Thousands of Minnesotans with disabilities have been forced needlessly to wait months and even years for community-based services because the state has underspent more than $1 billion in public funds, according to a lawsuit filed Friday in federal court in St. Paul.

Attorneys representing a group of people with disabilities allege that for nearly two decades, the Minnesota Department of Human Services (DHS) has mismanaged money set aside under Medicaid, the state and federal health insurance program, for services intended to help people with disabilities live more meaningful and integrated lives in their communities.

More than 5,000 Minnesotans with intellectual and developmental disabilities have been placed on county waiting lists — in some cases, for a decade or more — for Medicaid benefits, known as "waivers," which fund a wide variety of community-based services, from personal caregiving in the home to job coaching and transportation to day treatment programs. The lawsuit alleges that, in many cases, people are kept on these waiting lists for extended periods without ever being told that there are adequate waiver funds to pay for these services.

"We absolutely cannot treat people like this," said Shamus O'Meara, the lead attorney for the plaintiffs, who are seeking class-action status from the federal court. "Justice requires that DHS be ordered to immediately address this important issue and provide these services without further delay."

Cutting the waiting list

DHS Commissioner Lucinda Jesson said Friday that "quickly reducing, and ultimately eliminating" the waiting lists for people with disabilities are key goals of a new state plan, known as an Olmstead Plan, that has been submitted to federal court for possible approval. The Olmstead Plan, a detailed blueprint for expanding community services for people with disabilities, calls for eliminating the waiting list to one of Minnesota's main waivers, known as the Community Access for Disability Inclusion (CADI) waiver, entirely by October 2016. People on a second list, for the Developmental Disability (DD) waiver, would move off more quickly starting in December, Jesson said.

"For many years, the state has been committed to serving people with disabilities in the community, and we are ranked as one of the best states for this work," Jesson said in a written statement. She added that DHS has not been formally served with the lawsuit regarding waiting lists for disability services. "Once we are, we will review the claims and respond," she said.

Medicaid waivers are the largest single source of social services for people with disabilities in Minnesota, and are hugely important because they unlock payments for a bevy of community services. In Minnesota, the competition to obtain waivers can be so fierce that some parents of disabled children have likened getting a waiver to winning the lottery. In many cases, people with disabilities are unable to afford independent apartments and transportation to jobs in the community, among other services, without the cherished waivers.

State officials have long argued, however, that many people on waiting lists for waivers are receiving other services, such as medical visits and home caregiving, and are not being deprived of county social services.

A 14-year wait

One plaintiff, Jeff Pearson, said he has been waiting for more than 14 years for a Medicaid-funded waiver for his 25-year-old disabled daughter, Abigail Pearson, who has a developmental disability, a mental disorder and intractable epilepsy. His daughter wants to move out of her parents' home, but is unable to do so without a waiver that would enable her to live with support on her own.

"The lack of waiver services … forces her to remain segregated from her preferred community living arrangements," the lawsuit said. This "exacerbates her mental health and cognitive disability conditions," and causes "feelings of worthlessness, depression and negative and discordant behaviors," it said.

Some advocacy groups for people with disabilities have argued that DHS could dramatically reduce or even eliminate waiting lists statewide for disability services if it did a better job managing the monies allocated by the Legislature under the Medicaid waiver program. Many individual counties, these advocates argue, are overly stingy with their waiver monies, unnecessarily keeping people on prolonged waiting lists.

"By letting millions of dollars that were intended to fund the waiver programs go unspent year after year, DHS unnecessarily placed eligible individuals with disabilities on waiting lists that blocked them from gaining access to the services and supports they need to live and work in their communities," said Pamela Hoopes, legal director of Mid-Minnesota Legal Aid's Minnesota Disability Law Center, co-counsel in the lawsuit.

There are large disparities among counties in their spending of waiver monies. Some counties spend 20 percent to 40 percent of the money allocated to them by the state, while others spend nearly all of what they receive.

Disability advocates have argued that the money goes unspent in part because of perverse incentives. Counties are required to reimburse the state if they overspend their waiver funds. As a result, say advocates, some counties tend to be overly cautious and spend much less than the amount allocated.

Chris Serres • 612-673-4308