                             In the
    United States Court of Appeals
                For the Seventh Circuit
                          ____________

No. 02-3935
BRANDON COLLINS, et al.,
                                            Plaintiffs-Appellees,

                                v.


JOHN HAMILTON, et al.,
                                        Defendants-Appellants.

                          ____________
           Appeal from the United States District Court
                for the Southern District of Indiana.
          No. IP01-244-C-Y/K—Richard L. Young, Judge.
                          ____________
     ARGUED MAY 29, 2003—DECIDED NOVEMBER 6, 2003
                      ____________

    Before CUDAHY, EVANS, and WILLIAMS, Circuit Judges.
  WILLIAMS, Circuit Judge. Brandon Collins and Omega
McCullagh filed a class action suit against various Indiana
state officials,1 under 42 U.S.C. § 1983, alleging violations
of the Medicaid Act based on the State of Indiana’s failure
to provide long-term residential treatment in psychiatric


1
   The district court certified a class of “[a]ll present and future
Medicaid-eligible children under age twenty-one who require
mental health services for which Federal Financial Participation
is available, and those children’s parents.”
2                                                No. 02-3935

residential treatment facilities (PRTF) for children under
the age of twenty-one. Plaintiffs sought declaratory and
injunctive relief requiring Indiana to provide Medicaid
coverage for psychiatric residential treatment found to be
“medically necessary” as determined by the Early and
Periodic Screening Diagnosis and Treatment program
(EPSDT) of the Medicaid Act. Granting summary judgment
to the plaintiffs, the district court concluded that placement
in a PRTF qualifies as “medical assistance” necessary to
“correct or ameliorate” a recipients’ psychiatric condition,
and the court permanently enjoined Indiana from denying
Medicaid coverage for psychiatric residential treatment for
all Medicaid-eligible children under the age of twenty-one
when such treatment is found to be “medically necessary”
by an EPSDT screening. Indiana appeals, arguing that the
district court’s issuance of the permanent injunction was an
overly broad reading of the EPSDT provision of the
Medicaid Act. Because we find that a PRTF qualifies as an
inpatient psychiatric hospital and that the State of Indiana
is required to fund the cost of placement in a PRTF if it is
deemed “medically necessary” by an EPSDT screening, we
affirm.


                     I. BACKGROUND
   Indiana participates in the federal Medicaid program. In
compliance with Medicaid requirements, Indiana maintains
an EPSDT program entitled Heathwatch, which provides
annual health screenings by a primary care medical service
provider to Medicaid-eligible individuals under the age of
twenty-one. Indiana law mirrors the Medicaid Act and
requires the state to provide “[a]ny treatment found
necessary as a result of a diagnosis pursuant to an initial or
period screening, [or an EPSDT screening]” whether or not
it is covered by the state plan, so long as it is “necessary to
No. 02-3935                                                 3

correct or ameliorate defects and physical and mental
illnesses and conditions discovered by the screening ser-
vices.” 405 I.A.C. 5-15-4.
  In Indiana, a child diagnosed with a mental illness may
be treated on an outpatient basis, inpatient basis, or in a
residential facility, such as a PRTF. Under Indiana’s
current Medicaid plan, residential placement in a PRTF is
not covered, even if a child is diagnosed as needing such
placement by an EPSDT provider. The available treatment
options of outpatient care or inpatient hospitalization afford
Medicaid recipients under the age of twenty-one short-term
acute treatment, rather than long-term chronic treatment.
By excluding all PRTFs, Indiana does not cover services
associated with residential placement, even if that place-
ment occurs in a residential treatment ward of a psychiatric
hospital. Indiana acknowledges the existence of PRTFs
which meet Medicaid statutory requirements for accredita-
tion but has declined to enroll these facilities in the
Medicaid program.
  Brandon Collins was born in 1995, and resides with his
maternal grandmother who is also his adoptive mother,
Barbara Collins, in Lake County, Indiana. He has been
diagnosed with Bipolar Disorder, Oppositional Defiant
Disorder, Organic Personality Syndrome, and Attention
Deficit Hyperactivity Disorder. His prognosis includes the
need for chronic treatment in a PRTF setting as well as
supplemental acute treatment through inpatient hospital-
ization. As an Indiana Medicaid recipient, however, PRTF
treatment is unfunded. Brandon’s grandmother was in-
formed during one of Brandon’s numerous hospitalizations
that he was in need of more long-term chronic treatment as
opposed to the acute treatment he was receiving in the
psychiatric hospitals. She was told that residential treat-
ment would not be available through Medicaid; however,
Brandon could receive residential placement if she filed a
4                                                No. 02-3935

