In the
United States Court of Appeals
For the Seventh Circuit

No. 99-3135

Andrea N. Butler, Emmalea Butler
and Ted Butler,

Plaintiffs-Appellants,

v.

H. Dean Evans, individually and in his capacity
as Superintendent of the Indiana Department
of Education, Indiana Department of Education,
Jerry Thaden, individually and in his capacity
as Commissioner of the Indiana Department
of Mental Health, Dina Haugh, in her capacity
as Superintendent of LaRue D. Carter Memorial
Hospital, and Paul Ash, individually and in his
capacity as Director of the Indiana Division of
Special Education,

Defendants-Appellees.



Appeal from the United States District Court
for the Northern District of Indiana, Hammond Division.
No. 91 C 216--Theresa L. Springmann, Magistrate Judge.


Argued May 9, 2000--Decided August 31, 2000



  Before Manion, Kanne and Rovner, Circuit Judges.

  Kanne, Circuit Judge. As a child, Andrea "Niki"
Butler experienced severe emotional and
psychological troubles that made it difficult for
her to be educated in a regular school. Her local
school recommended that she be placed in a
residential educational facility that could
provide a structured setting designed to
accommodate her condition. Before her local
school and the Indiana Department of Education
could process this placement, Niki Butler’s
condition forced her parents, Emmalea and Ted
Butler, to have her committed to a psychiatric
hospital for several months. After Niki was
released from the hospital, the state of Indiana
placed her in a residential educational facility.
Nevertheless, her parents sought reimbursement
from the state for the costs of Niki’s
hospitalization. We affirm the district court’s
denial of the Butlers’ reimbursement claim
because Niki’s hospitalization did not result
from delays by the state of Indiana in processing
Niki’s placement, nor did the hospital care
constitute "related services" reimbursable under
the Individuals with Disabilities Education Act
("IDEA"), 20 U.S.C. sec.sec. 1400-1487.

I.   History

  The IDEA represents "an ambitious federal effort
to promote the education of handicapped
children." Board of Educ. of Hendrick Hudson
Cent. Sch. Dist. v. Rowley, 458 U.S. 176, 179
(1982) (discussing the Education for All
Handicapped Children Act, later amended and
renamed the IDEA). Its purpose is "to ensure that
all children with disabilities have available to
them appropriate public education that emphasizes
special education and related services designed
to meet their unique needs." 20 U.S.C. sec.
1400(d). Among other things, the IDEA supplies
the states with federal funding for specialized
education services to assist eligible disabled
children. In conformity with applicable federal
guidelines, the state of Indiana administers
those funds through the Indiana Department of
Education and its local school systems. See Ind.
Code sec. 20-1-6-4.

  For each child in need of special education
assistance, the state of Indiana convenes an IDEA
case conference between parents and local
officials to tailor an individualized education
plan ("IEP") for the disabled student. See 20
U.S.C. sec.sec. 1401(11), 1414(d). In most cases,
the local school or school cooperative can
provide the necessary accommodations suggested by
the IEP and keep the child in her regular school.
However, in unusual circumstances, the local
school is unequipped to provide the necessary
services and must transfer the child to a special
residential facility. Typically at that point, a
local coordinating committee comprising a
juvenile court judge, the child’s parents and
local education and health officials evaluates
the child’s condition and makes proposals to the
local school board. The Indiana Department of
Education administers these special cases through
what it calls a Rule S-5 application, pursuant to
which the local school can apply to the state for
IDEA funding of a residential placement on the
disabled child’s behalf. See Ind. Code sec. 20-1-
6-19; 511 Ind. Admin. Code sec. 7-12-5.

