled children who are beneficiaries under the QExA Program. See St.2d Am. Compl. ¶¶ 4, 8-9. In addition, the State Defendants have stated that “[a]ll of the ABD Plaintiffs are currently receiving Medicaid services in the community.” St. Defs.’ Multi-count MSJ Mem. 12. However, there has been no showing that the ABD Plaintiffs who are disabled children are currently receiving “home nursing services” or that they are being subjected to the “secret new assessment tool.” See id. ¶¶ 8-8.a. While it is asserted that this assessment tool has allegedly been applied to Harrison’s daughter in connection with her home nursing services and that she is thus at a greater risk of institutionalization, she is not a Plaintiff in this action. The ABD Plaintiffs have not shown that any reduction in benefits under the QExA Program has resulted in an increased risk that the disabled children among them will be forced into institutions.

b. Dr. Meyers’ Declaration

Apart from relying on Harrison’s declaration, Plaintiffs have also submitted a declaration by Arlene Meyers, M.D. Dr. Meyers explains that one of the ABD Plaintiffs in this case, L.P., is a dual-eligible who suffers from cancer and other conditions. Pis.’ Opp’n to St. Defs.’ Multicount MSJ CSF, Decl. of Arlene Meyers, M.D. (“Dr. Meyers’ Decl.”), ¶23. She asserts that L.P. “has experienced long-running problems with securing payment from Evercare or [WellCare of Arizona] for community aides his doctors have ordered.” Id. Dr. Meyers maintains that, “[w]ithout the community aids, L.P. would have to be institutionalized,” and that L.P. “has been repeatedly approached to agree to institutionalization, which he declined.” Id.

Dr. Meyers seems to suggest that L.P. is at risk of institutionalization for two reasons. One is that he has been repeatedly approached to agree to institutionalization, which he has declined. See id. There is no violation of the ADA or Rehabilitation Act in merely approaching an individual to see if he wishes to be institutionalized. Cf. Olmstead, 527 U.S. at 602, 119 S.Ct. 2176 (noting that there is no “federal requirement that community-based treatment be imposed on patients who do not desire it”). L.P. has decided that he does not want to enter an institution, and that is his prerogative, assuming, of course, that he “ ‘meets the essential eligibility requirements’ for habilitation in a community-based program,” which appears to be the case since his doctors have ordered that he receive community aids. See id. (quoting 42 U.S.C. § 12131(2)) (“[T]he State generally may rely on the reasonable assessments of its own professionals in determining whether an individual ‘meets the essential eligibility requirements’ for habilitation in a community-based program. Absent such qualification, it would be inappropriate to remove a patient from the more restrictive setting.” (quoting 42 U.S.C. § 12131(2))); Pis.’ Opp’n to St. Defs.’ Multi-count MSJ CSF, Dr. Meyers’ Deck ¶ 23. There is no suggestion that one of the QExA Contractors has applied undue pressure to coerce L.P. into “agreeing” to institutionalization.

The second basis for Dr. Meyers’ assertion that L.P. is at risk of institutionalization is that he has encountered “long-running problems with securing payment from Evercare or [WellCare of Arizona] for community aides his doctors have ordered,” and that if he loses those services, he “would have to be institutionalized.” Pis.’ Opp’n to St. Defs.’ Multi-count MSJ CSF, Dr. Meyers’ Deck ¶ 23. In view of this testimony, the Court finds that, while L.P. has not yet experienced a loss of community-based services, there is a question of fact as to whether he is at risk of suffering an imminent reduction in those services and having to be institutionalized as a result thereof. See O’Shea v. Littleton, 414 U.S. 488, 496, 94 S.Ct. 669, 38 L.Ed.2d 674 (1974) (“[P]ast wrongs are evidence bearing on whether there is a real and immediate threat of repeated injury.”).

The State Defendants invoke the fundamental alteration defense by asserting that the QExA Program qualifies as an Olmstead plan, that is, a comprehensive, effectively-working deinstitutionalization scheme. See St. Defs.’ Multi-count MSJ 15; Sanchez, 416 F.3d at 1067-68. They note that all individuals who were previously on a waiting list for HCBS under the prior fee-for-service system are now receiving services in the community, that there is currently no waiting list for HCBS, and that, under the QExA Contracts, Evercare and WellCare of Arizona are contractually obligated to increase HCBS services by five percent annually. St. Defs.’ Multi-count MSJ CSF, Deck of Patricia Bazin ¶¶25, 27-28; AR 4037, 4100-03. While it is abundantly clear that the QExA Program is a comprehensive deinstitutionalization scheme, and that it is working to some extent, Dr. Meyers’ testimony regarding the potential denial of community-aide services to L.P. raises a question of fact as to whether the plan is working “effectively” as it applies to him. This issue is better left for trial.

