Olmstead v. L.C.: Judicial Developments
Prepared for Members and Committees of Congress
The Supreme Court ruled in Olmstead v. L.C. that Title II of the Americans with Disabilities Act
(ADA) requires states to transfer individuals with mental disabilities into community settings
rather than institutions when a state treatment professional has determined such an environment is
appropriate, the community placement is not opposed by the individual with a disability, and the
placement can be reasonably accommodated. Most subsequent litigation has focused on whether
state programs for individuals with developmental disabilities, including Medicaid waiver
programs, have adequately complied with the Olmstead decision. This report will discuss the
Supreme Court’s decision, selected subsequent appellate court decisions, and related legislation in th
the 110 Congress.
Backgr ound ..................................................................................................................................... 1
Olmstead v. L.C...............................................................................................................................1
Selected Appellate Decisions: Fundamental Alteration Defense.....................................................2
Successful Fundamental Alteration Defenses...........................................................................2
Unsuccessful Fundamental Alteration Defenses.......................................................................3
Legislation in the 110th Congress....................................................................................................5
Author Contact Information............................................................................................................5
The Americans with Disabilities Act (ADA) provides broad nondiscrimination protection for
individuals with disabilities in employment, public services, public accommodations and services 1
offered by public entities, transportation, and telecommunications. Its stated purpose is “to
provide a clear and comprehensive national mandate for the elimination of discrimination against 2
individuals with disabilities.” Title II of the ADA states in part that “no qualified individual with
a disability shall, by reason of such disability, be excluded from participation in or be denied the
benefits of the services, programs, or activities of a public entity, or be subjected to discrimination 34
by any such entity.” A public entity is defined as a state or local government. The Department of
Justice has promulgated detailed regulations for Title II. One of these regulations interprets Title
II to mean that “a public entity shall administer services,
programs, and activities in the most integrated setting appropriate to the needs of qualified 5
individuals with disabilities.” However, the integrated setting is not required if “the public entity
can demonstrate that making the modifications would fundamentally alter the nature of the 6
service, program, or activity.”
In Olmstead v. L.C.,7 the Supreme Court held that “unjustified isolation ... is properly regarded as 8
discrimination based on disability” under Title II of the ADA. The plaintiffs in Olmstead were
mentally disabled individuals who were voluntarily confined to a state hospital’s psychiatric unit.
Their physicians had determined that they were capable of living in a community-based
environment. Georgia refused to transfer the individuals to a less restrictive setting, although the
programs were available in the state. The plaintiffs then brought suit under the ADA arguing that 9
their segregation in the state institution violated Title II of the act. The Court ruled that states are
“required to provide community-based treatment for persons with mental disabilities when the
[s]tate’s treatment professionals determine that such placement is appropriate, the affected
persons do not oppose such treatment, and the placement can be reasonably accommodated,
taking into account the resources available to the [s]tate and the needs of others with mental 10
disabilities.” However, the Court found that the state maintains the right to argue that a
“reasonable modification” for a person with physical or mental limitations who is able to live in a
42 U.S.C. § 12101 et seq. For a more detailed discussion of the ADA, see CRS Report 98-921, The Americans with
Disabilities Act (ADA): Statutory Language and Recent Issues, by Nancy Lee Jones.
2 42 U.S.C. § 12101(b)(1).
3 42 U.S.C. §§ 12131-12133.
5 28 C.F.R. § 35.130(d).
6 28 C.F.R. § 35.130(b)(7).
7 527 U.S. 581 (1999).
8 Id. at 597.
9 Id. at 593-94.
10 Id. at 607.
less restrictive setting would be a “fundamental alteration” of the program and therefore not 11
required under the ADA. “Sensibly construed, the fundamental-alteration component of the
reasonable-modifications regulation would allow the [s]tate to show that, in the allocation of
available resources, immediate relief for the plaintiffs would be inequitable, given the
responsibility the [s]tate has undertaken for the care and treatment of a large and diverse 12
population of persons with mental disabilities.” For example, if “the [s]tate were to demonstrate
that it had a comprehensive, effectively working plan for placing qualified persons with mental
disabilities in less restrictive settings, and a waiting list that moved at a reasonable pace not
controlled by the [s]tate’s endeavors to keep its institutions fully populated, the reasonable-13
modifications standard would be met.”
