By Ben Solis
Gongwer News Service
Several private foster care placement, case management and licensing organizations sued the Department of Health and Human Services recently over what they said was a unilateral decision to pay them less than a statutorily mandated per diem rate.
The lawsuit, Michigan Federation for Children and Families v. DHHS (COC Docket No. 24-000195), was filed late last week in the Court of Claims. It alleges that in October, the department imposed a provision in its master agreement to amend placement contracts with a new per diem rate of $53.18, which the plaintiffs argue is far less than what was mandated by the Legislature in the Fiscal year 2024-25 budget.
The approved budget included a per diem rate of $60.20, the lawsuit noted.
“The MDHHS has … acted unilaterally, without authority, and contrary to the Legislature’s direction by improperly reducing the amount of compensation it is paying to foster care service providers, and it threatened said providers with contract termination if they refused to accept the lesser pay,” the lawsuit said. “The MDHHS has made passing reference to Act 174, Public Acts of Michigan, 2020, (Act 174) as the source of its authority for including incentives in the amended contracts but has failed to respond to the plaintiffs’ requests for a substantive explanation of which provision of Act 174 empowers the Agency to pay less than the mandatory per diem rate. Consequently, the plaintiffs are forced to seek judicial relief to prevent the MDHHS from violating state law and exceeding its limited authority.”
Michigan Federation for Children and Families is a nonprofit organization that represents nearly 60 member organizations that claims to provide services for nearly 55 percent of children laced in foster care in Michigan. Several other plaintiffs are religious or community foster care organizations.
The complaint said that the path to foster care typically begins after Child Protective Services receives a report of abuse or neglect, and if an investigation determines the home environment is unsafe, the agency will seek court orders to remove the child. DHHS will then receive an order of removal if the home is found to be unsafe, and the department works to assign placement with a DHHS office or a contracted private agency like the plaintiffs.
The lawsuit said nearly 55 percent of children are placed by private agencies.
“Private agency foster care service providers are also responsible for developing and implementing comprehensive plans to supervise children in the foster care system. Supervision includes creating treatment plans to enhance each child’s and family’s functioning and preparing for a more permanent home solution, including reunification with the child’s parent or parents, adoption, or another permanent living arrangement,” the lawsuit said. “Without these private agency foster care service providers, the MDHHS would be overwhelmed and overloaded by the responsibility of finding homes for and supervising the unfortunately high number of children who are abused and neglected each year.”
The complaint said DHHS lacks the funding to take over administration of services provided by contracted entities, which the lawsuit said are offered at a much lower cost than what the department would have to expend on its own.
“It is, therefore, essential that the MDHHS adequately compensates organizations like the plaintiff providers for the indispensable services they render, and the Legislature has recognized as much by setting a minimum amount for compensation for foster care services,” the lawsuit said. “State agencies in Michigan are creatures of limited power, only permitted to act if they are authorized to do so. The MDHHS may only act insofar as it is authorized to do so and has flagrantly disregarded the Legislature’s intention that foster care service providers receive adequate pay for vital services.”
Overall, the lawsuit said the department has a duty to comply with the Legislature’s appropriation of the higher per diem amount, and that compliance with the Legislature’s funding choices was a key part of contractors being able to work with government and particularly for essential services dealing with vulnerable children.
The lawsuit alleges that DHHS made the change known to organizations in September without explanation and improperly, leading to the complaint in the Court of Claims.
“In an unprecedented attempt to coerce the Plaintiff Providers into capitulation with the illegal amended contracts, in or about the beginning part of October 2024, the plaintiff providers received communication from the MDHHS indicating the agency would potentially remove foster care placement cases from plaintiff providers who refused to sign the amended contracts, which would ultimately lead to contract termination – further jeopardizing the safety and welfare of those served by the plaintiff providers,” the lawsuit said.
It adds that DHHS made the “threat knowing that there are likely no other viable placement options available for those vulnerable populations if the MDHHS were to start cancelling the plaintiff providers’ contracts if they did not capitulate to the illegal amended contracts.”
The plaintiffs have also asked Court of Claims Judge Sima Patel for a temporary restraining order and preliminary injunction to prevent DHHS from paying the lower amount while the case moves forward.