4. Decision Regarding the Integration Claim

In short, taking the evidence in light most favorable to Plaintiffs, the Court finds that there are genuine issues of material fact surrounding L.P.’s integration claim set forth in Counts VI and VII of the State Second Amended Complaint. The remaining ABD Plaintiffs have not, however, identified a genuine issue of material as to whether they are at risk of institutionalization as a result of the QExA Program. Consequently, the Court will deny the State Defendants’ general motion for summary judgment as to Counts VI and VII insofar as those counts assert an integration claim on behalf of L.P., but grant the motion for summary judgment as to those counts to the extent that they advance integration claims on behalf of all other ABD Plaintiffs, namely: (1) G., parent and next friend of K.; (2) D., parent and next friend of E.; (3) C., parent and next friend of M.; (4) M., parent and next friend of I.; (5) V., parent an guardian of R.; (6) T. parent and next friend of E.S.; (7) A., parent and next friend of C.; (8) J., parent and next friend of R.J.; (9) T.I.; and (10) H., parent and next friend of K. The Court will now turn its attention to the ABD Plaintiffs’ second theory of liability in Counts VI and VII.

C. Equal Access

In their opposition to the State Defendants’ multi-count motion for summary judgment, the Plaintiffs note that the integration mandate is not “the sole basis for their [ADA and Rehabilitation Act] claims.” Pis.’ Opp’n to St. Defs.’ Multicount MSJ Mem. 22. They explain that their claim is premised on the equal access requirement of those statutes, citing Alexander v. Choate, 469 U.S. 287, 105 S.Ct. 712, 83 L.Ed.2d 661 (1985). See Pis.’ Opp’n to St. Defs.’ Multi-count MSJ Mem. 27.

1. Choate

In Choate, the Supreme Court assumed without deciding that Section 504 of the Rehabilitation Act reaches at least some conduct that has an unjustifiable disparate impact upon the handicapped. 469 U.S. at 299, 105 S.Ct. 712. In discussing such conduct, the Supreme Court observed that a state participating in the Medicaid program has substantial discretion to choose the proper mix of amount, scope, and durational limitations on the benefits it will provide, so long as otherwise qualified disabled individuals are afforded meaningful and equal access to the benefits offered. Id. at 299-301, 105 S.Ct. 712. The Supreme Court observed that, “to assure meaningful access, reasonable accommodations in the grantee’s program or benefit may have to be made.” Id. at 301, 105 S.Ct. 712.

However, no such accommodations were necessary in the case before the Supreme Court. Id. at 306, 105 S.Ct. 712. The state had proposed reducing the number of annual days of inpatient hospital care covered by its Medicaid program from twenty days to fourteen days. Id. at 289, 105 S.Ct. 712. The Court reasoned that, because the disabled plaintiffs in the case had “meaningful and equal access to that benefit, [the state was] not obligated to reinstate its 20-day rule or to provide the handicapped with more than 14 days of inpatient coverage.” Id. at 306, 105 S.Ct. 712. The Court emphasized that “[t]he State has made the same benefit — 14 days of coverage — equally accessible to both handicapped and nonhandicapped persons, and the State is not required to assure the handicapped ‘adequate health care’ by providing them with more coverage than the nonhandicapped.” Id. at 309, 105 S.Ct. 712.

“Following Choate, several courts of appeals have adopted the view that the Rehabilitation Act requires public entities to modify federally assisted programs if such a modification is necessary to ensure that the disabled have equal access to the benefits of that program.” Wisconsin Cmty. Servs. v. City of Milwaukee, 465 F.3d 737, 748 (7th Cir.2006) (collecting cases); see also Vaughn v. Sullivan, 906 F.Supp. 466, 474 (S.D.Ind.1995) (explaining that, under Section 504 of the Rehabilitation Act, “a participating state may define the Medicaid benefits it will provide, so long as otherwise qualified disabled individuals are afforded meaningful and equal access to the benefits offered”); Wolford by Mackey v. Lewis, 860 F.Supp. 1123, 1134-35 (S.D.W.Va.1994) (“[SJection 504 ensures only that disabled individuals receive the same treatment as those who are not disabled .... The state ... must afford individuals with a disability meaningful and equal access to the Medicaid benefits or services offered to those without a disability and may be required to adjust its programs to achieve that result.” (citation omitted)).