The major appellate cases subsequent to the Olmstead decision tend to discuss the fundamental
alteration defense and its application to various programs for individuals with developmental
disabilities. In some instances, courts have found a state’s program to be committed to
deinstitutionalization and therefore allowed the state to claim a fundamental alteration defense.
However, courts also have determined that a state’s program falls short of the Olmstead mandate
and therefore prohibited the state from asserting the fundamental alteration defense.
Two significant appellate court cases held that the state was entitled to claim the fundamental
alteration defense for its program for individuals with developmental disabilities. In both of these
cases, the state had a comprehensive working plan that resulted in fewer individuals residing in 14
institutions. In The Arc of Washington State, Inc. v. Braddock, the Court of Appeals for the Ninth
Circuit held that “forcing the state to apply for an increase in its Medicaid waiver program cap 15
constitutes a fundamental alteration, and is not required by the ADA.” The court found that
Washington had shown a “‘comprehensive, effectively working plan,’ ... and that its commitment 16
to deinstitutionalization ... [was] ‘genuine, comprehensive and reasonable.’” In another case, 17
Sanchez v. Johnson, the Ninth Circuit found that California’s commitment to deinstitutionalizing 18
persons with developmental disabilities was “genuine, comprehensive and reasonable” and held
that granting the plaintiffs’ requested relief would “require the ‘fundamental alteration’ of a 19
comprehensive, working plan for deinstitutionalization in contravention of Olmstead.”
Id. at 603; 28 C.F.R. § 35.130(b)(7).
12 Id. at 604.
13 Id. at 605-06.
14 427 F.3d 615 (9th Cir. 2005).
15 Id. at 621-22.
16 Id. at 621.
17 416 F.3d 1051 (9th Cir. 2005).
18 Id. at 1067.
19 Id. at 1068.
Throughout both cases, the court specifically analyzed the structure and features of each program
before reaching its conclusion. The Braddock court observed that the state’s home and
community-based services waiver program was “sizeable,” “full,” and “available to all Medicaid-20
eligible disabled persons as spots become available.” Additionally, the program had “already
significantly reduced the size of the state’s institutionalized population” and had “experienced 21
budget growth in line with, or exceeding, other state agencies.” Similarly, the Sanchez court
observed that California’s expenditures for individuals in community settings increased 196%
between 1991 and 2001 and that California decreased its institutional population by 20% between 22
Appellate courts have held in several other cases that the state could not claim the fundamental
alteration defense because its programs for individuals with developmental disabilities did not
comply with Olmstead. Two of these cases emphasize that the state’s budget constraints alone are
not sufficient to establish a fundamental alteration defense.
In some cases, the state did not have an Olmstead program but attempted to claim that changing
its noncomplying program would amount to a fundamental alteration. For example, in 23
Pennsylvania Protection and Advocacy, Inc. v. Pennsylvania Department of Public Welfare, the
Court of Appeals for the Third Circuit held that a state could not successfully assert the
fundamental alteration defense for a program when compliance with Olmstead “would be too 24
costly or would otherwise fundamentally alter” a noncomplying integration program. The court
stated that “budgetary constraints alone are insufficient to establish a fundamental alteration 25
defense.” The Department of Public Welfare attempted to claim that it had a “sufficient plan in
the form of ‘policies and procedures that demonstrate DPW’s commitment to 26
deinstitutionalization ... and a history ... that show[ed] that the policy ... [was] in effect,’” but the
court concluded that “the only sensible reading of the integration mandate consistent with the
Court’s Olmstead opinion allows for a fundamental alteration defense only if the accused agency 27
has developed and implemented a plan to come into compliance with the ADA.” In another 28
case, the Third Circuit in Frederick L. v. Department of Public Welfare of Pennsylvania held that
a state could not assert the fundamental alteration defense for a program that was not an
“adequately specific comprehensive plan” for transferring eligible individuals into community-29
based programs. The Department of Public Welfare claimed that it had a sufficient plan that 30
showed the “required commitment to deinstitutionalization.” Its plan included the “non-
specific” goal of closing “up to” 250 state hospital beds per year but lacked “measurable goals”
427 F.3d at 622.
22 416 F.3d at 1067.
