BILL LANN LEE
Acting Assistant Attorney General
MARK L. GROSS
LINDA F. THOME
Department of Justice
P.O. Box 66078
Washington, D.C. 20035-6078
JOY EVANS, et al.,Plaintiffs-Appellees
UNITED STATES OF AMERICA,Plaintiff-Intervenor-Appellee
ANTHONY A. WILLIAMS, et al.,Defendants-Appellants
ON APPEAL FROM THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIA
BRIEF FOR THE UNITED STATES AS APPELLEE
This is an action by private plaintiffs and by the United States to enforce the constitutional rights of the former residents of Forest Haven, the District of Columbia's institution for persons with mental retardation. The district court had subject matter jurisdiction under 28 U.S.C. 1331 and 28 U.S.C. 1345. The district court entered its order imposing contempt sanctions and denying defendants' motion to modify its prior remedial orders on February 10, 1999. Defendants filed a timely notice of appeal on April 7, 1999. This court has appellate jurisdiction under 28 U.S.C. 1291 and 28 U.S.C. 1292(a).
STATUTES AND REGULATIONS
All applicable statutes are contained in the statutory addendum submitted by the appellants.
STATEMENT OF ISSUES
1. Whether the district court abused its discretion in imposing civil contempt sanctions on the defendants when they failed to comply with remedial orders requiring timely payment of vendors responsible for providing, on defendants' behalf, day-to-day care and services for class members.
2. Whether the district court abused its discretion when it denied defendants' motion to modify prior remedial orders to expand the time for payment of vendors from 30 days to 45 days.
STATEMENT OF THE CASE
This appeal concerns the defendants' obligation to pay, on a timely basis, the vendors who provide vital services to class members in this litigation. The class consists of some 800 adults with mental retardation who were committed to and formerly resided in Forest Haven, the District of Columbia's now-closed institution for individuals with mental retardation (App. 182-183). More than half of the class members are severely or profoundly mentally retarded; many have physical disabilities; most are impoverished (App. 204-205). Under the terms of consent orders entered in this case in 1978, 1981, and 1983, the defendants are obligated to provide class members "community living arrangements suitable to each, together with such community-based day programs and services as are necessary to provide them with minimally adequate habilitation" (App. 110; see App. 115-139). The defendants have chosen to provide such services to the class members almost entirely through vendors; with few exceptions, the District of Columbia itself does not provide either residential or day programs to class members (App. 183). Pursuant to a 1983 consent order, to ensure that vendors are financially able to provide continuing services, defendants are obligated to pay those vendors within 30 days of the submission of acceptable vouchers (App. 138).
In October 1995, the district court held the defendants in contempt for violation of this and other provisions of its remedy orders (App. 164a-164j). In August 1996, the court found that the defendants had "for over two years, chronically and unapologetically violated the terms of nearly every aspect" of the court's orders, and that their noncompliance had "created chaos for the care providers vested with day-to-day responsibility for the members of this plaintiff class" (App. 364-365). The court thus entered a Remedial Plan setting forth sanctions, including daily and monthly coercive fines to be imposed if the defendants failed to purge their contempt by timely paying all undisputed invoices and vouchers submitted by vendors providing care to Evans class members (App. 366-379). Defendants did not appeal from the contempt finding or from the Remedial Plan. Nor did they move to modify the timely-payment requirement until May 1997 -- after the plaintiffs moved for the imposition of sanctions in April 1997 (App. 425-432; see App. 403). There is no dispute that defendants failed to purge their contempt by paying the vendors on time.
On February 10, 1999, the district court imposed numerous fines totaling over $5 million for defendants' repeated failures to comply with the timely-payment requirement for the period between the entry of the Remedial Plan on August 2, 1996 and the filing of the plaintiffs' motion for sanctions on April 2, 1997 (App. 485 n.3, 488-489 & n.11).
This class action was initiated in 1976 by residents of Forest Haven (App. 65-81). The Evans plaintiffs alleged that they were being denied "a constitutionally minimal level of habilitation, a term which incorporates care, treatment, education and training," and that Forest Haven provided them "only the most meager custodial care" (App. 66). The United States intervened as a plaintiff soon thereafter (App. 96-104), alleging that the defendants had "denied to residents of Forest Haven their rights to living conditions which are free from harm, in violation of the Fifth and Eighth Amendments to the Constitution of the United States" (App. 99). In addition to allegations that Forest Haven failed to provide its residents with appropriate training and education, the Evans plaintiffs and the United States alleged that defendants failed to provide the institution's residents with a clean, decent and safe living environment (App. 75, 99); that the institution was understaffed and the staff inadequately trained to care for the residents (App. 76, 99-100); that residents suffered physical abuse from staff and other residents (App. 76, 100); that residents were denied adequate medical and dental care (App. 77); that residents were not provided with a well-balanced nutritious diet (App. 77, 100); and that residents were improperly subjected to restraints or medication to control their behavior (App. 77, 100).