Child In Need of Services (CHINS) petition with the Child
Protective Services division of the Indiana Family and
Social Services Office.2
  Brandon was eventually awarded CHINS status and
received placement in a PRTF, however, the placement was
not paid for by Medicaid but rather with funding from Lake
County. After his stay at the PRTF, Brandon was dis-
charged from the residential facility and returned to his
grandmother’s care. He subsequently regressed and was
again hospitalized, where he received acute short-term care
addressing his symptoms. Brandon’s most recent diagnosis
again called for treatment in a PRTF; however, as his
CHINS action was dismissed, he was no longer eligible for
the state funding he previously received. Thus, Brandon’s
only present recourse is the acute care available through
Indiana’s inpatient psychiatric hospitals.
  Omega McCullagh was born in 1996 and also suffers from
a litany of mental illnesses. Omega’s story parallels
Brandon’s. He too was denied Medicaid coverage for place-
ment in a residential facility after being diagnosed as
needing PRTF placement by an EPSDT service provider.
Currently, Omega is not receiving any treatment for his
conditions.


                      II. ANALYSIS
  The question in this case is whether Indiana is required
to provide Medicaid coverage to eligible individuals under
the age of twenty-one for placement in long-term PRTFs, or
whether Indiana’s obligations under Medicaid are limited
to coverage of the acute treatment options currently
available in its inpatient psychiatric hospitals. Essentially,


2
  Effectively, if awarded CHINS status, Brandon would become
a ward of the State.
No. 02-3935                                                  5

the issue boils down to whether Indiana’s exclusion of
PRTFs encompasses “necessary” medical services and
whether a state has the discretion to make such exclusions
under the Act?
  We review the district court’s decision to grant summary
judgment de novo. Hilt-Dyson v. City of Chicago, 282 F.3d
456, 462 (7th Cir. 2002). Where a permanent injunction has
been requested at summary judgment, we must determine
whether the plaintiff has shown: (1) success, as opposed to
a likelihood of success, on the merits; (2) irreparable harm;
(3) that the benefits of granting the injunction outweigh the
injury to the defendant; and, (4) that the public interest will
not be harmed by the relief requested. Plummer v. Am. Inst.
of Certified Pub. Accountants, 97 F.3d 220, 229 (7th Cir.
1996) (internal citations omitted). The only factor at issue
in this appeal is plaintiffs’ success on the merits, which
hinges on a statutory interpretation of the relevant
Medicaid provisions. As this court has previously noted, if
the text of the statute at issue is clear and unambiguous, it
controls. MBH Commodity Advisors, Inc. v. Commodity
Futures Trading Comm’n, 250 F.3d 1052, 1060 (7th Cir.
2001) (citing Chevron U.S.A., Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837, 844 (1984)). However, if the
statute is ambiguous or simply silent on the issue before the
court, we will defer to the interpretation promulgated by
the regulatory agency charged with administering the
statute so long as that interpretation is reasonable. Id.
  The Medicaid Act was established to allow states to
provide “medical assistance” to eligible individuals and
families with insufficient income or resources to pay for
necessary medical services. 42 U.S.C. § 1396. A state’s
participation in the Medicaid program is completely
voluntary. However, once a state elects to participate, it
must abide by all federal requirements and standards as set
forth in the Act. See Wilder v. Va. Hosp. Ass’n, 496 U.S. 498,
6                                                No. 02-3935

