Gongwer News Service
A group of foster care placement, case management and licensing organizations have prevailed in a lawsuit against the Department of Health and Human Services over a unilateral decision to pay them less than a statutorily mandated per diem rate.
In an opinion issued last week by Court of Claims Judge Sima Patel, the defendant in Michigan Federation for Children and Families v. DHHS (COC Docket No. 24-000195) was ordered to pay the plaintiffs $60.20 per diem and enjoined from withholding the full administrative rate selected by the Legislature.
Patel declared that DHHS's decision to amend a master agreement providing split per diem and incentive rates violated the tenets of the Legislature's appropriation in the 2024-25 budget.
In a statement provided to Gongwer News Service, the Michigan Federation for Children and Families applauded the ruling, which it said upholds the state's obligation to fully fund foster care services at the Legislature's determined per diem rate.
"All children deserve excellence in service and every effort to ensure they grow up in strong families and supportive communities. With this decision, our member organizations can continue meeting the full scope of children's needs, free from the threat of reduced funding or uncertainty," Janet Reynolds Snyder, president of MFCF, said in a statement.
"We look forward to a continued partnership with DHHS to best meet the needs of children and families engaged with the state's child welfare system, and to support successful outcomes."
The lawsuit was filed in the Court of Claims in December 2024.
It alleged 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 argued was far less than what was mandated by the Legislature in the 2024-25 budget.
The approved budget included a per diem rate of $60.20, the lawsuit noted.
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 placed in foster care in Michigan. Several other plaintiffs were religious or community foster care organizations.
The complaint said that the path to foster care typically begins after Children's 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.
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.
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.
Patel agreed and her order closed the case.
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