Defendants, sued in their individual and official capacities, were the Mayor of the District of Columbia, the Director of the Department of Human Resources for the District of Columbia, the Administrator of the Mental Health Administration, the Chief of the Bureau of Developmental Disabilities, and the Director of Forest Haven (App. 65, 72-73). The defendants answered both complaints (App. 82-88, 89-95, 105-108). Although they admitted some of the factual allegations (e.g., that some incidents of physical abuse by staff had occurred and that the institution was understaffed as a result of a hiring freeze (App. 86)), they denied that they had violated the residents' constitutional or statutory rights (App. 87-88, 94-95, 107-108).
In 1978, with the defendants' consent (see App. 109), the district court entered a final judgment and order (1978 Order) (App. 109-114). The court defined the plaintiff class to include mentally retarded residents of Forest Haven, and found that the class had suffered violations of their rights, under the Due Process Clause of the Fifth Amendment and under the Eighth Amendment, to be free from harm and to habilitative care and treatment in the alternative least restrictive of liberty (App. 109). The 1978 Order, inter alia, required the defendants to develop a Plan of Implementation for providing all class members with community living arrangements, and set goals for the deinstitutionalization of residents in each of the next three years, pending the development of that Plan (App. 110-112). The 1978 Order also set out specific requirements for the interim operation of Forest Haven to safeguard the health and well-being of Forest Haven residents pending their placement in community living arrangements (App. 112-114).
In 1981, in the wake of motions by the Evans plaintiffs and the United States to enforce the 1978 Order, the court entered a Consent Order (1981 Consent Order) (App. 115-124). The 1981 Consent Order required defendants, among other things, to "exert their maximum efforts" to fill staff vacancies at Forest Haven within 60 days (App. 115-116); provide individual assessments and habilitation plans for each class member and identify the services needed by each (App. 117-118); report annually on the resources available to provide those services (App. 119); procure and maintain a reserve supply of food, medicine, and other supplies to meet the needs of class members and maintain the facilities at Forest Haven (App. 120-121); implement the defendants' own plan for the outplacement of class members from the institution (App. 121-122); and seek "to the maximum extent feasible" necessary funding to meet class members' needs (App. 123). Paragraph 6 of the 1981 Consent Order required the defendants to propose a timetable for the processing of contracts to provide services to class members, and to "exert their maximum efforts to adhere to the time frames finally adopted" (App. 123).
The district court entered a third Consent Order in 1983, following motions for contempt filed by the Evans plaintiffs and the United States (1983 Consent Order) (App. 125-139). The 1983 Consent Order again dealt with the defendants' obligations to provide individual assessments of class members' needs (App. 126, 132-133); to seek adequate funding for class member services (App. 127); and to maintain adequate staffing, supplies, and maintenance at Forest Haven (App. 127-132). The 1983 Consent Order also required the defendants to continue the outplacement of class members, with the goal of placing all residents in community settings by the end of Fiscal Year 1988 (App. 136-138). With respect to this community placement requirement, Part IX of the 1983 Consent Order included specific provisions regarding contracts with outside entities for the continuing provision of services to class members (see ¶¶ IX.3., IX.7., IX.10., App. 136-138). To ensure continuing services, paragraph 10 of Part IX required the defendants to "insure that all vendors are paid for goods and services no later than thirty days following their submission of acceptable vouchers" (App. 138). Part X required defendants to "give notice of this Order to their successors, officers, agents, and employees affected by the provisions herein" (App. 138).
B. Defendants' Failures To Comply With The Court's Orders
1. As contemplated by the consent orders, defendants contracted with private vendors to provide both residential care and habilitation services for Evans class members and other individuals with mental retardation committed to the care of the Mental Retardation and Developmental Disabilities Administration (MRDDA)(App. 183). These vendors maintain four different types of residential facilities, which provide varying levels of supervision and care for the residents: adult foster care, supervised apartments, community residence facilities, and intermediate care facilities (App. 183; see App. 206-210). A small number of class members are in nursing homes (App. 183). Private vendors also provide day programs for class members, including education, training in daily living skills, vocational training, community orientation, occupational therapy, and sheltered workshops (App. 183-184; see App. 210). Class members receive medical services through providers under contract with MRDDA (App. 210).