502 (1990). The State of Indiana participates in the
Medicaid program and is therefore bound by its require-
ments.
  One such requirement is the creation of an “early and
periodic screening, diagnostic, and treatment service,” or
EPSDT service, for categorically needy individuals under
the age of twenty-one. 42 U.S.C. § 1396d(a)(4)(B). EPSDT
services are mandated by section 1396a(a)(10), which
obligates states to provide the services listed in section
1396d(a)(1)-(5), (17) and (21). Id. § 1396a(a)(10). Within the
ambit of EPSDT services for children, states are also
required to furnish “[s]uch other necessary health care,
diagnostic services, treatment, and other measures de-
scribed in subsection (a) of this section to correct or amelio-
rate defects and physical and mental illnesses and condi-
tions discovered by the screening services, whether or not
such services are covered under the State plan.” Id.
§ 1396d(r)(5).
  Under subsection (a)(16), “inpatient psychiatric hospital
services for individuals under age 21,” are coverable
Medicaid expenses so long as they abide by the directives of
subsection (h). Id. § 1396d(a)(16). The language in sub-
section (h) broadens the definition of “inpatient psychiatric
hospitals” to include the services rendered in PRTFs by
expressly incorporating other inpatient settings as specified
by the Secretary in the promulgated regulations. Id. §
1396d(h)(1)(A) (covering services which “are provided in an
institution (or a distinct part thereof) which is a psychiatric
hospital as defined in section 1395x(f) of this title or in
another inpatient setting that the Secretary has specified in
regulations.”) (emphasis added).3 The Secretary has promul-



3
    Subsection (h) states
                                                 (continued...)
No. 02-3935                                                          7

gated regulations that specifically include PRTFs as
possible venues for patients under the age of twenty-one to
receive psychiatric treatment. See 42 C.F.R. § 441.151(b).4
The regulations elaborate on this requirement by defining
a “Psychiatric Residential Treatment Facility” as “a facility
other than a hospital, that provides psychiatric services [. . .
] to individuals under age 21, in an inpatient setting.” Id. §
483.352.5 Under the language in the Act and the provisions


3
    (...continued)
       (1) For purposes of paragraph (16) of subsection (a) of
       this section, the term “inpatient psychiatric hospital ser-
       vices for individuals under age 21” includes only—
      (A) inpatient services which are provided in an institu-
      tion (or a distinct part thereof) which is a psychiatric
      hospital as defined in section 1395x(f) of this title or in
      another inpatient setting that the Secretary has specified
      in regulations;
      (B) inpatient services which, in the case of an individual
      (i) involve active treatment which meets such standards
      as may be prescribed in regulations by the Secretary, and
      (ii) a team, consisting of physicians and other personnel
      qualified to make determinations with respect to mental
      health conditions and the treatment thereof, has deter-
      mined are necessary on an inpatient basis and can
      reasonably be expected to improve the condition, by
      reason of which such services are necessary, to the extent
      that eventually such services will no longer be necessary;
      and
      (C) [are provided before the child turns 21.]
42 U.S.C. § 1396d(h) (emphasis added).
4
  Section 441.151(b) of the regulations provides that “[i]npatient
psychiatric services” may be “furnished in a psychiatric residential
treatment facility” so long as the residential treatment facility
adheres to the agency’s rules concerning the use of physical
restraints. Id. (emphasis added).
5
    To the extent Indiana asseverates that the services rendered by
                                                      (continued...)
8                                                    No. 02-3935

in the regulations, we find that PRTFs qualify as “inpatient
psychiatric hospitals,” and therefore placement in a PRTF
is included within the ambit of covered EPSDT services.
  In an effort to avoid the statutory and regulatory provi-
sions, Indiana attempts to read a durational limitation into
the statute’s definition of “inpatient psychiatric services.”
Drawing a distinction between residential treatment and
“long-term” residential treatment, it argues that long-term
residential treatment is inconsistent with section 1396d(h)
because long-term residence in a facility does not: (1)
amount to “active treatment;” (2) “improve” a patient’s
condition; or, (3) anticipate a patient’s “discharge” from the
facility.6 We see no reason why residential treatment, even
if long-term, cannot consist of “active treatment” that
“improves or ameliorates” a patient’s condition. Nor do we
accept the State’s assumption that long-term residential
placement equates to a perpetual responsibility. Though


