Medicaid Funding For Community Living

In many states, funding for large institutions housing people with developmental disabilities far exceeds funding for community placements and services.

This disparity persists even now, after the movement to deinstitutionalize people with disabilities has succeeded in moving the vast majority of people out of state-run institutions. Though unnecessary segregation of people with disabilities is prohibited, many people who wish to remain in the community are forced into institutions or are stuck on waiting lists. This is a result of the fact that because of the funding offered to service providers, there aren’t enough service providers. And because of that, people have to live in institutions.

In California in the late 1990s, over 180,000 people with disabilities relied on Medicaid to provide services, but this funding disparity seriously compromised the quality of care they received and left almost 2,000 people unnecessarily stuck in institutions.

In 2000, the Law Center filed Sanchez v. Johnson, a class action lawsuit on behalf of seven individuals with developmental disabilities and six organizations.

Case Documents


In Sanchez v. Johnson, we argued that the funding disparity violated equal access provisions of the Medicaid Act as well as laws prohibiting unnecessary institutionalization. The Disabilities Rights Education & Defense Fund served as local counsel.

In the District Court and again in the Ninth Circuit Court of Appeals, our claims were dismissed. The Ninth Circuit’s 2005 decision was the first time that a Court of Appeals ruled that Medicaid’s equal access provisions were not enforceable in lawsuits brought by Medicaid providers and recipients. The Courts also ruled that California’s plan to move residents out of institutions and provide community services met its legal requirements, even as thousands of people with developmental disabilities remained in institutions against their will or struggled to obtain necessary services in the community.

The Law Center and of the plaintiffs in a parallel case brought by the California Medical Association then unsuccessfully petitioned to have the full Court of Appeals review the panel decision, which we argued upset existing precedent and threatened California’s entire medical assistance program.

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