Services provided by intermediate care facilities, most medical services, and some day programs qualify for reimbursement under the Medicaid program (App. 183-184; see App. 207-210). Medicaid reimbursement, for which the federal government provides half the funding, is made on a fee-for-service basis through the District of Columbia's Health Care Finance Commission (HCF) (App. 184; see App. 210). Providers of services that are not reimbursable under Medicaid (non-Medicaid services) are paid under contracts with MRDDA (App. 184, 207-210).
2. In February 1995, the court monitor reported to the court that the defendants were substantially behind in their payments to the vendors providing daily care and other services to Evans class members (see App. 154, 164b & n.2). On April 21, 1995, following motions by the United States and the Evans plaintiffs (App. 142-152), and a hearing, the district court issued an order to show cause why the defendants should not be held in contempt (App. 153-157). The court concluded that "defendants essentially concede[d]" that they were in violation of the court's prior orders. In particular, the court found that the defendants were "substantially in arrears on undisputed payments to care providers for Evans class members," in violation of paragraph IX.10 of the 1983 Consent Order and paragraph 6 of the 1981 Consent Order (App. 153-154). Based upon information provided by the court monitor, the court found that the outstanding balance due to providers was between 3 and 4 million dollars, and that some providers had not been paid for nine months, dating back to May 1994 (App. 154 & n.2).(1) The court also found "compelling evidence that several providers can no longer meet payroll and have cut back even basic medical care for class members. The District counters only that to its knowledge no class members have gone without housing" (App. 154).
The court took judicial notice of the District of Columbia's financial crisis, but rejected the defendants' contention that the crisis excused their failure to comply with the orders (App. 155): "The District does not have the power to unilaterally ignore or stretch the terms of the consent orders to meet its agenda. * * * [T]he District must petition the Court to alter the terms of the decrees if it cannot conform." The court deferred consideration of a remedy for 20 days (App. 153-154). Instead, it urged the defendants to comply voluntarily, and directed the parties to seek to develop a plan to reimburse the providers and to bring the defendants into compliance (App. 153-154, 156-157 & n.6).
3. The parties, however, were unable to reach agreement on such a plan and the defendants failed to come into compliance voluntarily (App. 164b). On October 11, 1995, following additional submissions, affidavits, and oral argument from the parties, the district court entered findings of fact and conclusions of law holding the defendants in contempt of its prior orders (App. 164a-164j). The court also issued an Order of Reference appointing a Special Master "to evaluate and ensure defendants' compliance" (App. 166).
The district court found that the defendants "concede that for at least the past eight months, the District's practice has been to delay or withhold payments to providers of residential and habilitation services," and that the "overdue amounts total in the millions of dollars" (App. 164c). As a result, the vendors had "been forced to obtain funds from other sources, including bank loans, personal loans, lines of credit, and extensions of lines of credit, in order temporarily to make up for District payment shortfalls" (App. 164d). The court concluded, "through clear and convincing evidence, including defendants' conceded violations," that the defendants were violating its prior orders, including paragraph IX.10 of the 1983 Consent Order and paragraph 6 of the 1981 Consent Order, requiring prompt payment of Evans class providers (App. 164g-164h).(2) The court acknowledged that the defendants had "recently made substantial efforts to pay overdue accounts," but then found that it was unclear whether all overdue payments had been made or whether newly-submitted vouchers were being paid on time (App. 164h).
The court directed the Special Master to prepare a proposed plan to bring the District into compliance with the orders (App. 164i-164j; see App. 166-167). In preparing the plan, the Special Master was to consult with the parties and to consider "any proposals made by defendants which may be appropriate to alter the terms of the consent decrees in light of changed circumstances" (App. 164i). The court again emphasized that the defendants' interests would be best served by voluntary compliance (App. 164i n.6). Defendants appealed neither the contempt finding nor the Order of Reference.