23 402 F.3d 374 (3d Cir. 2005).
24 Id. at 381.
25 Id. at 380.
26 Id. at 383 (citing Appellees’ Brief at 20).
27 Id. at 380.
28 422 F.3d 151 (3d Cir. 2005).
29 Id. at 158-59.
30 Id. at 154-55.
and “any commitment to implement” specific plans that had been developed by each of the state’s 31
regions that were served by a state psychiatric hospital. The appellate court held that “general 32
assurances and good-faith intentions to effectuate deinstitutionalization” were insufficient and
concluded that “an adequately specific comprehensive plan for placing eligible patients in
community-based programs by a target date” must be part of the program in order for the state to 33
assert the fundamental alteration defense.
In other cases, the state refused to expand its community based programs to include certain
individuals who were otherwise qualified for the programs and argued that this expansion would
be a fundamental alteration. The Court of Appeals for the Ninth Circuit held in Townsend v. 34
Quasim that the state could not claim a fundamental alteration defense solely because it would 35
have to offer its existing program in a community-based setting rather than a nursing home. Mr.
Townsend, a bilateral amputee who originally qualified for a Medicaid waiver program based on
his income, was informed that he would have to move to a nursing home or lose his benefits 36
following an increase in his income which disqualified him from the Medicaid waiver program.
The court observed that “[c]haracterizing community-based provision of services as a new
program of services not currently provided by the state fails to account for the fact that the state is 37
already providing those very same services” and concluded these facts alone would not allow
the state to claim that the provision of services to Townsend would fundamentally alter the state’s 3839
program. In another case, Fisher v. Oklahoma Health Care Authority, the Court of Appeals for
the Tenth Circuit held that “the fact that Oklahoma has a fiscal problem, by itself, does not lead to
an automatic conclusion that preservation of unlimited ... prescription benefits for participants in 40
the ... program will result in a fundamental alteration.” Oklahoma imposed a cap of five
prescriptions per month on individuals in its home and community-based services waiver
program while imposing no cap on individuals in nursing homes, and the plaintiffs claimed that
Oklahoma’s decision violated the ADA because it would force them into nursing homes in order 41
to obtain needed medical care. The Oklahoma Health Care Authority (OHCA) claimed that the 42
cap was a “reasonable” decision in light of the state’s financial crisis, but the court observed that
“[i]f every alteration in a program or service that required the outlay of funds were tantamount to 43
a fundamental alteration, the ADA’s integration mandate would be hollow indeed.”
Id. at 157-58.
32 Id. at 158-59.
34 328 F.3d 511 (9th Cir. 2003).
35 Id. at 517-18.
36 Id. at 514-15.
37 Id. at 517.
38 Id. at 518.
39 335 F.3d 1175 (10th Cir. 2003).
40 Id. at 1182.
41 Id. at 1181.
42 Id. at 1182.
43 Id. at 1183.
Two identical bills that address issues related to the Olmstead decision were introduced in March
2007. H.R. 1621 and S. 799 (known as the Community Choice Act of 2007) proposed to amend
Title XIX (Medicaid) of the Social Security Act to require state Medicaid plan coverage of
community-based attendant services and support for certain Medicaid-eligible individuals. The
bills also proposed to establish financial assistance programs for states with community-based
attendant services. The bills stated that one of their purposes was to “assist States in addressing
the decision of the Supreme Court in Olmstead v. L.C. ... and implementing the integration 44
mandate of the Americans with Disabilities Act.” Although a hearing was held by the Senate 45th
Committee on Health, Education, Labor, and Pensions on July 10, 2007, the 110 Congress did
not enact this legislation.
Carol J. Toland
44 th st th st
H.R. 1621 at § 2(b)(4), 110 Cong. (1 Sess. 2007); S. 799 at § 2(b)(4), 110 Cong. (1 Sess. 2007).