                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


4-13-2004

L. v. Dept Pub Welfare PA
Precedential or Non-Precedential: Precedential

Docket No. 02-3721




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Recommended Citation
"L. v. Dept Pub Welfare PA" (2004). 2004 Decisions. Paper 749.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/749


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                     PRECEDENTIAL

   UNITED STATES COURT OF                    Robert W. Meek
APPEALS FOR THE THIRD CIRCUIT                Mark J. Murphy (Argued)
                                             Robin Resnick
                                             Disabilities Law Project
              No. 02-3721                    Philadelphia, PA l9l07

                                                    Attorneys for Appellants
FREDERICK L.; NINA S.; KEVIN C.;
   STEVEN F., ON BEHALF OF                   D. Michael Fisher
THEMSELVES AND ALL PERSONS                         Attorney General
    SIMILARLY SITUATED,                      Claudia M. Tesoro (Argued)
                                                   Senior Deputy Attorney General
                            Appellants       Calvin R. Koons
                                                   Senior Deputy Attorney General
                    v.                       John G. Knorr, III
                                                   Chief Deputy Attorney General
    DEPARTMENT OF PUBLIC                     Office of Attorney General of
       WELFARE OF THE                              Pennsylvania
     COMMONWEALTH OF                         Philadelphia, PA 19107
  PENNSYLVANIA; FEATHER O.
  HOUSTOUN, IN HER OFFICIAL                         Attorneys for Appellees
  CAPACITY AS SECRETARY OF
   PUBLIC WELFARE FOR THE                    Robert D. Fleischner
     COMMONWEALTH OF                         Center for Public Representation
        PENNSYLVANIA                         Northampton, MA 01060

                                                    Attorney for Amici-Appellants
  On Appeal from the United States
District Court for the Eastern District of
             Pennsylvania                          OPINION OF THE COURT
         (D.C. No. 00-cv-04510)
   District Judge: Berle M. Schiller
                                             SLOVITER, Circuit Judge.

       Argued October 15, 2003                      Appellants represent a class of
                                             mental health patients institutionalized in
   Before: SLOVITER, ROTH, and               the Norristown State Hospital, a large
     CHERTOFF, Circuit Judges                congregate psychiatric hospital located in
                                             southeast Pennsylvania, who are qualified
         (Filed April 13, 2004)              for and wish to be placed in a community-
care setting.1 They seek declaratory and           persistent mental disabilities who are
permanent injunctive relief to remedy what         institutionalized at Norristown State
they claim are violations of their federal         Hospital (“NSH”). Approximately 32% of
statutory rights to a more accelerated             the class members are classified as short-
program of deinstitutionalization. They            stay patients (approximately 10 months)
appeal from the judgment for the                   and 68% of the class members are
Commonwealth entered by the District               c l a ss i f ie d a s l o n g -s t a y p a t i en t s
Court following a bench trial. Appellants          (approximately 12 and a half years).
contend that the District Court erroneously        Appellee Department of Public Welfare of
interpreted the applicable legal principles.       the Commonwealth of Pennsylvania
The issue raised is significant as it              ( “ DPW ” ) is an ag ency of the
implicates the extent to which the state           Commonwealth of Pennsylvania (“the
may rely on general cost concerns to avoid         Commonwealth”) that provides publicly
its statutory responsibility to eliminate          funded mental health care in institutional
disabilities discrimination.                       and community settings. Also named as a
                                                   defendant is Feather O. Houston in her
                     I.                            official capacity as Pennsylvania’s
                                                   Secretary of Public Welfare. The Office
   FACTS AND PROCEDURAL                            of Mental Health and Substance Abuse
HISTORY                                            Services (“OM HSAS”), is a department of
                                                   DPW that has the responsibility to ensure
     Appellants represent approximately            local access to mental health and substance
300 class members with serious and                 abuse treatment. App. at 712. OMHSAS
                                                   operates nine psychiatric facilities and one
                                                   nursing facility throughout Pennsylvania.
   1                                               NSH is one such facility. App. at 717.
       The class includes all qualified
                                                   Amici curiae represent fourteen former
and willing “persons institutionalized at
                                                   state mental health agency administrators
Norristown State Hospital at any time
                                                   and have submitted a brief in support of
after September 5, 2000 with the
                                                   appellants.
following exceptions: persons who, at
the time of final adjudication, are: 1)
                                                           Appellants filed this class action
confined in the Regional Forensic Unit
                                                   lawsuit in September 2000, claiming that,
and Juvenile Forensic Unit; 2) are
                                                   because the class members are qualified
involuntarily committed . . . ; 3) have
                                                   and prepared for community-based
criminal charges pending who have been
                                                   services,         their     continued
found to be incompetent to stand trial; or
                                                   institutionalization violates the anti-
4) otherwise are subject to the
                                                   discrimination and integration mandates of
jurisdiction of the criminal courts.” App.
                                                   the Americans with Disabilities Act
at 711 (Jt. Stipulation).
                                                   (“ADA”), 42 U.S.C. §§ 12131-12134 and