4. In January 1996, the Special Master submitted Proposed Recommended Findings of Fact and Conclusions of Law and Recommendations for a 1996 Remedial Plan (1996 Report), based upon submissions from the parties and from the court monitor (App. 177-257). The Special Master reported that the defendants conceded their failure to comply with the timely-payment requirement since the contempt finding (App. 186). As a result, the providers charged with caring for class members on a daily basis had been forced to lay off staff, to reduce or eliminate services, and to borrow large amounts of money to meet their payroll and cover such basic expenses as food and utilities (App. 189; see App. 223-226). With these loans coming due, several providers had indicated they would be forced to terminate services to class members because of non-payment; at least one was in bankruptcy (App. 186, 189; see App. 233-250). The Special Master explained the consequences for class members of the defendants' failure to pay on time (App. 189, footnote omitted):
Without continued care from private providers, class members are in jeopardy of being deprived of their right to minimally adequate habilitation in the least restrictive settings. As the Court has heard in emergency hearings, many Providers believe they will have to terminate their services to Plaintiffs if they cannot be assured of predictable and full payment of the amounts owed them by Defendants. * * * Physicians and other health care providers who render services to class members are threatening to stop their care if they are not paid for their services by Medicaid. The unnecessary disruption in the lives of mentally retarded people that would result from the closure of their residences and their removal to new and uncertain surroundings would be devastating to many class members and would be contrary to the requirements of the several consent orders that Plaintiffs be provided adequate, normal residential settings.
* * * Even if other private providers can be found to fulfill Defendants' obligations to the Plaintiff class, members of the class will be bewildered and harmed by the disruption of their lives and the loss of the only homes they have known for many years.
The Special Master recommended entry of a remedial plan that, inter alia, would require the defendants to abide by the 30-day payment requirement already established in paragraph IX.10 of the 1983 Consent Order (App. 191-195). The Special Master also recommended that, after the remedial plan was entered, the defendants be assessed a civil fine amounting to twice the amount overdue, for each month that they failed to comply with the timely-payment requirement (App. 194). Such fines would be paid to the court and set aside for payment to Evans class providers upon the recommendation of the Special Master (App. 194). The defendants objected to each of these recommendations in their submissions to the Special Master (App. 192, 195; see App. 294). In their objections to the district court, however, while the defendants maintained their objections to the provisions regarding fines (App. 269-270), they were silent on the 30-day payment requirement (App. 267).
In June 1996, the Special Master submitted a Supplemental Report (June 1996 Report) (App. 325-333). The Special Master found that, while defendants had shortened the time for payment of many providers and had reduced the backlog of overdue payments, they still were not fully complying with the 30-day payment requirement (App. 326-327). As of April 6, 1996, the defendants owed $388,719 in overdue payments for services rendered in 1996, and an unspecified amount for services rendered in 1995 (App. 327). Medicaid payments for March, April, and May had been made more than 30 days but less than 45 days after submission (App. 327).
C. The 1996 Remedial Plan
On August 2, 1996, the district court entered an Order largely adopting the Special Master's Proposed Findings of Fact (App. 361-365), and a Remedial Plan (App. 366-379). The court specifically found that, although the defendants had reduced both the time required to pay vendors and the backlog of overdue payments, "neither Medicaid payments nor payments from MRDDA to Evans providers have met the requirement of the 1983 Consent Order, para. IX, section 10, that defendants pay acceptable invoices within 30 days of their submission" (App. 362, quoting App. 326). The court found that the defendants had "for over two years, chronically and unapologetically violated the terms of nearly every aspect of this Court's multiple Consent Orders," thereby creating "chaos for the care providers vested with day-to-day responsibility for the members of this plaintiff class" (App. 364-365). Class members, the court found, were "ill-equipped to adjust to or defend against the city's failure to assist their care providers in giving them the care and treatment they desperately need" (App. 365). Thus, while acknowledging the District's financial situation, the court wrote that "[a]ny further noncompliance with this Court's longstanding Consent Orders, and noncompliance with the Remedial Plan issued this date, must be expected by defendants to result in serious consequences" (App. 365).
The Remedial Plan restated the pre-existing requirement that "defendants shall pay all acceptable invoices from Evans care providers within 30 calendar days of their submission" (App. 367). The Remedial Plan also required the defendants to submit monthly statements to the court identifying all Evans class care providers to whom timely payment had not been made during the previous month, the amount of the overdue payment, and the number of days it was overdue (App. 369-370). The Remedial Plan further provided that coercive fines would be imposed "should defendants fail to purge their contempt by paying acceptable provider invoices within 30 days of submission" (App. 370-371). For each month in which Medicaid payments were overdue, the defendants would be fined $5,000 per day until the overdue payments were made (App. 371). For each month in which non-Medicaid payments were overdue, defendants would be fined twice the amount overdue (App. 371).