2. Whether the Equal Access Claim was Properly Pled

As a preliminary matter, the State Defendants question whether the equal access component of Plaintiffs’ claim was properly raised in the State Second Amended Complaint. St. Defs.’ Multicount MSJ Reply 8. “Federal Rule of Civil Procedure 8(a)(2) requires that the allegations in the complaint ‘give the defendant fair notice of what the plaintiffs claim is and the grounds upon which it rests.’ ” Pickem v. Pier 1 Imps. (U.S.), Inc., 457 F.3d 963, 968 (9th Cir.2006) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002)). Consistent with this requirement, “the district court [does] not commit error by refusing to award relief on an unpleaded cause of action.” 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir.1999),

In their opposition to the State Defendants’ multi-count motion for summary judgment, the ABD Plaintiffs contend that the QExA Program is providing disabled recipients with less access to Medicaid benefits than the QUEST Program provides to non-disabled recipients. See Pis.’ Opp’n to St. Defs.’ Multi-count MSJ 22. This claim is not clear from the factual allegations in the ADA and Rehabilitation Act Counts in the State Second Amended Complaint. See St.2d Am. Compl. ¶¶ 103— 14. Those counts do, however, incorporate Count II’s allegations, one of which is that the State Defendants failed to ensure that the QExA Contractors were ready to administer the QExA Program on February 1, 2009, in a manner in which existing QUEST plans have demonstrated skill and commitment. Id. ¶¶ 94, 103, 111; see also id. ¶¶ 118-20 (suggesting that reimbursement rates for providers under the QExA Program are not sufficient to enlist enough providers so that services are available at least to the extent that they are available under the QUEST Program).

Additionally, the ABD Plaintiffs contend that the State Defendants violated Section 504 of the Rehabilitation Act in light of the State Defendants’ conduct and policy of contracting with the QExA Contractors such that providers are financially discouraged from participating in the QExA Program and accepting as patients and clients Medicaid-eligible disabled individuals. Id. ¶ 107. In support of this assertion, the ABD Plaintiffs cite Zamorar-Quezada v. HealthTexas Med. Group of San Antonio, 34 F.Supp.2d 433 (W.D.Tex.1998). See St.2d Am. Compl. ¶ 107. While a case citation is by no means a substitute for factual allegations, it does provide at least some insight into the plaintiffs legal theory. In ZamorarQuezada, the court held that the plaintiffs, disabled enrollees of HMOs, had sufficiently stated a claim under the ADA and Rehabilitation Act against the HMOs by alleging, inter alia, that they had, on numerous occasions, been forced to wait for long periods of time and delayed or denied medical care while, at the same time, there were specific instances of non-disabled patients not having to wait for hours and receiving better treatment. 34 F.Supp.2d at 442. The State Defendants note this holding in their multi-count motion for summary judgment. St. Defs.’ Multi-count MSJ Mem. 13 n. 4.

In view of the allegations in the State Second Amended Complaint and the citation to Zamorar-Quezada, the Court finds that the equal access component of Plaintiffs’ claim was sufficiently raised in the complaint. The Court will therefore consider Plaintiffs’ equal access claim on the merits.

3. Whether the Equal Access Claim Should Proceed to Trial

The State Defendants contend that it would be improper to compare the ABD Plaintiffs in the QExA Program to the non-disabled beneficiaries enrolled in the QUEST Program. St. Defs.’ Multi-count MSJ Reply 8. The State Defendants note that the QExA Program and the QUEST Program are fundamentally different because the disabled beneficiaries in the QExA Program have greater access to Medicaid services than the non-disabled beneficiaries in the QUEST Program. Id. at 9. The State Defendants note that disabled beneficiaries in the QExA Program have access to certain benefits, including specialized and long-term care services, that the beneficiaries in the QUEST Program do not. Id.; see also AR 1589-90 (delineating benefits under the QUEST and QExA Programs).

Of course, Plaintiffs are not complaining about how they have access to more services under the QExA Program than non-disabled beneficiaries enrolled in the QUEST Program. Rather, their quarrel is with how the State DHS has provided certain Medicaid services to both disabled and non-disabled beneficiaries, such as primary care, and how the disabled beneficiaries in the QExA Program have less access to those benefits than non-disabled beneficiaries in the QUEST Program. In other words, Plaintiffs’ claim is that they have less, and thus unequal, access to benefits that are common to both programs. Cf. Choate, 469 U.S. at 309, 105 S.Ct. 712 (rejecting a claim under Section 504 of the Rehabilitation Act because the state had “made the same benefit — 14 days of [inpatient hospital] coverage— equally accessible to both handicapped and nonhandicapped persons”). The fact that the State DHS has decided to utilize separate programs to provide benefits to disabled and non-disabled beneficiaries does not relieve it of its obligation to provide disabled beneficiaries with equal access to the benefits that it grants to non-disabled beneficiaries. Accordingly, the Court rejects the State Defendants’ contention that it is improper to compare the ABD Plaintiffs’ access to certain Medicaid benefits under the QExA Program with non-disabled beneficiaries’ access to the same types of Medicaid benefits under the QUEST Program.

