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April 18, 2014
FAQ: Rekhter v. Washington Department of Social and Health Services case

OLYMPIA – The Washington State Attorney General’s Office and Department of Social and Health Services today issued the following answers to questions about the status of the Rekhter v. Washington Department of Social and Health Services case:
Q:  How much did the State Supreme Court’s recent 5-4 ruling in Rekhter v. DSHS  order DSHS to pay to care providers?
A:  The Supreme Court ordered DSHS to pay $57 million in contract damages to certain care providers, plus $22 million in post-judgment interest. The total is $79 million.
Q:  Didn’t the trial court previously order DSHS to pay a lot more in the same case?
A:  Yes. The trial court said DSHS had to pay the plaintiffs $38 million in prejudgment interest (which by last month had become $51 million) in addition to the $57 million and the $22 million. The Supreme Court overruled the trial court on prejudgment interest.
Q:  Why hasn’t DSHS paid the judgment yet?
A:  Paying it now would be premature for three reasons.
First, the Department of Social and Health Services does not have $79 million appropriated in its budget to pay this judgment. Unlike a liability lawsuit which may be paid out of a separate liability account, this class action lawsuit must be paid out of DSHS’s budget for client services. It will require a special appropriation from the Legislature.
Second, under the Supreme Court’s rules, proceedings before the Washington State Supreme Court are not yet over. The decision will become final 20 days after the decision was issued (April 23), unless either side asks the Court to reconsider elements of its decision.  DSHS won part of the case at the Supreme Court and lost the other part in a narrow 5-4 ruling. In light of this close ruling, DSHS will continue to study the ruling to evaluate its options. The State has successfully sought reconsideration before the Supreme Court in the past.
Finally, once the Supreme Court issues its final “mandate,” determining all action in that court is concluded, then Thurston County Superior Court reassumes jurisdiction and must approve the plan to distribute the funds to the care providers.

Following is the statement that DSHS issued about this case on April 3:
Contact: Kathy Spears,
April 03, 2014

Partial Victory for DSHS in Supreme Court Ruling on In-home Care
OLYMPIA – The state Supreme Court today issued a ruling that reversed a 2007 lower court award of nearly $39 million in prejudgment interest in the case of Rekhter v. state Department of Social and Health Services.
This case dealt with a 'shared living rule' a policy since the 1990s that was automated into the department's client assessment process between 2003 and 2007. It reduced the amount of hours of care awarded to Medicaid clients with live-in providers by an average of 15 percent. The reduction reflected the Medicaid requirement that DSHS consider informal sources of support for clients, including how providers benefited from some of the home-care tasks, such as preparing meals and housekeeping.
In a 5-4 ruling, the Court also upheld the lower court's decision to award the class of providers $57 million in contract damages. In the majority opinion, the Court held “a jury found that DSHS violated its duty of good faith and fair dealing in the performance of a specific term of its contracts with providers. This verdict accords with relevant law and we affirm it.'
'This is a partial victory for the Department,' said Bill Moss, assistant secretary with the DSHS Aging and Long-Term Support Administration. 'There is no doubt that providers do an outstanding job of serving our vulnerable population. It is rewarding work, but can be difficult and stressful.
'But when dealing with limited funds, it is critical to do everything possible to stretch and leverage funds to sustain services and to care for the greatest number of folks with personal care needs,' Moss said.
In 2007, the Supreme Court ruled in another case – Jenkins v. DSHS – that the automatic reduction aspect of the shared living rule was invalid because it was inconsistent with a federal Medicaid requirement.  DSHS repealed the rule and reassessed the needs of home care clients, who were individually assessed to determine whether an increase in a public assistance award was warranted.
In today's split ruling, a dissent authored by Justice Stephens stated those in this class of providers could not claim their contracts because federal law governs how Medicaid benefits are determined.
DSHS is nationally recognized for its innovative, long-term care programs and is ranked as second in the nation by AARP in its 2011 state scorecard on Long-Term Services and Supports for Older Adults, People with Disabilities, and Family Caregivers.  Additional information can be found at: 

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