D. Defendants' Continued Noncompliance And The Imposition Of Sanctions
1. Defendants failed to comply fully with the 30-day payment requirement in the months following entry of the August 1996 Remedial Plan (App. 406-423; see App. 381, 390a, 391, 393, 395, 397-398, 399-400). The court monitor's analysis of the defendants' submissions to the court from September through December 1996 showed that 19% of the non-Medicaid invoices were paid more than 30 days, but less than 45 days, after submission; 18% were paid more than 45 days after submission (App. 417); and Medicaid payments were "consistently being disseminated to providers two (2) weeks late" (App. 423; see also App. 433).
In April 1997, the Evans plaintiffs moved the court for the imposition of sanctions (App. 403-404), and the United States filed a memorandum supporting that motion (see App. 485 n.2; R. 114). The following month, the defendants moved, for the first time, to modify the 1983 Consent Order and the 1996 Remedial Plan to enlarge the time for payment of Evans class providers from 30 days to 45 days (App. 425-443). In support of their motion to modify, defendants contended that modification was warranted because the District of Columbia's cash flow problems and payment processes precluded payment within 30 days, and because significant changes in circumstances had occurred since entry of the 1983 Consent Order (App. 425-443).
2. The court referred both the motion for sanctions and the motion to modify the remedy orders to the Special Master (App. 444). On January 26, 1998, the Special Master submitted her recommended findings of fact and conclusions of law regarding both motions (App. 444-472). This report was based upon submissions from the parties, defendants' monthly reports to the court, the court monitor's analysis of those reports, and meetings with the parties (App. 444). The defendants expressly declined to request a formal hearing before the Special Master on the motions (App. 482).
The Special Master's analysis of defendants' submissions to the court indicated that defendants had made Medicaid payments to Evans class providers after the 30-day deadline in each month from December 1996 through June 1997 (App. 455-456). Some payments to non-Medicaid providers were made late in each month from October 1996 through July 1997 (App. 456-457). The Special Master found that "[t]he well being and habilitation of the mentally retarded and developmentally disable[d] people who make up the plaintiff class depend on the ability of the District of Columbia government to maintain a network of private vendors able to provide them adequate residential care, day treatment, and vocational training. All of the parties agree that the District's ability to do that depends on its capacity to contract, monitor and pay for such private services" (App. 445).
The Special Master calculated that the defendants should be assessed $6,370,242 in coercive civil fines for their failure to comply with the 30-day payment requirement from September 1996 through August 1997 (App. 448, 455-458).(3) Of this amount, $305,000 was attributed to defendants' late payment of Medicaid invoices for a total of 61 days (i.e., 61 days times $5,000 per day) (App. 455-456), and $6,065,242 was attributed to defendants' late payment, during ten separate months, of a total of $3,032,621 in non-Medicaid invoices (i.e., twice the amount overdue in each month) (App. 456-457).
While the Special Master recommended denial of the defendants' motion to modify the 30-day payment requirement (App. 460-464), she recommended that the sanctions for noncompliance with the payment requirement be modified in three respects. First, fines imposed for defendants' failure to meet the 30-day deadline would be forgiven if defendants purged their contempt by paying all undisputed invoices within 45 days. Thus, if the defendants paid within 45 days, they would not be subject to any fines; if they paid after 45 days, they would be fined for each day of noncompliance after 30 days (App. 464-468). Second, the fines imposed for delinquent payment of Medicaid invoices would be increased from $5,000 to $10,000 per day. Third, the fines for nonpayment of non-Medicaid invoices would be decreased from twice the amount overdue to $1,000 per day for each overdue invoice (App. 468-469).
3. The defendants appealed the Special Master's recommendations to the district court and submitted a jury demand "of the maximum allowed by law, on all issues so triable" (App. 473; see App. 485; R. 163, 165). The district court held a hearing on the plaintiffs' motion for sanctions and the defendants' motion to modify the remedy orders on July 22, 1998 (July 22, 1998 Transcript). On February 10, 1999, the court entered its order imposing sanctions on the defendants for their failure to comply with the 30-day payment requirement from September 1996 through March 1997, and denying defendants' motion to modify (App. 483-492).
The district court "adopt[ed] the Special Master's conclusion that defendants owe substantial fines due to their noncompliance with the purgation conditions of the Remedial Plan, and relie[d] on [the Special Master's] factual determinations in calculating the amount owed" (App. 486). The court rejected defendants' contention that they were entitled to an evidentiary hearing before sanctions could be imposed, noting that the defendants had not requested a formal hearing before the Special Master and were precluded by the Order of Reference from submitting to the court evidence that "could reasonably have been submitted to the Special Master" (App. 486 n.5, quoting App. 171). The court noted that defendants had failed to identify any evidence that they would submit at an evidentiary hearing that could not have been submitted to the Special Master, but explained that it had fully considered all of the evidence defendants had submitted with their pleadings (App. 486 n.5).
