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Federal Court Ruling Supports Cardinal Innovations’ Authority to Manage and Adjust Reimbursement Rates to Maintain Services

Cardinal Innovations Healthcare — September 02, 2014

FOR IMMEDIATE RELEASE

KANNAPOLIS, Sept. 2, 2014 – In a significant victory for the North Carolina Department of Health and Human Services (DHHS), a federal judge has held that a key contractor, Cardinal Innovations Healthcare Solutions, has authority to manage and adjust reimbursement rates paid to providers in order to maintain necessary services to consumers. In a recent ruling on August 28, 2014, Senior United States District Judge N. Carlton Tilley, Jr. issued his decision in favor of DHHS and Cardinal Innovations in Clinton L., et al. v. Wos, et al., a case first filed by Disability Rights North Carolina (DRNC) in February 2010.

“We appreciate the court acknowledging our legal and contractual obligation to carefully manage taxpayer resources in a fair and equitable manner on behalf of DHHS and the State of North Carolina,” said Pam Shipman, CEO of Cardinal Innovations. “We take seriously our role of balancing our responsibilities to the State, our provider network, and most importantly, the people we serve.”


The federal lawsuit was filed by DRNC, a publicly-funded advocacy group, during a time of recession and challenging budget reductions in 2009. In response to these budget reductions, Cardinal Innovations reduced the rates paid to providers of a service known as Supervised Living; however Cardinal Innovations did not reduce any of the services that were provided to individuals receiving this service.

In bringing the lawsuit, DRNC alleged that this rate change constituted a violation of the Americans with Disabilities Act (ADA) and demanded that Cardinal Innovations be required to continue paying providers the higher rate for this service. No providers sought to join in the lawsuit. Instead, DRNC argued that if the rate paid to the providers was not higher, individuals receiving the service would all lose their community placements and would be imminently forced into state institutions in violation of the ADA. DRNC asked the court to permanently restore and freeze the rate at the higher level that it was prior to the change.

In a 78-page decision, Judge Tilley rejected all of DRNC’s claims in the case, concluding that Cardinal Innovations’ change of the rate for the Supervised Living service did not result in the outcome argued by DRNC, and that the rate change was not a violation of the ADA. In doing so, Judge Tilley declined to mandate that Cardinal Innovations pay a particular rate for services.

“The court’s decision recognizes that in a world of limited resources mandating certain rates to be paid to providers could impact the availability of services.” added Shipman. “Healthcare is dynamic, and the court’s decision allows us the flexibility to allocate resources in a manner that best meets the needs of the individuals we serve.”

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