The State Defendants next assert that, to the extent that a necessary service is not available through a contractor’s network, the QExA Contracts require that it be provided out-of-network. St. Defs.’ Multi-count MSJ Reply 11. The availability of out-of-network providers would seem to undermine the significance of the alleged disparities between the provider networks of QExA and QUEST Programs.

On the other hand, the ABD Plaintiffs, many of whom have been shown to have complex medical conditions, point to differences in access between the QExA and QUEST Programs regarding the availability of specialists. Pis.’ Opp’n to St. Defs.’ Multi-count MSJ CSF 1HI5a, 3f; Pis.’ Opp’n to St. Defs.’ Multi-count MSJ CSF, Dr. Meyers’ Decl. ¶¶ 15-23. They explain that the disparities stem from the fact that specialists are paid less in the QExA Program than they are paid in the QUEST Program. Pis.’ Opp’n to St. Defs.’ Multicount MSJ CSF ¶ 3b. Physicians in particular are paid ten to twenty percent less in the QExA Program than they are paid in the QUEST Program. See id. ¶ 2b. According to Plaintiffs, it takes twelve to thirty times as long to secure a referral to a specialist for a QExA enrollee than for a non-disabled person in the QUEST Program. Pis.’ Opp’n to St. Defs.’ Multi-count MSJ CSF ¶ 3f & Decl. of Richard C. Custodio, M.D. (“Dr. Custodio’s Decl.”), ¶25. Apart from complaining about their access to specialists, Plaintiffs assert that certain prescription drugs are not covered under the QExA Program that are covered under the QUEST Program, which means that prior-approvals must be obtained for those drugs in the QExA Program, but not in the QUEST Program. Pis.’ Opp’n to St. Defs.’ Multi-count MSJ CSF ¶ lc. Plaintiffs maintain that the preauthorization process for certain services and items, including non-covered prescription drugs, under the QExA Program is onerous and lengthy compared to the process utilized in the QUEST Program. Id. ¶¶ 3d, 4e-5e.

In addition, the ABD Plaintiffs claim that they have been denied transportation. Pis.’ Opp’n to St. Defs.’ Multi-count MSJ 16. They assert that, with inadequate provider networks, the denials of transportation increase the risks of adverse consequences because QExA patients cannot travel to the doctor’s office or the pharmacy. Id. It is claimed that ABD Plaintiff L.P., a cancer patient, has repeatedly been denied transportation to the pharmacy and doctors’ offices. Pis.’ Opp’n to St. Defs.’ Multi-count MSJ CSF ¶ lg. According to Plaintiffs, riding the bus is debilitating and increases his risk of infection. Id. Plaintiffs maintain that non-disabled patients in the QUEST Program do not face the transportation problems because they have adequate provider networks. Pis.’ Opp’n to St. Defs.’ Multi-count MSJ 16.

Viewing the evidence in the light most favorable to the ABD Plaintiffs, the Court finds that there are genuine issues of material fact as to whether the ABD Plaintiffs have equal access to Medicaid benefits as compared to non-disabled beneficiaries enrolled in the QUEST Program. See Choate, 469 U.S. at 306, 105 S.Ct. 712. That question is better left for trial. As such, the Court will deny the State Defendants’ multi-count motion for summary judgment as to Counts VI and VII, insofar as those counts assert an equal access claim.

II. Count VIII of the State Second Amended Complaint: Violation of 42 U.S.C. § 1396a(a)(30)(A) and 42 C.F.R. § 447.204

In Count VIII of the State Second Amended Complaint, Plaintiffs contend that, since July 1, 2009, the State DHS has rolled back reimbursement rates for providers to 2006 levels. St.2d Am. Compl. ¶ 88. These rates are lower than those in effect on January 31, 2009. Id. Plaintiffs claim that the reduction is not supported by any systematic analysis assuring that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general public in the state. Id. On that basis, Plaintiffs claim that the reduction violates 42 U.S.C. § 1396a(a)(30) and its corresponding regulation, 42 C.F.R. § 447.204. Id. ¶ 118. The State Defendants seek summary judgment as to Count VIII.

The statute provides that:

A State plan for medical assistance must ... provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan ... as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area....

42 U.S.C. § 1396a(a)(30)(A). The regulation similarly states that: “The agency’s payments must be sufficient to enlist enough providers so that servic