The court next rejected defendants' contention that sanctions should not be imposed because they were not capable of complying fully with the 30-day payment requirement due to changed circumstances (App. 486). In this regard, the court adopted the Special Master's conclusion that the defendants were foreclosed from arguing that circumstances that existed before entry of the 1996 Remedial Plan, i.e., the District's financial crisis, made the imposition of sanctions unjust (App. 486, citing App. 458-459). As the Special Master explained, the court had considered and rejected this contention before reaffirming the 30-day payment requirement in the Remedial Plan, and the defendants had not sought to modify that requirement until May 1997 (App. 458). The defendants' efforts to avoid the imposition of fines for noncompliance prior to May 1997 was thus an effort to "seek a retrospective amendment of the Order as a defense to the contempt flowing from their repeated, admitted violations of it" (App. 458). Moreover, even during the worst of the financial crisis, as the Special Master noted, the defendants had not contended that compliance was impossible -- only that the Chief Financial Officer had exercised his discretion not to place a priority on payments to Evans providers (App. 459).
The district court also adopted the Special Master's conclusion that the sanctions imposed were civil in nature, and that the procedures required prior to the imposition of criminal contempt sanctions were not warranted (App. 486-487, citing App. 452-455). The fines set forth in the 1996 Remedial Plan were civil in nature because they were coercive and compensatory (App. 454). Moreover, because the facts regarding defendants' failure to comply were based upon the defendants' own submissions, there was no need for the heightened fact-finding requirements of criminal contempt (App. 455).
In concluding that civil contempt sanctions were warranted, the court emphasized that the timely-payment requirements of the 1996 Remedial Plan were mandatory (App. 487 n.6):
Defendants provide the Court with no persuasive justification for disregarding this mandatory language and permitting them additional opportunities to purge their contempt. The Court concludes that such laxity -- after the Court's clear admonition to defendants in its 1996 Order that future noncompliance with the timeliness requirements would result in severe consequences -- would effectively negate the coercive effect of such fines.
The court, however, rejected the Special Master's conclusion that the imposition of contempt fines was automatic under the 1996 Remedial Plan, and that fines should be imposed for the entire period from September 1996 through August 1997 (App. 486-488). The court thus imposed fines for the defendants' noncompliance only for the period from the entry of the Remedial Plan until the date of the plaintiffs' motion for sanctions -- for the period September 1996 through March 1997 (App. 488). The court found that, during that period, the defendants had made Medicaid payments in December, January, and February 1997 that were late by a total of 31 days, for a fine of $155,000 (31 days times $5,000 per day). The court found that the defendants had made late non-Medicaid payments in October, November, and December 1996, and in January and February 1997, totalling $2,470,670, for a fine of $4,941,340 (twice the amount overdue) (App. 488-489). The total fine imposed was $5,096,340 (App. 489).
The district court also denied the defendants' motion to modify the 30-day payment requirement, but adopted the changes in the sanctions provisions recommended by the Special Master (App. 489-490). The court adopted the Special Master's findings and conclusions that defendants had failed to establish that it was inequitable to require them to pay vendors within 30 days, as required by the 1983 Consent Order (App. 489, citing App. 460-464). The district court specifically adopted the Special Master's conclusion, citing Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367, 383-393 (1992), that modification was warranted only if the defendants could "establish that a significant change in facts or law warrants revision of the decree and that the proposed modification is suitably tailored to the changed circumstances" (App. 461).
The court also adopted the Special Master's rejection of all four of the defendants' proferred justifications for modification. First, the defendants asserted that the 30-day payment requirement was no longer justified because they were required to pay more vendors than in 1983. But, since the object of the 1983 Consent Order was the placement of all Forest Haven residents in small community facilities, the Special Master found that the need to pay more vendors could not have been an unforeseen development, even in 1983 (App. 461-462). Second, defendants contended that they could not make Medicaid payments within 30 days of submission because cash was not available to pay claims submitted on the fifth of the month until the middle of the following month (App. 462). The Special Master noted, however, that the defendants were required by federal regulations to pay Medicaid providers within 30 days of submission of a valid claim, and that they had done so for the last three months (App. 462). Thus, while acknowledging the District's cash flow problems, the Special Master found that they were not unforeseeable and that the defendants could accommodate them through changes in their payment practices (App. 462).