  Niki Butler endured a series of emotional
disturbances during her childhood and was
diagnosed with severe schizophrenia. By her
sixteenth birthday, she had suffered auditory and
visual hallucinations, attempted suicide and
struggled with paranoia and psychotic episodes.
She eventually was hospitalized for six weeks at
Alexian Brothers Medical Center in August 1990.
After evaluating Niki’s case on November 16,
1990, her local school preliminarily recommended
application for a S-5 residential placement. On
February 12, 1991, the local coordinating
committee agreed that Niki’s condition warranted
a residential placement and approved the proposed
S-5 application to the Indiana Department of
Education. On April 18, 1991, the local school
authorities held an IEP case conference and
agreed that Niki’s condition required a
residential placement for educational purposes.
They devised an IEP that targeted basic academic
skills and social behavior as key areas for
instruction and suggested a number of placement
options, including special classes in a private
or public residential education facility. The IEP
assumed that Niki would not be hospitalized and
was ready for an educational placement.

  However, during this prolonged administrative
process, Niki’s condition demanded immediate
medical intervention. Following a request from
Niki’s school that she be examined by a
psychiatrist, Niki’s parents admitted her
voluntarily to Valle Vista Hospital on March 15,
1991. Then, on April 23, 1991, before Niki’s
local school had filed its S-5 application with
the Indiana Department of Education, Niki’s
parents transferred her to Our Lady of Mercy
Hospital in Dyer, Indiana, where she would stay
for the next six months. During her hospital
stay, Niki received medical treatment for her
psychiatric needs at a cost of $121,021.13. This
care included daily psychiatric counseling,
strong doses of Lithium and Stelazine and daily
group and recreational therapy. The hospital
retained two teachers and a teacher’s aide on
staff for patients from 9 to 11 a.m., and Niki
received assignments from school while she was
hospitalized. However, Our Lady of Mercy Hospital
was not approved by the state as her IDEA
residential educational placement, nor were these
educational activities at Our Lady of Mercy
Hospital conducted pursuant to Niki’s IEP.

  On April 24, the day after Niki was admitted to
Our Lady of Mercy Hospital, Niki’s local school
corporation filed the long-anticipated S-5
application. Yet the next day, April 25, 1991, on
their own initiative, Niki’s parents filed a
petition in Indiana state court for Niki’s
involuntary commitment. Her parents alleged in
the commitment petition that Niki was suffering
from a psychiatric disorder and presented a
substantial risk of harming herself and others.
On May 17, 1991, the court reviewed a physician’s
report and entered an order of commitment for
Niki. The court agreed that Niki was mentally
ill: "schizo-affective, paranoid, suicidal,
satanical and with a mental disorder needing
long-term education, structural, locked
residential protective placement." The court
physician reported that a commitment longer than
ninety days would be necessary for Niki’s
condition to stabilize, and the court suggested
LaRue D. Carter Memorial Hospital, a state
hospital operated by the Indiana Division of
Mental Health, as the "most appropriate, least
restrictive facility for placement." LaRue
Hospital had no vacancies and could not
immediately admit Niki, so the court ordered Niki
to remain at Our Lady of Mercy Hospital until
space opened at an alternate psychiatric
institution designated by the Indiana Department
of Mental Health.

  Niki remained at Our Lady of Mercy Hospital for
another five months awaiting a transfer. Our Lady
of Mercy Hospital reported that Niki "worked
toward a goal ultimately of residential
treatment. . . . She showed significant gains.
She ceased to be delusional and hallucinating.
She slowly began to explore the relationship to
family and to become more appropriate. Certainly
the underlying pathology was still present
throughout. As of the time of discharge she
appeared to be stabilizing and preparing for
transfer to residential care." She eventually
transferred to LaRue Carter Hospital on November
6, and then pursuant to her IEP, moved to a
residential special education program at the
Maryhurst School in Louisville, Kentucky, on
December 2, 1991. It was not until December 3
that LaRue Carter Hospital notified the court
that Niki was no longer a danger to herself or
others and that her civil commitment could be
terminated.

  Meanwhile, a class of disabled children and
their parents filed a class-action lawsuit in
federal district court against the Indiana
Department of Education. The class alleged, among
other things, that the long delays between the
development of IEPs requiring residential
placement and the actual residential placements
violated the IDEA. Niki’s parents added Niki and
themselves as plaintiffs to the lawsuit in
August. On April 8, 1993, Judge Rudy Lozano
granted the plaintiffs’ motion for partial
summary judgment, explaining that "[a]n IEP must
be implemented as soon as possible following the
development of that IEP." Evans v. Evans, 818
F.Supp. 1215, 1222 (N.D. Ind. 1993).