                                               2
28 C.F.R. § 35.130(d) (1998), and Section         concerns alone do not provide the
504 of the Rehabilitation Act (“RA”), 29          Commonw ealth grounds for a
U.S.C. § 794 and 28 C.F.R. § 41.51(d)             fundamental-alteration defense to their
(1998).2 They claim that DPW has failed           claims.
to provide services to them in the most
integrated setting appropriate to their                  On May 6, 2002, the parties filed
needs and has developed no plan to assure         extensive joint stipulations regarding the
that this be done. They also claim that           facts underlying this case. App. at 710-39.
DPW has failed to require treatment teams         In pertinent part, they stated that between
to prepare appropriate individualized             1976 and 1998, DPW closed thirteen state-
assessments of the service needs of the           operated psychiatric facilities, including
class members that are a prerequisite for         two facilities in southeastern Pennsylvania
community placement. In their answer,             in 1990 and 1998. App. at 717.
defendants admit some of the detailed
allegations of the amended complaint and                  The joint stipulations explain that
deny others. Essentially, defendants assert       one way in which DPW closed hospitals is
as an affirmative defense the analysis in         by moving qualified patients into
Olmstead v. L.C., 527 U.S. 581 (1999),            community care programs. In order to
where a plurality of the Supreme Court            determine when a patient is ready for
allowed the states to resist modifications        community care, NSH county program
that would effect a fundamental alteration        officers hold “monthly Hospital/County
of the states’ services and programs.             Discharge Planning meetings,” at which
Although Appellants acknowledge that the          staff and county representatives conduct
statutes would not require additional             “independent, ongoing assessments of
community placements if the increase              each consumer’s discharge readiness and
would require a fundamental alteration of         aftercare needs,” and address “unresolved
the Commonwealth’s policy and budget,             impediments to discharge.” App. at 715.
Appellants argue that the cost of providing       However, NSH does not maintain formal
the additional placements would be                waiting lists for community services. App.
defrayed by cost-savings from bed closures        at 722.
in NSH. They further argue that cost
                                                        The parties also stipulated that
                                                  DPW receives the bulk of its mental health
   2                                              funding from the Commonwealth through
       The language and implementing
                                                  a budgetary process set out in 71 P.S. §§
regulations of the ADA and the RA are
                                                  229-240. App. at 723. Under Pa. Code §
virtually the same and the parties
                                                  4215.21, county programs must annually
acknowledge the congruence of their
                                                  develop and submit to DWP and
integration mandates. Frederick L. v.
                                                  OMHSAS an assessment of needs for
Dep’t of Pub. Welfare, 217 F. Supp. 2d
                                                  community-based mental health services
581, 591 (E.D. Pa. 2002).

                                              3
and budget estimates. App. at 724.               581 (E.D. Pa. 2002). The District Court
OMHSAS submits a proposed budget to              held that Appellants were not entitled to
DPW, which can modify it, and DPW                the requested relief because it would have
submits the budget to the Governor’s             required a fundamental alteration of the
Office of Budget. The Governor then              Commonwealth’s programming and
formulates a comprehensive budget and            budgetary allocations. The District Court
submits it to the Legislature, which             also found that providing additional
ultimately enacts DPW’s budget. App. at          community placements would have
724.                                             negatively affected other state residents
                                                 with mental disabilities who received
       DPW’s primary funding mechanism           services in an institutional setting.
for new community care placements has
been the Community Hospital Integration                  Appellants contend that the District
Projects Program (“CHIPP”) and the               Court erred by stating that the immediate
Southeastern Integration Projects Program        extra cost coupled with a lack of
(“SIPP”). App. at 15, 725. The number of         immediate cost-savings associated with
community care placements has varied             their requested relief, without more,
widely from year to year: 38 in 1996-97;         provided DPW with a fundamental-
155 in 1997-98; 82 in 1998-99; 121 in            alteration defense. Appellants further
1999-2000; 43 in 2000-01; and 60                 argue that the District Court erred in
(proposed) in 2001-02. App. at 726-27.           finding that DPW’s pre-budgetary
                                                 involvement in the legislative process was
       The stipulations describe instances       “beyond judicial scrutiny.” Frederick L.,
in which DPW did not request the full            217 F. Supp. 2d at 593.
amount of mental health monies requested
by the counties and instances in which                               II.
DPW initially requested add itional
community placements, but the Governor                        DISCUSSION
informed DPW that no funding would be
available or rejected the request. App. at               We may set aside the District
725, 729. However, apart from the budget         Court’s conclusions of fact only for clear
process, DPW has funded 48 additional            error, but we subject its conclusions of law
community care slots through savings in          to plenary review. See, e.g., Goldstein v.
overtime. App. at 730.                           Johnson & Johnson, 251 F.3d 433, 441 (3d
                                                 Cir. 2001).
      Following a three-day bench trial in
May 2002, the District Court issued a            A. Statutory Framework
memorandum opinion on September 5,
2002 in favor of DPW. Frederick L. v.                 This case arises under Title II of the
Dep’t of Pub. Welfare, 217 F. Supp. 2d           ADA and Section 504 of the RA. Title II