Third, the defendants contended that the 30-day payment requirement actually gave them only 19 working days to process claims, and that this period did not take into account such contingencies as audits, contractual problems, and staff vacations that would delay the payment process (App. 462). The Special Master found, however, that the time for processing 25 claims was not a changed circumstance, and that, in any event, the problems cited by the defendants were within their own control (App. 462-463). Fourth, the Special Master found that the more complex payment process put in place as a result of the District's 1995 fiscal crisis was not so complex as to require modification of the payment requirement (App. 463).
Although the district court denied the defendants' motion to extend their time to pay vendors from 30 days to 45 days, it did adopt the Special Master's recommendation that fines be imposed only if the defendants failed to pay Evans providers within 45 days (App. 489). Under the revised order, to be applied prospectively from the date of the February 10, 1999 Order, the defendants would be in noncompliance if they failed to pay vendors within 30 days (App. 489). But any fines accrued for such noncompliance would be purged if the payments were made within 45 days (App. 489). If payment was not made within 45 days, however, fines for the entire overdue period would be assessed (App. 489). The district court also accepted the Special Master's recommendation that the sanctions be modified: for overdue Medicaid payments, the defendants would be fined $10,000 per day (increased from $5,000 per day); for overdue non-Medicaid payments, the defendants would be fined $1,000 per day for each overdue invoice (App. 490).
Finally, the district court directed the Special Master, with the cooperation of the parties, to propose a plan to end the court's jurisdiction of this case, and to use the contempt fines to serve the needs of class members (App. 491).
Defendants appealed from the district court's February 10, 1999 Order.
SUMMARY OF ARGUMENT
The district court did not abuse its discretion when it imposed fines for defendants' repeated failures to comply with the requirement embodied in the 1983 Consent Order and restated in the 1996 Remedial Plan that defendants pay the private entities with which they contracted to provide essential services to Evans class members within 30 days. The sanctions were civil in nature. They were coercive in that they were imposed on a daily or monthly basis and were purged once the defendants complied with the court's orders. Moreover, the fines were imposed for conduct that involved "discrete, readily ascertainable facts," and thus did not require extensive factfinding. International Union, United Mine Workers v. Bagwell, 512 U.S. 821, 833 (1994).
The sanctions were consistent with civil contempt principles. The fines were imposed for the defendants' undisputed failure to comply with the 30-day payment requirement during a period beginning more than a year and a half after their noncompliance had been brought to the court's attention in February 1995, and nearly a year after they had been held in contempt in October 1995. Defendants had not moved to modify the 30-day payment requirement until May 1997, a month after the plaintiffs moved for the imposition of sanctions. The district court did not err in finding that the defendants failed to prove that they were incapable of complying with the requirement. Nor did they demonstrate that the burdens of their own mismanagement and cash flow problems should be transferred to the mostly small and non-profit entities with which they had contracted to provide vital services to the Evans class members.
The district court did not abuse its discretion in denying the defendants' motion to modify its orders to expand the time for payment from 30 to 45 days. Although the extent of the District's financial crisis in 1994 and 1995 may not have been anticipated, the defendants' potential inability or refusal to pay the vendors on a timely basis was clearly anticipated by the parties and dealt with in unambiguous, mandatory terms in paragraph IX.10 of the 1983 Consent Order. Moreover, defendants failed to prove that compliance with the 30-day payment requirement was sufficiently onerous or that their proposed change was tailored to changed circumstances to warrant the modification they sought. Evidence in the record indicated that, at least by the time of their motion to modify, defendants' compliance with the 30-day payment requirement was or could be accomplished through management changes. The district court's alternative modification, which retained the 30-day payment requirement, but gave the defendants a grace period of 15 days before sanctions would be imposed, better served the purpose of ensuring timely payments to providers while giving the defendants additional flexibility.
ARGUMENTI. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN IMPOSING FINES FOR DEFENDANTS' REPEATED FAILURES TO COMPLY WITH THE 30-DAY PAYMENT REQUIREMENT IN THE 1983 CONSENT ORDER AND THE 1996 REMEDIAL PLAN
There is no dispute that, both before and after entry of the 1996 Remedial Plan, the defendants repeatedly failed to comply with the requirement embodied in the 1983 Consent Order and in the 1996 Remedial Plan that they pay all undisputed vouchers submitted by Evans care providers within 30 days. The defendants' delinquent payment of these providers jeopardized the continued viability of the network of community-based living arrangements that provided day-to-day care for the Evans class members. After giving the defendants many opportunities to come into compliance with the 30-day payment requirement, the district court did not abuse its discretion when it finally imposed civil contempt fines, as set forth in the August 1996 Remedial Order, for the defendants' continued noncompliance from September 1996 through March 1997.