  After some negotiation, the parties submitted an
agreed order settling the suit on June 20, 1994.
The order provides that the plaintiffs were
eligible to petition through administrative
adjudication for "educational and related
services reimbursement for each member of the
class who incurred costs for education and
related services between the date of the IEP . .
. and the date of actual placement." In addition,
the agreed order concluded that the state of
Indiana should place eligible disabled children
in a residential facility no later than thirty
days from their IEPs, "except where special
circumstances require otherwise." The order
explains, "Among the events that shall constitute
special circumstances for purposes of this
paragraph are IDOE’s lack of receipt of notice
[of the IEP]." The state of Indiana also agreed
to waive all the charges that Niki accrued at
LaRue Carter Hospital.

  Pursuant to the administrative procedure
described in the agreed order, the Butlers filed
a reimbursement claim for Niki’s bills from Our
Lady of Mercy Hospital because the
hospitalization occurred during the delay between
completion of Niki’s IEP on April 18, 1991, and
her placement at the Maryhurst School on December
2, 1991. The Indiana Department of Education
independent hearing officer approved the Butlers’
claims. However, because the services that Niki
received at Our Lady of Mercy Hospital were
primarily medical and psychiatric, the Indiana
Board of Special Education Appeals reversed the
hearing officer’s decision and found that Niki’s
psychiatric hospitalization was not "education or
related services" as required for reimbursement
by the agreed order. The Butlers appealed the
final denial of their reimbursement claim to
Judge Lozano who, with the parties’ consent,
referred the appeal to a magistrate judge.
Magistrate Judge Theresa L. Springmann then
affirmed the decision of the Board of Special
Education Appeals.

II.   Analysis

  The Butlers appeal the district court’s
affirmance of the denial of their IDEA
reimbursement claim by the Indiana Board of
Special Education Appeals. Under the IDEA,
parties may appeal the results of a state
administrative proceeding to a district court.
The district court "basing its decision on the
preponderance of the evidence shall grant such
relief as the court determines is appropriate."
20 U.S.C. sec. 1415(i)(2)(B)(iii). The district
court must confer due weight to the final
decisions of the state administrators and cannot
substitute its own notions of sound educational
policy for those of the school authorities. See
Heather S. v. State of Wis., 125 F.3d 1045, 1052-
53 (7th Cir. 1997) (quoting Rowley, 458 U.S. at
206); see also O’Toole v. Olathe Dist. Schs.
Unified Sch. Dist. No. 233, 144 F.3d 692, 698-99
(10th Cir. 1998). Now on appeal, we review the
district court’s judgment as a mixed question of
law and fact, reviewing the ultimate
determination de novo but reversing the court’s
factual findings only if clearly erroneous. See
Heather S., 125 F.3d at 1053.

  The agreed order in Evans declared that the
Indiana Department of Education was obligated by
federal law to place disabled children in
residential facilities within thirty days of the
IEP, except when "special circumstances require
otherwise." In addition, the agreed order
stipulated that the state of Indiana would
reimburse the plaintiffs, after administrative
adjudication of their claims, for qualified
"educational and related services" incurred as a
result of unreasonable delays between IEP
development and residential placement. The
Butlers contend that Niki’s hospitalization
expenses at Our Lady of Mercy Hospital are
reimbursable costs under the agreed order.