                                             4
of the ADA provides that “no qualified             individuals with disabilities.” 28 C.F.R. §
individual with a disability shall, by             35.130(d). “[T]he most integrated setting
reasons of such disability, be excluded            appropriate to the needs of qualified
from participation in or be denied the             individuals with disabilities” is “a setting
benefit of services, programs, or activities       that enables individuals with disabilities to
of a public entity, or be subjected to             interact with nondisabled persons to the
discrimination by any such entity.” 42             fullest extent possible.” 28 C.F.R. pt. 35,
U.S.C. § 12132. The ADA largely mirrors            App. A, p. 450 (1998). In short, where
Section 504 of the RA, which states as             appropriate for the patient, both the ADA
follows:                                           and the RA favor integrated, community-
                                                   based treatment over institutionalization.
       No otherwise qualified                      Significantly, none of the parties contests
       individual with a disability .              that proposition.
       . . shall, solely by reason of
       her or his disability, be                   B. Olmstead v. L.C.
       excluded f ro m the
       participation in, be denied                         The parties agree that this case is
       the benefits of, or be                      governed by the Supreme Court’s decision
       subjected to discrimination                 in Olmstead v. L.C., 527 U.S. 581 (1999).
       under any program or                        In Olmstead, two mental health patients
       activity receiving Federal                  alleged that the State of Georgia violated
       financial assistance or under               the ADA integration mandate by
       any program or activity                     unnecessarily segregating them in mental
       conducted by any Executive                  health institutions and failing to place
       agency or by the United                     them in community-based treatment
       States Postal Service.                      programs. Id. at 593-94. The Court found
                                                   that the ADA reflects the congressional
29 U.S.C. § 794(a). We have construed              conclusion          that unjustified
the provisions of the RA and the ADA in            institutionalization perpetuates prejudice
light of their close similarity of language        against mental health patients and severely
and purpose. See Helen L. v. DiDario, 46           diminishes their quality of life. Id. at 600-
F.3d 325, 330-32 (3d Cir.), cert. denied,          01. The Olmstead plurality held that,
516 U.S. 813 (1995).                               under certain circumstances, unnecessary
                                                   institutionalization and segregation may
        The ADA and RA’s anti-                     constitute discrimination. Id. at 597.
discrimination principles culminate in their
integration mandates, which direct states                 Justice Ginsburg, writing for the
to “administer services, programs, and
activities in the most integrated setting
appropriate to the needs of qualified

                                               5
plurality, 3 emphasized that the integration              mo difica tions would
mandate “is not boundless.” Id. at 603. It                fundamentally alter the
is quali fied by the “reasonable                          nature of the service,
modifications” and “fundamental-                          program, or activity.
alteration” clauses, which provide that:
                                                   28 C.F.R. § 35.130(b)(7) (1998). In light
       [a] public entity shall make                of these qualifications, the plurality held
       reasonable modifications in                 that unnecessary institutionalization only
       policies, practices , or                    violates the ADA when the following
       procedures wh en th e                       conditions are met:
       modifications are necessary
       to avoid discrimination on                         [1] the State’s treatment
       the basis of disability, unless                    p r o f e s s io n als have
       the public entity can                              determined that community
       demonstrate that making the                        placement is appropriate, [2]
                                                          the transfer fro m
                                                          institutional care to a less
   3                                                      restrictive setting is not
       Justice Ginsburg’s plurality
                                                          opposed by the affected
opinion was joined by Justices
                                                          individual, and [3] the
O’Connor, Souter, and Breyer. Although
                                                          placement can be reasonably
Justice Kennedy concurred in the
                                                          accommodated, taking into
judgment of the Court, he wrote
                                                          account [a] the resources
separately to explore the question of
                                                          available to the State and [b]
whether plaintiffs should have been
                                                          the needs of others with
required to prove that they had been
                                                          mental disabilities.
treated differently than similarly-situated
persons. See Olmstead, 527 U.S. at 611-
                                                   Olmstead, 527 U.S. at 587. The Olmstead
15 (Kennedy, J., concurring). Justice
                                                   plurality thus made clear that a state may
Kennedy agreed with the plurality that
                                                   defend against disability discrimination
States have a responsibility to provide
                                                   claims by establishing that the requested
community-based mental health services,
                                                   community services would require a
but characterized the responsibility as a
                                                   fundamental alteration of the state’s
limited one and emphasized that States
                                                   mental health system. Id.4
are entitled to considerable deference in
allocating their budgets. Id. at 615.
Justice Stevens also joined the judgment
                                                      4
of the plurality, but did not believe the               Under this scheme, the plaintiff first
question was properly before the Court.            bears the burden of articulating a
See Olmstead, 527 U.S. at 607-08                   reasonable accommodation. The burden
(Stevens, J., concurring).                         of proof then shifts to the defendant, who

                                               6
       Here, the parties do not dispute that               fundamental- alteratio n
Appellants have satisfied the first two                    component of the
Olmstead requirements.        The District                 reasonable-modificatio ns
Court found that one-third of the                          regulation would allow the
Appellants were qualified for community-                   State to show that, in the
based mental health services and an even                   allocation of available
larger portion of the class expressed                      resources, immediate relief
affirmative interest in being placed in                    for the plaintiffs would be
community-based care. The point of                         inequitable, given the
contention instead arises from the                         responsibility the State has
interpretation of Olmstead’s third prong                   undertaken for the care and
regarding reasonable accommodation and                     treatment of a large and
the fundamental-alteration defense.                        diverse popula tion of
                                                           p e r s o n s w i th m e n t a l
C. Reasonable Modifications and the                        disabilities.
Fundamental-Alteration Defense
                                                   Id. at 604. The plurality thus characterized
       The Olmstead plurality explained            the state’s available resources and
the reasonable-modifications clause and            responsibility to other institutionalized
fundamental-alteration defense as follows:         mental health patients as primary
                                                   c o n s i d e ra t i o n s i n e v a lu a t i n g a
       Sensibly    construed,    the               fundamental-alteration defense.

