Groups sue state over foster care NAACP, Disability Rights NC sue state over foster-care placement services. Complaint alleges abuse, "warehousing" of children.

A federal lawsuit has been filed against state Health Secretary Kody Kinsley addressing the N.C. Department of Health and Human Services' foster-care placement services for children with disabilities.

The complaint was filed Tuesday in the Middle District of N.C. on behalf of a class of youth in foster care with mental and behavioral health needs. They were joined by Disability Rights N.C. and the N.C. Chapter NAACP State Conference.

The plaintiffs pulled few punches in the complaint, accusing DHHS of a "pervasive, system-wide practice of unnecessarily warehousing children with disabilities in foster care in dangerous, locked psychiatric institutions - a harmful, unlawful practice that also falls most heavily on children of color."

"These children deserve and have the right to a family and place in our communities where they can meet their full potential," Virginia Knowlton Marcus, chief executive of Disability Rights N.C., said in a statement.

"Instead, they receive institutionalization and irreparable harm to their childhood and wellbeing."

DHHS could not be immediately reached for comment on the lawsuit.

The plaintiffs accuse DHHS of annually placing more than 500 foster care youths with disabilities in psychiatric residential treatment facilities.

The lawsuit cited as examples of dangerous conditions that the youths "regularly suffer from broken bones, sprains, bruises and dangerous physical and chemical restraints."

"They endure abuse, bullying and hate speech by both youth and staff, and receive strong cocktails of psychotropic medications instead of therapeutic treatment and care."

The plaintiffs said DHHS "is aware of these harms, yet continues to warehouse children in (those residential conditions) instead of building community-based placements and services."

"DHHS further compounds the harm by shipping significant numbers of youth in its care to other states as far away as Utah, severely limiting ties to family and community, not to mention oversight by a child's North Carolina-based caseworker."

"The unnecessary use of these prison-like settings is both unlawful and widely recognized as harmful to youth, who fare far better when supported in family like settings in communities with supportive services," the plaintiff said.

The plaintiffs claim the effects of the foster-care housing environments linger beyond their youth.

"Some experience grave outcomes when they leave the system, such as homelessness and incarceration," the plaintiffs said.

"Black and Brown children in North Carolina are overrepresented in the state's child welfare system, and are also over-represented in psychiatric residential treatment facilities."

The complaint points to DHHS data that found children of color make up more than 40% of the children on Medicaid confined to psychiatric residential treatment facilities.

Legislative approach

During the 2022 legislative session, a bill preferred by state health regulators cleared the N.C. Senate addressing statewide foster-care services.

The Medicaid Children and Families Specialty Plan, a revamped version of House Bill 144, titled cleared the Senate by a 41-0 vote on June 16.

Because Senate bill sponsors, led by Sen. Joyce Krawiec, R-Forsyth, had used the gut-and-replace strategy for HB144, the House was required to either agree with the changes or reject them.

The House did not take up the bill after receiving it June 21.

A rejection would have sent HB144, titled Medicaid Children and Families Specialty Plan, to a concurrence committee in an attempt to reach a compromise between the two chambers.

As of June, DHHS proposed handling foster-care services through a statewide plan set to debut by Dec. 1, 2023.

However, bill opponents still don't like that counties - such as Forsyth - cannot opt out of the plan if it becomes law.

Dave Richard, the state's deputy Medicaid secretary, has said the plan is expected to cover about 31,000 young people statewide through providers already participating in the state's Medicaid program.

About 218 young people in Forsyth have received foster-care services from its managed-care organization, Partners Health Management, since Forsyth joined on Nov. 1.

Under the bill approved by the Senate, a child cannot be taken out of the statewide plan unless DHHS requests it, and federal Centers for Medicare and Medicaid Services approves it.

Changes made to HB144 remove a limitation on prepaid health plans that "will open the bids up for any qualified vendor." Any of the state's six behavioral health managed-care organizations are eligible to bid, Krawiec said.

Another change removes a limitation to allow entities with a common ownership to submit more than one bid.

HB144 details

Proposals for the statewide plan would be sought from prepaid health plans operated by health insurers who already have contracts with DHHS.

DHHS would be responsible for determining which services would be offered in the plan and which Medicaid and N.C. Health Choice beneficiaries are eligible to enroll.

The bill says those services are to include: intensive in-home services; multi-systemic therapy; residential treatment; and services in private residential treatment facilities.

The goal is "to support family preservation, advance the unification of families, support the permanency goals of children, and support the health of former foster youth."

Key elements of HB144 would require the state's six behavioral health MCOs "to cease managing Medicaid services" for most foster care children.

The bill also would require area authorities to operate the plan under a contract with DHHS.

The primary purpose of the state's six behavioral health MCOs is to oversee providers of mental health, substance-use disorder, intellectual/developmental disability and traumatic brain injury services.

They also play a role in ensuring that children in foster care are connected to proper health and medical care, along with other services.

Krawiec said that "right now, we have a very fragmented system" involving the six behavioral health MCOs

"Some are doing a good jobs and some are not," Krawiec said. "They don't tend to talk with each other well."

The genesis of HB144's revamped language came from complaints expressed by county officials, including in Forsyth, about how Cardinal Innovations - once the state's largest MCO at 20 counties, but now disbanded - was overseeing foster care services.

"These children go from one area to another and their insurance does not go with them," Krawiec said.

"With a statewide plan, they will have one (insurance) card, just like you and I, and they will be covered wherever they go in North Carolina."

Opposition

HB144 and the plan is opposed by the state's six behavioral health MCOs and at least 30 counties, including Forsyth, all of which say they want to keep foster care services as close to local as possible.

Among Partners' counties are Davie, Forsyth, Surry and Yadkin as members. Forsyth is by far the largest member by population.

"The current CFSP proposal would transition many of the youth in Department of Social Services custody outside of Partners management, which would create another change too soon in an already complex system," David Plyler, chairman of the Forsyth Board of Commissioners, wrote to Richard in April.

Forsyth commissioners and DSS staff have expressed satisfaction with Partners' handling of foster-care service.

"The proposed single statewide plan design of the CFSP will jeopardize, rather than support, the progress we are making and targeted infrastructure we are building with Partners," Plyler said.

The six MCOs and the counties say they were told in April by Richard that counties can opt out of the plan contained in HB144.

"I believe there was a misunderstanding of what Dave said, but we have discussed at length," Krawiec said last week. "Counties could never opt out as a whole, but it can only be done on an individual basis."

Partners has said that "establishing a new, redundant statewide plan would cost North Carolina taxpayers millions of unnecessary dollars, and it would significantly limit choice and control for all North Carolina counties who care for many of our most vulnerable children."

MCO alternative

On May 1, the six MCOs unveiled the N.C. Child and Family Improvement Initiative, which represents their collective first step toward providing an alternative to the proposed statewide foster-care services plan.

The MCOs said a primary goal of the initiative is to demonstrate that their ability to "implement a statewide model to ensure seamless access to quality care for these children and families regardless of where they live in North Carolina."

Some of the plan's components include:

* Creating a statewide provider network to ensure access to residential treatment and other services;

* Ensuring a standardized, seamless process for children moving from one MCO region to another or changing custody to a new Department of Social Services;

* Establishing rapid access to care by reducing authorization barriers for residential treatment; and

* Increasing capacity for crisis care across the state.

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