Health Law Daily Wrap Up, MEDICAID—7th Cir.: Appeals court affirms preliminary injunction against Indiana LRI attendant care policy change, (Aug 19, 2025)

By Jeffrey H. Brochin, J.D.

The court rejected the agency’s theory that LRI-provided attendant care was a “new service” to its Medicaid program.

The United States Court of Appeals for the Seventh Circuit has affirmed the district court’s granting of a preliminary injunction against a policy change to Indiana’s Family and Social Services Administration (FSSA) “legally responsible individual” (LRI) attendant care policy. The July 2024 policy change by FSSA would have made mothers of severely disabled minors ineligible to be paid providers of attendant care services for their children. The appeals court agreed with the district court that there was a high likelihood of success on the merits of the argument that the policy change would violate the integration mandate requirement of the Americans with Disabilities Act (ADA), and that the likelihood of FSSA suffering irreparable harm was low (Indiana Protection and Advocacy Services Commission v. Indiana Family and Social Services Administration, Nos. 24-2633, 24-2741, and 24-2770 (7th Cir. Aug. 11, 2025)).

FSSA policy change. The mothers of severely disabled minor children filed suit together with the Indiana Protection and Advocacy Services Commission (IPAS) challenging FSSA’s July 2024 policy change to its Medicaid plan that would prohibit the mothers from being approved to receive attendant care services reimbursement through the Aged and Disabled Waiver (A&D Waiver). Before the policy changes, the mothers had both been approved to receive attendant care services through both the state plan and Indiana’s Health and Wellness Waiver (H&W Waiver), meaning that the prohibition on an LRI from serving as a paid provider of either attendant care service or structured family caregiving to the disabled minor children was waived.

Without the reimbursements, both mothers would have needed to seek full-time employment outside of their homes; and, due to the unavailability of in-home skilled nursing to provide the care and supervision that the disabled minors required, their return to full-time employment outside of the home would have forced both mothers to seek institutional placement for their sons. The lawsuit claimed, among other things, that the policy change violated ADA’s integration mandate.

Integration mandate defined. Title II of the ADA prohibits public entities such as FSSA from excluding or discriminating against qualified disabled individuals in the provision of public services. Congress further provided that unjustified segregation of disabled individuals amounts to an actionable form of discrimination, and, consistent with Congress’s desire to prevent the unnecessary confinement of disabled individuals in institutions, the regulations implementing the ADA contain an integration mandate which provides: “A public entity shall administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities.” The “most integrated setting appropriate” is defined as “a setting that enables individuals with disabilities to interact with nondisabled persons to the fullest extent possible.” The district court’s reading of the ADA and its implementing regulations lead them to conclude that the individuals had a high likelihood of success on the merits, thereby leading to the granting of the preliminary injunction (see Indiana must provide ‘integration mandate’ in-home care to two children during pending litigation, Sept. 4, 2024, and Preliminary injunction modified as to FSSA status reporting, not services provided, Sept. 12, 2024).

Not a new service. Among the arguments made by FSSA for reversal of the preliminary injunction was that LRI-provided attendant care constituted a “new service” that would be a “fundamental alteration” to its Medicaid program. It cited precedent recognizing that states are not obligated to create new services in order to enable an institutionalized individual to live in a more integrated setting. However, the appeals court rejected that argument, finding that what the mothers and IPAS were seeking was not a new service: FSSA already provided the exact service being sought in the exact same form, and the mothers had already both been approved to receive such service.

Removing the prohibition on LRIs serving as paid providers of attendant care for the minors did not change the substance of the service as defined by the H&W Waiver, rather, it merely gave them access to an existing benefit that had been granted to other disabled individuals, and one that FSSA agreed was needed by the minors and for which they qualified. Significantly, FSSA explicitly acknowledged that it could authorize LRIs to perform attendant care consistent with state law and federal requirements for waiver program approval and funding—yet chose not to do so.

Based on the foregoing, the appeals court concluded that there was no clear error in the district court’s finding of a high likelihood of success on the merits, and it affirmed the district court’s granting of the preliminary injunction. The case was remanded for further proceedings.

The case is Nos. 24-2633, 24-2741, and 24-2770.

Judge: Hamilton, D.

Attorneys: Gavin M. Rose (American Civil Liberties Union of Indiana) for Indiana Protection and Advocacy Services Commission. Harmony Ann Mappes (Faegre Drinker Biddle & Reath LLP) for Indiana Family and Social Services Administration.

Companies: Indiana Family and Social Services Administration

MainStory: TopStory CaseDecisions CMSNews GCNNews MedicaidNews EligibilityNews MedicaidPaymentNews ProgramIntegrityNews IllinoisNews IndianaNews WisconsinNews