The United Cerebral Palsy Association of New York State, Inc. appeals from an order of the Eastern District of New York, Bartels, J., denying its motion for an injunction directing the State of New York to reimburse it for expenditures made since July 1, 1982, in operating centers for the disabled in excess of the Medicaid reimbursement rates set by the State, and to set prospective reimbursement rates at a level sufficient to cover UCP's cost of operations.
Lumbard, Mansfield and Kearse, Circuit Judges.
The United Cerebral Palsy Associations of New York State, Inc. (UCP) appeals from an order of the Eastern District of New York, Bartels, J., denying its motion for an injunction directing the State of New York ("the State") to reimburse it for expenditures made since July 1, 1982, in operating centers for the disabled in excess of the Medicaid reimbursement rates set by the State, and to set prospective reimbursement rates at a level sufficient to cover UCP's cost of operations.
We agree with Judge Bartels that UCP's becoming a party defendant after the 1975 consent decree approved by Judge Bartels, and acting as the State's agent to supply services mandated by the decree, gave UCP no rights under the consent decree to be paid for those services. Thus, UCP's only rights against the State arise under its contract with the State to act as the State's agent in providing services mandated by the consent judgment. Judge Bartels therefore correctly denied UCP's demand for retroactive reimbursement as barred by the Eleventh Amendment, and abstained from setting prospective Medicaid reimbursement rates, in deference to available state remedies. We affirm.
In March, 1972, this class action was brought under 42 U.S.C. § 1983 by the residents of the Willowbrook Developmental Center, now known as the Staten Island Developmental Center, a State-operated institution for the mentally retarded, alleging that they were forced to endure inhuman conditions in violation of their constitutional rights. On April 30, 1975, the claims were resolved when the then parties to the action signed the Willowbrook Consent Judgment which contained detailed "steps, standards and procedures"*fn1 that New York State must follow in caring for class members, and required the State to "take all steps necessary to ensure the full and timely financing" necessary to carry out those responsibilities. In addition, the judgment expressly provides that the district court retains jurisdiction "for the purpose of enabling any party to apply at any time . . . for such further orders as may be necessary or appropriate for the construction of, implementation of, or enforcement of compliance with this judgment or any of the provisions thereof."
UCP was not a party to this action when the consent judgment was signed. It first became involved in June, 1975, when the State requested UCP to assist it in carrying out its responsibilities by providing direct care to 50 of the most severely disabled members of the plaintiff class at the Nina Eaton Center on Staten Island. In November, 1976, plaintiffs moved to have the State held in contempt for failure to comply with the consent judgment. They were impressed with UCP's performance, and suggested that UCP take over some of the operations at Willowbrook. The State and UCP accepted the proposal, and pursuant to a Stipulation and Order entered on March 10, 1977, UCP assumed full operational authority of the seven-building Karl Warner complex at Willowbrook.
The authority to operate both the Eaton and Warner Centers as the State's agent was delegated to UCP pursuant to contracts between the State and UCP in the form of revocable permits. Those permits require UCP to comply with the "steps, standards, and procedures" set out in the consent judgment. In addition, on April 26, 1978, the parties to the action and UCP stipulated that UCP would be added as a party defendant "for the sole purpose of the carrying out of the . . . Consent Judgment," and that UCP would adhere to the terms of the judgment "insofar as the same are relevant and applicable to [UCP] and the operation of said buildings by [UCP]." This Stipulation was entered as an Order on June 29, 1978.
Currently, UCP operates residential and day services for approximately 700 class members. Of those, about 300 live at the Warner Center, 50 at Eaton Center and 250 in over 60 apartments and group homes located throughout New York City.
Shortly after it began providing services in 1975, UCP challenged the State's reimbursement scheme under Medicaid, 42 U.S.C. §§ 1396 et seq. In July, 1982, UCP and the State entered into an agreement resolving all claims regarding UCP services provided until July 1, 1982, and stating that they would begin work to devise new Medicaid rates, to be applied retroactive to July 1, 1982. In the interim, UCP agreed to continue its operations and be paid an "interim rate." To date, no new Medicaid rates have been finally set, and UCP now claims that its funding since July 1, 1982, under the interim rate has been so inadequate that it has been able to continue operating only by accruing debts of over 5 million dollars, including a bank loan of 1 million dollars, and by cutting back on staff. Thus, on March 15, 1983, it notified the State that, pursuant to its revocable permits, it would discontinue service in 90 days. UCP then moved in the district court for an injunction directing the State to pay the difference between the amount UCP has spent and the amount it has been reimbursed since July 1, 1982, and to set higher prospective Medicaid reimbursement rates for future services. UCP has indicated that it would withdraw its 90 day notice if its financial problems were resolved. On March 24, 1983, its motion was denied, and this appeal followed.
We turn first to UCP's claim for reimbursement of the difference between the interim reimbursement fixed by the State and the amounts actually spent by UCP since July 1, 1982. We agree with the district court that this claim amounts to a suit against the State for past debts, and is thus barred by the Eleventh Amendment since the State never consented to be sued by UCP in federal court. Edelman v. Jordan, 415 U.S. 651, 39 L. Ed. 2d 662, 94 S. Ct. 1347 (1974).
UCP contends that the Eleventh Amendment does not apply to this case for two reasons. First, it argues it is not seeking retroactive monetary relief but rather to force the State to comply with the consent ...