                                                           Although Olmstead permits courts
                                                   to consider a state’s financial burdens in
must establish that the requested relief
                                                   evaluating the fundamental-alteration
would require an unduly burdensome or
                                                   defense, the Olmstead plurality expressly
fundamental alteration of state policy in
                                                   proscribed two methods of cost-analysis.
light of its economic resources and its
                                                   First, courts may not simply compare the
obligations to other mentally ill persons
                                                   cost of providing the plaintiffs with
in the institutional setting. Although
                                                   immediate relief against the entirety of the
Appellants argue that the District Court
                                                   state’s mental health budget because the
reversed the burden of proof by requiring
                                                   state’s mental health budget will almost
Appellants to demonstrate that their
                                                   always dwarf the requested relief. Id. at
requested relief did not require a
                                                   603. Second, courts may not merely
fundamental alteration, this contention is
                                                   compare the cost of institutionalization
belied by the fact that the District Court
                                                   against the cost of community-based
expressly acknowledged the appropriate
                                                   health services because such a comparison
burdens of proof in its memorandum
                                                   would not account for the state’s financial
opinion. See Frederick L., 217 F. Supp.
                                                   obligation to continue to operate partially
2d at 592 n.12.

                                               7
full institutions with fixed overhead costs.              State’s choices in basic
Id. at 604 n.15. It is notable for our                    matters such as establishing
purposes that the plurality did not envision              or declining to establish new
the fundamental-alteration defense to be a                programs.        It is not
rare one that states would seldom be able                 reasonable to read the ADA
to invoke. See id. at 603 (eschewing                      to permit court intervention
formulation of fundamental-alteration                     in these decisions.
defense as one permitted “only in the most
limited of circumstances”).                        Id. at 612-13 (Kennedy, J., concurring).5
                                                   Justice Kennedy further stated that states
       In his concurrence, Justice Kennedy         have considerable latitude in analyzing the
underscored his opposition to judicial             “comparative costs of treatment”:
involvement in political and/or budgetary
decisions outside the province of the law.                The State is entitled to wide
He stated that federal courts should accord               discretion in adopting its
deference to state policym akers’                         o w n systems of cost
programmatic and political funding                        analysis, and, if it chooses,
decisions regarding mental health funding:                to allocate health care
                                                          resources based on fixed
       No State has unlimited                             and overhead costs for
       resources, and each must                           wh ole institutions and
       make hard decisions on how                         programs. We must be
       m u c h t o a ll o c a te to                       cautious when we seek to
       treatment of diseases and                          infer specific rules limiting
       disabilities. If, for example,                     S t a t e s ’ choic es w h e n
       funds for care and treatment                       Congress has used only
       of the mentally ill, including                     general language in the
       the severely mentally ill, are                     controlling statute.
       reduced in order to support
       programs directed to the                    Id. at 615 (Kennedy, J., concurring).
       treatment and care of other
       disabilities, the decision
       may be unfortunate. The
       judgment, however, is a                        5
                                                           Justice Kennedy further opined
       political one and not within
                                                   that a state without any community
       the reach of the statute.
                                                   treatment programs in place would not be
       G r a v e c o n st i tu t i o n al
                                                   required to create such programs under
       concerns are raised when a
                                                   the ADA. Id. at 613 (Kennedy, J.,
       federal court is given the
                                                   concurring). We express no opinion on
       authority to review the
                                                   this view.

                                               8
D. Needs of Other Mentally Ill Persons              A. Budget Constraints and Needs of
                                                    Others
       Olmstead explains that the ADA
does not compel states to provide relief                    As mentioned above, Olmstead
where the requested relief would require            directs courts to evaluate the fundamental-
the state to neglect the needs of other             alteration defense in light of the state’s
segments of the mentally disabled                   resources and its responsibility to continue
population who are not litigants before the         providing services to mental health
court. Id. at 597 (recognizing “States’             patients other than those seeking
need to maintain a range of facilities for          community care.
the care and treatment of persons with
diverse mental disabilities, and the States’               The bulk of Appellants’ objections
obligation to administer services with an           have focused on the following statement in
even hand”).                                        the “Conclusions of Law” section of the
                                                    District Court’s opinion:
        In addition, the plurality reasoned
that a state may avoid liability by                        Even if cost savings may
providing “a comprehensive, effectively                    eventua lly be achieved
working plan for placing qualified persons                 t h r o u g h
with mental disabilities in less restrictive               deinstitutionalization, the
settings, and a waiting list that moved at a               immediate extra cost, and
reasonable pace [and was] not controlled                   the concomitant lack of
by the State's endeavors to keep its                       immediate aggregate cost
institutions fully populated.” Id. at 605-06.              saving, is sufficient to
It is this language that informs our                       establish             that     a
decision in this case.                                     “fundamental alteration”
                                                           would be required if the
                    III.                                   relief sought by plaintiffs –
                                                           a c c e le ra te d c o m m unity
   APPLICATION TO THIS CASE                                placements – were granted
                                                           in this case.
       Appellants, along with Amici,
argue that the District Court erroneously           Frederick L., 217 F. Supp. 2d at 593
construed the fundamental-alteration                (internal citations omitted). Appellants
defense with respect to three primary               a r gue that th e C ommonw e alth ’s
factors: 1) cost constraints and                    articulation of additional costs that would
consideration of institutionalized persons;         attend deinstitutionalization does not
2) past progress in deinstitutionalization;         automatically give rise to a fundamental-
a n d 3 ) l o ng-te r m p l a n n i n g fo r        alteration defense. Fu rthermore ,
deinstitutionalization.                             Appellants continue, these cost concerns

