A new legal challenge has emerged against recent modifications to New York’s Consumer Directed Personal Assistance Program (CDPAP), with the focus sharply on the state’s implementation of a single fiscal intermediary (FI) structure. This restructuring is poised to replace over 600 existing businesses that currently support approximately 246,000 consumers and their personal assistants.
On August 12, 2024, Save Our Consumer Directed Home Care, Inc., a non-profit organization representing Fiscal Intermediaries (FIs) and other stakeholders within the Program, formally contested the New York State Department of Health’s (DOH) execution of a Request for Proposal (RFP) for FI services. In their petition, they argue that the alterations to the CDPAP not only violate several legal and constitutional principles but also threaten the very foundation of consumer-directed home care. This lawsuit follows a previous legal action from July 22, 2024, where FIs challenged the DOH’s revised reimbursement methods for the Program, citing procedural flaws and arbitrary decision-making. These combined legal battles underscore the significant hurdles the state faces in managing the CDPAP effectively.
Allegations of Procedural and Legal Violations
The core of the current lawsuit lies in the petitioner’s assertion that the amendments to Section 365-f of the Social Services Law, which introduce a single Statewide FI (SFI) chosen by the DOH without typical oversight from the Office of the New York State Comptroller, represent a stark departure from established legal and regulatory norms. Federal regulations governing programs like CDPAP, which utilize federal funding, mandate strict adherence to principles of transparency, competition, and fairness in all procurement processes. Similarly, New York State law requires comptroller supervision to ensure state contracts are awarded justly and in the best interest of taxpayers.
Save Our Consumer Directed Home Care, Inc. contends that the DOH failed to clearly define essential requirements for potential contractors and lacked specific criteria for evaluating SFI bids. Granting the DOH unilateral power to reject applications and select proposals based on subjective judgment, without the Comptroller’s oversight, allegedly violates these mandates. This lack of transparency and accountability, according to the lawsuit, increases the potential for fraud, waste, and abuse within the system. Furthermore, the consolidation to a single FI raises concerns about disruptive transitions for consumers and the potential breakdown of established care relationships that are central to the Save Our Consumer Directed Home Care Program initiative.
Anti-Competitive Requirements and Barriers to Entry
The lawsuit further argues that the RFP issued by the DOH imposes unduly restrictive and anti-competitive requirements that effectively prevent many qualified entities from becoming the SFI. These challenging criteria include the prerequisite of having provided statewide FI services in another state as of April 1, 2024, securing a staggering $100 million line of credit, and compliance with collective bargaining agreements and New York’s prevailing wage laws.
The petitioner argues that these requirements are not pertinent to the fundamental services expected of an FI. Instead, they appear designed to limit competition, thereby preventing current FIs, who have deep-rooted experience and established relationships, from continuing to serve consumers and support their personal assistants. This narrowing of competition goes against the principles of save our consumer directed home care program which thrives on choice and accessibility.
Arbitrary and Unjustified Criteria
A key point of contention in the lawsuit is the requirement that SFI bidders must demonstrate experience providing statewide FI services in another state since April 1, 2024, and subcontractors since April 1, 2012. Save Our Consumer Directed Home Care, Inc. argues that these dates are arbitrary and lack any rational connection to the actual requirements of the FI role. The lawsuit also points out that the RFP process, impacting an $8 billion per year program like CDPAP, was allegedly implemented without adequate public discussion or input from key stakeholders, including consumers and current service providers who are vital to the save our consumer directed home care program.
Constitutional and Federal Law Challenges
The legal challenge extends beyond procedural issues, asserting that the RFP and the amendments to Section 365-f impose an undue burden on interstate commerce. By restricting competition through out-of-state experience mandates, the lawsuit claims the state is violating the U.S. Constitution’s Commerce Clause. Additionally, the petitioner argues that the changes breach the Contracts Clause by impairing existing contractual agreements and violate the Equal Protection Clause of the 14th Amendment by unfairly discriminating against certain groups.
Further constitutional claims include the assertion that the amendments and RFP function as a bill of attainder, punishing entities without due process, and that they infringe on Medicaid beneficiaries’ freedom of choice by preselecting a single FI provider without obtaining proper waivers. The lawsuit also alleges that these changes unjustifiably segregate individuals with disabilities, undermining the core principles of community integration and self-determination that the save our consumer directed home care program is designed to uphold. Finally, Save Our Consumer Directed Home Care, Inc. claims that the DOH has failed to fulfill requests for information under New York’s Freedom of Information Law (FOIL) regarding the development of these amendments and the RFP, further compromising transparency and accountability.
Call for Injunction and Legal Relief
In its petition, Save Our Consumer Directed Home Care, Inc. is seeking an injunction to prevent the DOH from proceeding further with the RFP process. They are also requesting a court order declaring the amendments to Section 365-f invalid. The outcome of this lawsuit and the previous one will be critical in determining the future of the CDPAP and the state’s approach to consumer-directed home care.
Holland & Knight will continue to monitor this evolving legal situation, including the court’s decisions and any further legal actions that may arise to challenge, modify, or halt the RFP and the CDPAP amendments, ensuring stakeholders are informed about developments impacting the save our consumer directed home care program.