Gongwer News Service
Several private foster care placement, case management and licensing organizations sued the Department of Health and Human Services recently over what they said was a unilateral decision to pay them less than a statutorily mandated per diem rate.
The lawsuit, Michigan Federation for Children and Families v. DHHS (COC Docket No. 24-000195), was filed late last week in the Court of Claims. It alleges that in October, the department imposed a provision in its master agreement to amend placement contracts with a new per diem rate of $53.18, which the plaintiffs argue is far less than what was mandated by the Legislature in the Fiscal year 2024-25 budget.
The approved budget included a per diem rate of $60.20, the lawsuit noted.
“The MDHHS has … acted unilaterally, without authority, and contrary to the Legislature’s direction by improperly reducing the amount of compensation it is paying to foster care service providers, and it threatened said providers with contract termination if they refused to accept the lesser pay,” the lawsuit said. “The MDHHS has made passing reference to Act 174, Public Acts of Michigan, 2020, (Act 174) as the source of its authority for including incentives in the amended contracts but has failed to respond to the plaintiffs’ requests for a substantive explanation of which provision of Act 174 empowers the Agency to pay less than the mandatory per diem rate. Consequently, the plaintiffs are forced to seek judicial relief to prevent the MDHHS from violating state law and exceeding its limited authority.”
Michigan Federation for Children and Families is a nonprofit organization that represents nearly 60 member organizations that claims to provide services for nearly 55 percent of children laced in foster care in Michigan. Several other plaintiffs are religious or community foster care organizations.
The complaint said that the path to foster care typically begins after Child Protective Services receives a report of abuse or neglect, and if an investigation determines the home environment is unsafe, the agency will seek court orders to remove the child. DHHS will then receive an order of removal if the home is found to be unsafe, and the department works to assign placement with a DHHS office or a contracted private agency like the plaintiffs.
The lawsuit said nearly 55 percent of children are placed by private agencies.
“Private agency foster care service providers are also responsible for developing and implementing comprehensive plans to supervise children in the foster care system. Supervision includes creating treatment plans to enhance each child’s and family’s functioning and preparing for a more permanent home solution, including reunification with the child’s parent or parents, adoption, or another permanent living arrangement,” the lawsuit said. “Without these private agency foster care service providers, the MDHHS would be overwhelmed and overloaded by the responsibility of finding homes for and supervising the unfortunately high number of children who are abused and neglected each year.”
The complaint said DHHS lacks the funding to take over administration of services provided by contracted entities, which the lawsuit said are offered at a much lower cost than what the department would have to expend on its own.
“It is, therefore, essential that the MDHHS adequately compensates organizations like the plaintiff providers for the indispensable services they render, and the Legislature has recognized as much by setting a minimum amount for compensation for foster care services,” the lawsuit said. “State agencies in Michigan are creatures of limited power, only permitted to act if they are authorized to do so. The MDHHS may only act insofar as it is authorized to do so and has flagrantly disregarded the Legislature’s intention that foster care service providers receive adequate pay for vital services.”
Overall, the lawsuit said the department has a duty to comply with the Legislature’s appropriation of the higher per diem amount, and that compliance with the Legislature’s funding choices was a key part of contractors being able to work with government and particularly for essential services dealing with vulnerable children.
The lawsuit alleges that DHHS made the change known to organizations in September without explanation and improperly, leading to the complaint in the Court of Claims.
“In an unprecedented attempt to coerce the Plaintiff Providers into capitulation with the illegal amended contracts, in or about the beginning part of October 2024, the plaintiff providers received communication from the MDHHS indicating the agency would potentially remove foster care placement cases from plaintiff providers who refused to sign the amended contracts, which would ultimately lead to contract termination – further jeopardizing the safety and welfare of those served by the plaintiff providers,” the lawsuit said.
It adds that DHHS made the “threat knowing that there are likely no other viable placement options available for those vulnerable populations if the MDHHS were to start cancelling the plaintiff providers’ contracts if they did not capitulate to the illegal amended contracts.”
The plaintiffs have also asked Court of Claims Judge Sima Patel for a temporary restraining order and preliminary injunction to prevent DHHS from paying the lower amount while the case moves forward.
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