                                                9
do not automatically make a requested                      to the recipient’s overall
modification unreasonable.       In sum,                   budget, but a “case-by-case
Appellants urge that the Commonwealth’s                    analysis weighing factors
fiscal concerns, without more, cannot                      that include: (1)[t]he overall
provide the sole basis for a fundamental-                  size of the recipient's
alteration defense. DPW acknowledges                       program with respect to
that government agencies frequently must                   number of e m ployees,
spend money in order to meet their ADA                     n u m b e r an d t yp e o f
and RA obligations, absent a windfall of                   facilities, and size of
cost-savings.                                              budget; (2)[t]he type of the
                                                           r e c i p i e n t ’ s o p e r a t io n ,
        We have not previously considered                  including the composition
the extent to which states may assert a                    a n d str uctur e of th e
fundamental-alteration defense based on                    recipient’s workforce; and
fiscal concerns alone, but now hold that if                (3)[t]he nature and cost of
the District Court’s opinion is read as                    the accommodation
focusing only on immediate costs, as                       n e e d e d.” 2 8 C FR §
Ap pellants contend, it would be                           42.511(c) (1998); see 45
inconsistent with Olmstead and the                         CFR § 84.12(c) (1998)
governing statutes. First, Olmstead lists                  (same).
several factors that are relevant to the
fundamental-alteration defense, including           Id. at 606 n.16.
but not limited to the state’s ability to
continue meeting the needs of other                         Second, at least one court of
institutionalized mental health patients for        appeals and one district court have held
whom community placement is not                     that a singular focus upon a state’s short-
appropriate, whether the state has a                term fiscal constraints will not suffice to
waiting list for community placements,              establish a fundamental-alteration defense.
and whether the state has developed a               In Fisher v. Oklahoma Health Care
comprehensive plan to move eligible                 Authority, 335 F.3d 1175 (10th Cir. 2003),
patients into community care settings.              the plaintiffs challenged the state’s
Olmstead, 527 U.S. at 605-06. The Court             decision to limit the number of
noted that Section 504 of the RA specifies          prescriptions provided for outpatients with
that:                                               disabilities who received Medical
                                                    Assistance, irrespective of medical
       [the fundamental-alteration                  necessity, while it continued providing
       and undue hardship] inquiry                  unlimited prescriptions to disabled in-
       requires not simply an                       patients in nursing homes. The Fisher
       assessment of the cost of the                plaintiffs argued that because the policy
       accommodation in relation                    would require low-incom e disabled

                                               10
persons to move to nursing homes in order             F. Supp. 2d 1017 (D. Haw. 1999), a class
to continue receiving full coverage of all            of mentally retarded persons on a waiting
of their prescriptions, the state had violated        list for Hawaii’s community-based
the ADA integration mandate. Id. at 1177-             program sued the state for violations of the
78. Oklahoma countered that granting                  ADA and the RA, seeking additional
plaintiffs’ requested relief would have               com mu nity place men ts and the
required a fundamental alteration in light            development of a program to encourage
of its fiscal crisis. Id. at 1178, 1182. The          movement on the waiting list at a
district court entered summary judgment               reasonable pace. Hawaii attempted to
against the plaintiffs because they were not          assert a fundamental-alteration defense
currently institutionalized nor did they face         based on the theory that increased
a risk of institutionalization. Id. at 1181.          community placements would require the
                                                      state to ignore state and federal funding
        After         holding        that             limits and alter its existing programs by
institutionalization was not a prerequisite           establishing an “unlimited” state fund for
to plaintiffs’ ADA claim, the Court of                community mental health services. Id. at
Appeals for the Tenth Circuit rejected the            1034. The district court rejected the
state’s fundamental-alteration defense,               state’s defense, noting that a potential
stating that Oklahoma’s fiscal problems               funding problem, without more, did not
did not establish a per se fundamental-               give rise to a fundamental-alteration
alteration defense. Id. at 1182. The court            defense. Id. We agree with the Makin
reviewed the legislative history of the               court and with Appellants that states
ADA and concluded that Congress                       cannot sustain a fundamental-alteration
contemplated that states sometimes would              defense based solely upon the conclusory
be required to make short-term financial              invocation of vaguely-defined fiscal
outlays, even in the face of mounting fiscal          constraints.
problems. Id. at 1183. The court thus
decided that such financial obligations did                   We do not read the District Court’s
not automatically relieve the state from              opinion in this case as relying solely on the
meeting Congress’ integration mandate.                increased short-term costs that additional
Id. Because the court found that the                  community placements would entail,
plaintiffs may have had a meritorious                 notwithstanding the sentence in its opinion
claim under the ADA, it reversed the                  that suggests a lack of cost-savings alone
district court’s grant of summary judgment            will sustain Pennsylvania’s fundamental-
and remanded for consideration of whether             alteration defense. Although the court
the plaintiffs’ requested modifications               noted the absence of cost-savings and the
would fundamentally alter the program.                requisite spending that new community
Id. at 1186.                                          placements would entail, it undertook
                                                      more comprehensive analyses that focused
       Similarly, in Makin v. Hawaii, 114             upon DPW’s unsuccessful attempts at fund