  The state of Indiana is not liable for Niki’s
hospitalization charges because those expenses
resulted from "special circumstances." Local
school officials approved Niki’s IEP on April 18,
1991, but the IEP was designed only for a
homebound placement and contemplated Niki’s
release from Valle Vista Hospital on April 23,
1991. The IEP recommended placement at a
residential educational facility to serve Niki’s
particular educational needs, not placement at a
hospital for further medical treatment. However,
Niki’s psychological condition demanded emergency
action. On April 23, instead of bringing her home
from Valle Vista Hospital, Niki’s parents
transferred Niki to Our Lady of Mercy Hospital
and two days later commenced involuntary
commitment proceedings. Niki’s unstable
psychological condition necessitated her
hospitalization and rendered her unable to handle
the residential placement recommended by the IEP.
In fact, it was only after several months of care
at Our Lady of Mercy Hospital that "she appeared
to be stabilizing and preparing for transfer to
residential care." By December, when Niki’s
commitment ended upon a declaration that she no
longer posed a risk to herself or others, the
state of Indiana had already moved her to the
Maryhurst School for her residential placement.
The district court and the Indiana Board of
Special Education Appeals found that Niki’s
transfer to Our Lady of Mercy Hospital and
subsequent commitment were special circumstances
that delayed her residential placement. We do not
find their conclusions clearly erroneous.

  Moreover, Niki’s hospital charges are not
recoverable because only payments for "education
or related services" are reimbursable under the
agreed order. The IDEA defines related services
as "transportation, and such developmental,
corrective, and other supportive services . . .
as may be required to assist a child with a
disability to benefit from special education." 20
U.S.C. sec. 1401(22). The IDEA lists a number of
services as examples, including medical care, but
stipulates "that such medical services shall be
for diagnostic and evaluation purposes only." Id.
Interpreting this clause, the Ninth Circuit held
that inpatient psychiatric hospitalization, like
Niki’s treatment at Our Lady of Mercy Hospital,
is not a special education placement and that the
hospitalization is not a related service
compensable under the IDEA. See Clovis Unified
Sch. Dist. v. California Office of Admin.
Hearings, 903 F.2d 635, 643 (9th Cir. 1990). The
court explained that the "analysis must focus on
whether [the disabled child’s] placement may be
considered necessary for educational purposes, or
whether the placement is a response to medical,
social, or emotional problems that is necessary
quite apart from the learning process." Id.
Although the Butlers contend that Niki received
some tutoring while hospitalized, we agree with
the Indiana administrative hearing board and the
district court below that Niki was admitted to
Our Lady of Mercy Hospital almost exclusively for
medical reasons, not for educational purposes,
and received almost exclusively medical services,
not educational ones. By April 1991, Niki’s acute
psychological condition demanded medical
intervention and took precedence over her
educational needs. As in Clovis, Niki’s
hospitalization was prompted by a psychiatric
crisis, was not approved by her IEP and occurred
at a medical facility that did not provide
educational services and had not been approved by
the state as her residential educational
institution. Clovis, 903 F.2d at 643-45.

  Niki’s IEP did not authorize psychiatric
hospitalization as a related service. The IEP
determines the IDEA services that the state will
provide subject to state approval and oversight.
Federal regulations require that the educational
placement of the disabled child be "based on his
or her IEP," 34 C.F.R. sec. 300.552(b)(2), and
Indiana law authorizes IDEA reimbursement for
related services only if "[the IEP] case
conference committee determines the student
requires the related services in order to benefit
from special education." 511 Ind. Admin. Code
sec. 7-13-5(a). As the Butlers themselves point
out, Niki’s education review committee decided
unanimously that Niki did not need
hospitalization. The Butlers conflate the
commitment proceedings and the IEP
recommendations to argue that the Indiana
Department of Education authorized Niki’s
hospitalization. They characterize the court’s
decision to commit Niki as based on Niki’s
educational needs and point to the court’s
recommendation of LaRue Carter Hospital, an
institution that the Butlers contend qualifies as
a residential education placement. However, the
commitment and IEP recommendations were decided
independently in separate proceedings. Niki’s
parents committed and hospitalized Niki outside
of the IDEA procedures and IEP recommendations.