5
  (...continued)
PRTFs are not covered Medicaid expenses, we find its arguments
unavailing. Furthermore, as the district court noted, Indiana
currently has several PRTFs which qualify for Medicaid coverage,
as defined by the regulations.
6
  Indiana points to the following three regulations to support its
argument that long-term residential placement is not covered by
the Act: (1) section 441.154 defines “active treatment” as treat-
ment “[d]esigned to achieve the recipient’s discharge from
inpatient status at the earliest possible time,” Id. § 441.154; (2)
section 441.152 states that when a team of specialists certifies a
child’s need for inpatient psychiatric services, the certification
must specify that “[t]he services can reasonably be expected to
improve the recipient’s condition or prevent further regression so
that the services will no longer be needed,” Id. § 441.152(a)(3)
(emphasis added); and, (3) section 441.155 provides that each
child’s plan of care must include “post-discharge plans and
coordination of inpatient services with partial discharge plans and
related community services,” Id. § 441.155(b)(5) (emphasis added).
No. 02-3935                                                        9

long-term placement in a PRTF may be warranted in some
cases, it is not mandatory for every patient.7
  Though it is unclear, Indiana also seems to be arguing
that residential treatment is not “medically necessary” and
therefore not covered by the Medicaid Act. Here, Indiana
contends that the services currently offered by the state
through its inpatient psychiatric hospitals remove the need
for residential treatment. We disagree. In some circum-
stances, residential treatment may be medically necessary.
As an initial matter, there is a distinction between the
acute care available in a psychiatric hospital setting and
the less restrictive treatment provided by a residential
facility. See Medicaid Program, 66 Fed. Reg. 7148 (Jan. 22,
2001). Furthermore, in order for a child to qualify for
residential treatment an EPSDT screening by a competent
medical service provider must determine that residential
treatment is required.
  In sum, we find that a PRTF qualifies as an inpatient
psychiatric hospital and that Indiana is required to fund
the cost of placement in a PRTF if it is deemed “medically
necessary” by an EPSDT screening.8 Plaintiffs have there-


7
  We also reject Indiana’s argument concerning the availability
of residential placement through the state’s CHINS program.
Indiana’s obligations under Medicaid stand independent of any
services available through its parallel state program. See 42
U.S.C. § 1396d(r)(5) and 405 I.A.C. 5-15-4 (stating that Indiana is
obligated to provide “medically necessary” coverage under
Medicaid “whether or not such services are covered under the
State plan”).
8
   Our conclusion is buttressed by the holdings from other circuits
which also found that in the context of individuals under the age
of twenty-one subject to EPSDT services, see id. §1396d(a)(4)(B)
& (r)(5), a state’s discretion to exclude services deemed “medically
necessary” by an EPSDT provider has been circumscribed by the
                                                       (continued...)
10                                                    No. 02-3935

fore sustained their burden of proving success on the merits
of their summary judgment motion. Thus, plaintiffs’ request
for a permanent injunction was properly granted by the
district court.


                      III. CONCLUSION
    For the reasons stated above, the judgment of the
district court is AFFIRMED.
A true Copy:
    Teste:
                           ________________________________
                           Clerk of the United States Court of
                              Appeals for the Seventh Circuit




8
   (...continued)
express mandate of the statute. See Pediatric Speciality Care, Inc.
v. Ark. Dep’t. of Human Servs., 293 F.3d 472, 480 (8th Cir. 2002)
(finding that a state must pay for costs of treatment found to
ameliorate conditions discovered by EPSDT screenings if such
treatments are listed in section 1396d(a)); and Pereira v.
Kozlowski, 996 F.2d 723, 725-26 (4th Cir. 1993) (“In section
1396d(r)(5), the Congress imposed upon the states, as a condition
of their participation in the Medicaid program, the obligation to
provide to children under the age of twenty-one all necessary
services, including transplants.”); see also Pittman v. Sec. of Fla.
Dep’t. of Health & Human Servs., 998 F.2d 887, 891 (11th Cir.
1993) (agreeing with the Fourth Circuit in Pereira that the 1989
amendment to the Medicaid Act removed a state’s discretion to
deny treatment found to be “medically necessary” for individuals
under the age of twenty-one).

                     USCA-02-C-0072—11-6-03