                                                 11
procurement through the Governor’s                               First, Appellants dispute the District
budget. App. at 20-21. It recognized that                 Court’s factual conclusion that moving
DPW had submitted evidence that it had                    currently institutionalized persons into
responsibly spent its budgetary allocation,               community settings wo uld req uire
re-allocated overtime savings to increase                 significant capital outlay by the
funding for community-based mental                        Commonwealth.        Because Appellants
health services, and had a favorable bed                  anticipate that the lion’s share of the
closure rate when compared with western                   community care costs would be offset by
Massachusetts, which is considered to be                  the savings reaped from hospital bed
a model region for deinstitutionalization.                closures, they estimate that the additional
App. at 7, 20-21, 30. Moreover, the                       community placements requested would
D i s t r ic t C o u r t e m p h a s i ze d t h at        have a net cost of $1 million. Appellants’
OMHSAS’s ability to increase the number
of community care placements was
hampered by community opposition to
                                                          budget; that is, that the District Court
further expansion in the neighborhoods
                                                          erred in concluding that it should
where the community centers were
                                                          consider DPW’s mental health budget,
located, App. at 23, and that increasing the
                                                          rather than the entire budget for DPW.
number of community placements would
                                                          Frederick L., 217 F. Supp. 2d at 592
eventually lead to a diminution of services
                                                          (“The resources available to the State
for institutionalized persons under the
                                                          refers to the state's mental health budget
Commonwealth’s care. App. at 24.
                                                          and nothing beyond that budget.”)
                                                          (internal quotation and citation omitted).
       Appellants       c h a l le n g e th e
                                                          Although there are a few references to
Common wealth’s position on cost
                                                          “resources available to the State,”
constraints, arguing that 1) the relief they
                                                          DPW’s myriad non-mental health
request would require only negligible cost
                                                          responsibilities, which include cash
increases; 2) DPW could increase its
                                                          welfare distribution, medical assistance,
community care budget by simply
                                                          food stamps provision, youth centers,
requesting additional funds from the
                                                          forestry camps, and chaplaincies, have no
legislature; and 3) DPW could shuffle its
                                                          nexus to the “care and treatment” of the
current budget to favor increased
                                                          mentally ill described in Olmstead. Id. at
community care programs. We consider
                                                          587. Upon examination of the language
and reject each argument. 6
                                                          used in Olmstead, we agree with the
                                                          District Court that it is DPW’s mental
                                                          health budget, rather than DPW’s more
   6
       Appellants also argue that, in                     general budget, that must be considered.
undertaking its cost analysis of the                      See Olmstead, 527 U.S. at 595, 596, 597,
“resources available to the State,” the                   603 (referring to state’s “mental health
District Court focused upon the wrong                     budget” six times).

                                                     12
cost comparisons, however, are precisely                        funding amounts beyond that which is
the sort of reductive cost comparisons                          p e r m i t te d unde r the Gov e r n o r ’ s
proscribed by the Olmstead plurality, 527                       Guidelines.
U.S. at 603-04, as well as by Justice                                     Finally, Appellants argue that the
Kennedy. Id. at 612-13 (Kennedy, J.,                            District Court erred by concluding that
concurring). In following Olmstead and                          DPW responsibly used its budgeted
r e j e ct i n g A p p e l l a n ts’ d i s f a v o r e d        monies because DPW should have shifted
methodology, the District Court did not                         money from other programs to fund
err.                                                            additional com mu nity placem ents .
                                                                Assuming a limited pool of budgetary
        Second, Appellants argue that the                       resources, if DPW had siphoned off
District Court erred by not considering                         monies appropriated for institutional care
DPW’s ability to lobby the legislature for                      for mental health patients in order to
additional funds during the budgetary                           increase community placements, DPW
process. Under the budget process in the                        would have run afoul of Olmstead
Commonwealth, DPW must submit a                                 prohibition on favoring those “who
report to the Commonwealth requesting an                        commenced civil actions” at the expense
operating budget for the upcoming year                          of institutionalized mental health patients
before DPW receives its budgetary                               who are not before the court. Any effort to
allocation. The Governor may then accept                        institute fund-shifting that would
or reject DPW’s request. Appellants                             disadvantage other segments of the
contend that DPW does not request the full                      mentally disabled population would thus
amount necessary to fund all of the                             fail under Olmstead. 527 U.S. at 604-06.
community placements requested. The
District Court concluded that the pre-                                  However, Appellants argue that
budgetary process “is beyond judicial                           DPW should re-allocate its funds to favor
scrutiny.” Frederick L., 217 F. Supp. 2d at                     additional community placements to the
593. We agree. This is not an issue of                          detriment of budget items that are not
legislative immunity, which DPW has not                         associated with community care or the care
claimed, but a recognition of the realities                     of institutionalized persons. For example,
of the budgetary process. DPW explains                          the parties’ stipulations explain that DPW
that it would not have been able to request                     requested additional funding for several
the full amount required to fund all of the                     non-community care items, such as
community placements needed because it                          approximately $9.5 million for a general
must make its budget request pursuant to                        3.5% salary increase for state psychiatric
the Governor’s Guidelines, which limit the                      services personnel; $2.5 million for
percent-increase that it may request. That                      contracted repairs; $186,000 for consultant
process is unchallenged here. We cannot                         fees; $5.7 million for specialized services;
hold, as Appellants would have us do, that                      $420,000 for contracted personnel
DPW should have requested additional                            services; $372,000 for travel; $47,000 for