  By the Butlers’ admission, Our Lady of Mercy
Hospital is a medical hospital, not a residential
education facility, and does not conform to the
recommendations in Niki’s IEP. There is scant
evidence that the hospital provided or was
equipped to provide anything more than meager
educational services, and Our Lady of Mercy
Hospital was not approved by the state to serve
as Niki’s IDEA residential educational placement
under Indiana law. See 511 Ind. Admin. Code sec.
7-12-5(o) (requiring state authorization before
placement); see also Clovis, 903 F.2d at 646
(disallowing reimbursement for hospitalization at
a facility not certified by the state department
of education). Niki’s IEP authorized a
residential placement in an educational facility,
but her commitment required a long hospital stay
instead and delayed the placement until December.
The IDEA requires in certain cases that the state
pay for institutionalized care or for tutors and
trained specialists at residential educational
placements, but only if "necessary to provide
special education and related services." 34
C.F.R. sec. 300.302. The IDEA does not require
reimbursement of medical-care costs for
psychiatric hospitalization when, as here, the
hospitalization addresses the child’s medical,
social or emotional disabilities apart from her
special education needs. See Clovis, 903 F.2d at
646-47.

  The Butlers do not argue that Niki’s IEP was
erroneous and should have recommended psychiatric
hospitalization at Our Lady of Mercy Hospital.
See, e.g., School Comm. v. Department of Educ.,
471 U.S. 359, 369 (1985) (holding that
reimbursement may be available when parents place
their child in an educational placement which the
IEP should have authorized in the first place).
In Mrs. B. v. Milford Board of Education, 103
F.3d 1114, 1122 (2d Cir. 1997), the Second
Circuit ordered state reimbursement for a
disabled child’s residential placement only after
the court found that the child’s IEP originally
should have recommended that placement as the
parents had insisted. Likewise in Seattle School
District, No. 1 v. B.S., 82 F.3d 1493, 1502 (9th
Cir. 1996), the Ninth Circuit held that the
school district was liable for the costs of a
residential placement at an accredited
educational institution approved by the state for
IDEA placements. The Butlers, however, did not
challenge Niki’s IEP and never requested a new
case conference to design a new IEP. In any case,
a revised IEP would not have authorized
residential educational placement at Our Lady of
Mercy Hospital because, as the Butlers’ counsel
admitted at oral argument, the facility "was not
in the business of providing residential
placement for educational purposes."

  It is true that the IDEA requires the provision
of certain medical accommodations within a
regular school environment for disabled students.
See Irving Independent Sch. Dist. v. Tatro, 468
U.S. 883 (1984); Seattle Sch. Dist., 82 F.3d
1493. For example, in Cedar Rapids Community
School District v. Garret F., 526 U.S. 66, 68
(1999), the Supreme Court held that the IDEA
required a school to provide a ventilator-
dependent student with a full-time nurse during
the school day. The Court reasoned that the sec.
1401(22) exclusion of medical services did not
exclude reimbursement for indispensable in-school
nursing because such "services that enable a
disabled child to remain in school during the day
provide the student with ’the meaningful access
to education that Congress envisioned.’" Id. at
973 (quoting Tatro, 468 U.S. at 891). Provision
of a nurse during the school day was borne of the
student’s educational needs because "the services
at issue must be provided if [the student] is to
remain in school." Cedar Rapids, 526 U.S. at 79;
see also Tatro, 468 U.S. at 891 (finding that in-
school catheterization, which enabled the child
to attend school, was a related service).

  In contrast, Niki’s hospitalization was not an
attempt to give her meaningful access to public
education or to address her special educational
needs within her regular school environment. This
is not a case in which the disabled student
needed medical assistance to remain in a regular
school; Niki was committed to a psychiatric
hospital. Niki might have continued to receive
school assignments and some tutoring while
hospitalized, but education was not the purpose
of her hospitalization. Unlike in-school nursing
in Cedar Rapids, Niki’s inpatient medical care
was necessary in itself and was not a special
accommodation made necessary only to allow her to
attend school or receive education. The IDEA does
not require the government to pay for all the
additional services made necessary by a child’s
disability, and it specifically excludes medical
services except those "for diagnostic and
evaluation purposes only." 20 U.S.C. sec.
1401(22). The district court and the state
appeals board were not clearly erroneous in
finding that Niki’s hospitalization was a medical
service extending beyond diagnostic and
evaluation purposes and thus excluded from
reimbursement by 20 U.S.C. sec. 1401(22).


  III.   Conclusion

  For the foregoing reasons, we Affirm the decision
of the district court denying the Butlers’ IDEA
reimbursement claim under the Evans agreed order.