                                                           13
out-service training travel; $1.1 million for               had a comprehensive,
motorized and other rentals; $75,000 for                    effectively working plan for
library materials and supplies; $116,000                    placing qualified persons
for other services and supplies; and $60.6                  with mental disabilities in
million for information systems. App. at                    less restrictive settings, and
730-32. The Commonwealth explains that                      a waiting list that moved at
some of the aforementioned increases are                    a reasonable pace not
mandated under the terms of the                             controlled by the State’s
employees’ union contract and the other                     endeav ors to keep its
costs assist in providing “a safe and secure                institutions fully populated,
environment” in which to provide “active                    t              h             e
treatment” to institutionalized patients.                   reasonable-modificatio ns
Appellees’ Br. at 53-54.                                    standard would be met.

        Because the judiciary is not well-           Olmstead, 527 U.S. at 605-06. Appellants
suited to superintend the internal                   and Amici argue that DPW did not
budgetary decisions of DPW or evaluate               main tain a waiting list or have
its physical plant needs, we decline to rely         comprehensive, strategic plans to continue
on Appellants’ assertion that the                    deinstitutionalization.
aforementioned costs are not essential to
the upkeep of DPW’s care-giving                             The District Court found that DPW
apparatus. Our rejection of Appellants’              begins discharge planning as soon as a
challenges to the District Court’s analysis          patient is admitted, with DPW holding
of the cost issues does not mean that we             monthly meetings to determine which
similarly adopt the court’s acceptance of            patients are ready for discharge. However,
the Commonwealth’s fundamental-                      the Court acknowledged that, while the
alteration defense.                                  Southeast Region Mental Health Planning
                                                     Task Force, which is composed of
B. Past Progress and Future Planning                 OMHSAS administrators, mental health
for Deinstitutionalization                           care consumers and providers, had
                                                     developed a five-year plan for integration
        In setting forth the circumstances           in 1994, the Commonwealth has not
under which a state might be relieved of its         demonstrated that it has a comprehensive
responsibility to provide ADA relief on the          or actionable plan to support increased
basis of the fundamental-alteration                  integration through community placements
defense, the Olmstead plurality provided             or any other mechanisms. App. at 18.
the following hypothetical:
                                                           S o m e c o u r t s h a v e giv e n
       If, for example, the State                    considerable weight to the presence of a
       were to demonstrate that it                   planning and/or waiting list referred to by

                                                14
the Olmstead plurality as examples of                       indicates that the Supreme
factors to be considered in connection with                 Court intended to shield
the fundamental-alteration defense. The                     States that had focused on
Makin plaintiffs had alleged that the state                 and planned for the need to
affirmatively “mismanag[ed] the wait list”                  place peop le into the
for community care and the court found no                   community on a statewide
evidence of any “comprehensive plan[s] to                   basis, prior to and apart
keep the waiting list moving.” Makin, 114                   from the litigation before
F. Supp. 2d at 1035 (internal quotation and                 the Court. A comprehensive
citation omitted). The court thus rejected                  plan is more than an annual
the state’s fundamental-alteration defense                  inquiry into whether there
in light of the absence of a comprehensive                  are extra funds left over in
integration plan, a slow-moving waiting                     the budget to fund creation
list, and the state’s vague protest of                      of community beds. It is
general fiscal problems.                                    long-term and central to the
                                                            State’s mental health policy,
        In contrast, a Maryland district                    not an “add-on” or “extra
court noted that Maryland maintained a                      funding” item subject to
waiting list and a waiting list equity fund                 elimination at the first chill
and also prioritized categories of crisis                   of budget difficulties.
resolution for services; further, there was
“no indication that the failure to move              Amici’s Br. at 23. Appellants argue that
people off the waiting list result[ed] from          the District Court should have rejected the
an endeavor to keep the State’s institutions         Commonwealth’s fundamental-alteration
fully populated,” as proscribed in                   defense based on DPW’s failure to
Olmstead. Williams v. Wasserman, 164 F.              develop comprehensive plans or a waiting
Supp. 2d 591, 633 n.37 (D. Md. 2001).                list. The Commonwealth responds that
Based in part on these factors, the court            Olmstead does not require the existence of
sustained the state’s fundamental-                   a comprehensive plan nor does it state that
alteration defense. Id. at 630-38.                   a non-stagnant waiting list is the only way
                                                     that a state can avoid liability. Appellees’
       Appellants, joined by Amici, urge             Br. at 41 n.27.
that we adopt long-term planning as a new
factor that should be used in determining                    Appellants also contend that under
whether a state is entitled to an affirmative        the facts of this case the District Court
defense to an ADA or RA claim. Amici                 erred in crediting DPW’s past progress in
argue as follows:                                    deinstitutionalization. The District Court
                                                     initially noted that “[t]he declining state
       T he emp hasis  on a                          hospital population is an important aspect
       c o m prehensive plan                         of this changing healthcare environment.

                                                15
In the 1950s, Pennsylvania housed                    d e v e l o p m e n t a l d i s a b il i ti e s ,” a n d
approximately 40,000 people in its state             M a r y l a n d ’ s l o n g - s t an d i n g p ol i c y
mental hospitals; at the time of trial [in           leadership in supporting community-based
2002], fewer than three thousand patients            mental health treatment. Williams, 164 F.
were housed in the ten remaining                     Supp. 2d at 633. The Williams court noted
OM HSAS-operated facilities.” Frederick              that Maryland had “been gradually closing
L., 217 F. Supp. 2d at 583 n.4. At the               institutions and expanding the number and
close of its opinion, the District Court             range of community-based treatment
concluded that “the record as a whole                programs it offers for people with severe
convincingly demonstrates that, over time,           disabilities” and Maryland decreased its
DPW has used its mental health budget to             mental hospital population from 7,114 in
establish more and more community-based              1970 to 1,200 in 1997. Id. at 634. As
programs, and DPW will continue to do                noted above, the District Court in the case
so, to the extent possible given fiscal              before u s a l s o cre d ited th e
realities.” Id. at 593.                              Commonwealth’s past progress.                      See
                                                     Frederick L., 217 F. Supp. 2d at 593.
        There is no reference in Olmstead
to a state’s past progress in                                 Although the District Court did not
deinstitutionalization as relevant to                err in ta king in to acc oun t the
analyzing a fun dam ental-a lteration                Commonwealth’s past progress in
defense.     As Appellants argue, past               evaluating its fundam ental-alteration
progress is not necessarily probative of             defense, it was unrealistic (or unduly
future        plans      to    continue              optimistic) in assuming past progress is a
deinstitutionalizing.       For example,             reliable prediction of future programs. One
although DPW funded more than 200                    of our principal concerns is the absence of
community placements in the past two                 anything that can fairly be considered a
fiscal years, only 33 placements are slated          plan for the future. The District Court
for next year. As such, Appellants argue             made a finding that “Defendants have not
that DPW’s past progress should not                  d e m o n s t r a te d that th e y ha ve a
provide grounds for relieving DPW of its             comprehensive effectively working plan
responsibility to continue providing                 for placing qualified persons with mental
community care in the future.                        disabilities in less restrictive settings.” Id.
                                                     at 587. The court continued, “At trial, one
        It is true that the district court in        of Defendants’ witnesses, Gerald Radke,
Williams, which accepted Maryland’s                  Deputy Secretary for OMHSAS, admitted
fundamental-alteration defense, relied               such a plan is not in place.” Id. The
most upon the state’s “role in the course of         representative of the Commonwealth
de-institutionalization[, the] development           arguing before us disagreed with the
of community-based treatment programs                District Court’s conclusion that there was
for all Maryland citizens with mental and            no such plan. She stated that “the district

                                                16
court recognized several indicia of a plan           vulnerable. It is a gross injustice to keep
at Norristown that we submit show that               these disabled persons in an institution
there is a plan.” Tr. of Argument at 31.             notwithstanding the agreement of all
She conceded, however, that there is no              relevant parties that they no longer require
piece of paper that represents that plan but         institutionalization. We must reflect on
her explanation of a plan (policies and              that more than a passing moment. It is not
procedures at NSH utilized for ongoing               enough for DPW to give passing
review of patients from the minute they              acknowledgment of that fact. It must be
come in and for discharge planning for               prepared to make a commitment to action
each patient individually) falls far short of        in a manner for which it can be held
the type of plan that we believe the Court           accountable by the courts.
referred to in Olmstead.
                                                                         IV.
         The issue is not whether there is a
piece of paper that reflects that there will                      CONCLUSION
be ongoing progress toward community
placement, but whether the                                  In analyzing whether there was
Commonwealth has given assurance that                sufficient evidence before the District
there will be. In that connection what is            Court to justify its acceptance of the
needed at the very least is a plan that is           Commonwealth’s fundamental-alteration
communicated in some manner. The                     defense, we conclude that its factual
D i s tr i c t C o u r t a c c e p te d t h e        findings are fully supported by the
Commonwealth’s reliance on past progress             evidence of record. As noted in the
without requiring a commitment by it to              foregoing discussion, many of the court’s
take all reasonable steps to continue that           conclusions of law are also consistent with
progress.      Under the circumstances               the governing legal principles. We believe
presented here, our reading of Olmstead              that the cost constraints make it
would require no less.                               inappropriate for us to direct DPW to
                                                     develop 60 community residential slots per
        After all, what is at issue is               year as Appellants request.          Unlike
compliance with two federal statutes                 Appellants, we credit the Commonwealth
enacted to protect disabled persons. The             for     its    past      progress         in
courts have held states throughout the               deinstitutionalization. We depart from the
country responsible for finding the manner           District Court’s analysis in its assumption
to integrate the schools, improve prison             or prediction that past actions auger future
conditions, and equalize funding to                  commitments.
schools within the respective states,
notwithstanding the states’ protestations                    Accordingly, we will vacate the
about the cost of remedial actions. The              judgment of the District Court and remand
plaintiffs in this case are perhaps the most         so that it can direct the Commonwealth to

                                                17
make a submission that the District Court
can evaluate to determine whether it
complies with this opinion.




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