A. The Sanctions Imposed Were Civil In Nature
Defendants erroneously contend (Br. 31-37), that the district court erred when it characterized the contempt sanctions here as civil in nature, thus denying them the procedural protections required for criminal contempt. The fines imposed -- daily fines for the defendants' failure to pay Medicaid claims on a timely basis, and monthly fines for their failure to pay non-Medicaid claims on a timely basis -- were imposed to coerce the defendants' compliance with the court's orders, not to punish their past violations of those orders. The sanctions were therefore civil in nature, and the procedures attendant to criminal contempt were not warranted.
It is important to determine whether the sanctions were civil or criminal in nature because heightened procedural protections are required for criminal contempt. Criminal contempt sanctions for indirect contempts (i.e., those occurring out of court) may be imposed only after the contemnor has been accorded the protections afforded by the Constitution for criminal proceedings. International Union, United Mine Workers v. Bagwell, 512 U.S. 821, 826 (1994). These protections include the right to proof beyond a reasonable doubt and, in the case of serious criminal contempts involving very large fines or imprisonment for more than six months, the right to a jury trial. Id. at 826-827,838 n.5. Civil contempt sanctions, in contrast, require neither a jury trial nor proof beyond a reasonable doubt, and may be imposed after ordinary civil proceedings upon clear and convincing evidence of noncompliance with a court order. Id. at 827; National Org. for Women v. Operation Rescue, 37 F.3d 646, 662 (D.C. Cir. 1994).
While criminal contempt sanctions are intended to be punitive and to vindicate the authority of the court for past violations of a court order, civil contempt sanctions are intended to be remedial or to compel future compliance. Bagwell, 512 U.S. at 827-829. As the Supreme Court explained in Bagwell, the "paradigmatic coercive, civil contempt sanction * * * involves confining a contemnor indefinitely until he complies with an affirmative command such as an order 'to pay alimony, or to surrender property ordered to be turned over to a receiver, or to make a conveyance.'" Id. at 828 (quoting Gompers v. Buck's Stove & Range Co., 221 U.S. 418, 442 (1911)). Fines are also characterized as coercive and therefore civil if "the contemnor is afforded an opportunity to purge." Bagwell, 512 U.S. at 829 (citing Penfield Co. v. Securities & Exch. Comm'n, 330 U.S. 585, 590 (1947)). Thus, a fine imposed for each day a contemnor fails to comply with the court's order is a civil contempt sanction. "Like civil imprisonment, such fines exert a constant coercive pressure, and once the jural command is obeyed, the future, indefinite, daily fines are purged." Bagwell, 512 U.S. at 829.
The fines imposed in this case were coercive fines because they were imposed for each day or month in which the defendants failed to comply with the 30-day payment requirement, and ended once the defendants complied with the requirement. It is easiest to see how the daily fines imposed for late payment of Medicaid claims fit into this mold: the fines were imposed only when the defendants failed to comply with the affirmative order that they pay undisputed claims within 30 days of their submission, and ended after the defendants paid the claims. The monthly fines imposed for late payment of non-Medicaid invoices were no less coercive. To ensure continuing services for class members, the command of the 1983 Consent Order and the 1996 Remedial Plan was that the defendants pay all undisputed invoices for Evans class providers within 30 days of submission every month. When the defendants failed to comply with this command with respect to the monthly Medicaid payments, fines were imposed for each month in which they remained out of compliance. Thus, after the first month of noncompliance, a monthly fine was imposed and continued each month as long as the defendants remained out of compliance. Defendants could avoid additional monthly fines if they purged their contempt by paying the non-Medicaid claims for each successive month on a timely basis. These fines were thus distinctly different from the fines the Court characterized as criminal in Bagwell, where the trial court held the union in contempt for over 400 individual violations of its orders and imposed determinate fines for each violation. See 512 U.S. at 824, 836-837. As the Court explained, the fines in Bagwell were "more closely analogous to fixed, determinate, retrospective criminal fines which petitioners had no opportunity to purge once imposed." Id. at 837.
The nature of the defendants' obligation here -- the simple command that they pay their bills within a specified period of time -- also distinguishes this case from Bagwell. There the union was held in contempt and fines were imposed for "widespread, ongoing, out-of-court violations of a complex injunction," requiring the court to assess its "compliance with an entire code of conduct that the court itself had imposed." 512 U.S. at 837. The Supreme Court held that contempts "involving out-of-court disobedience to complex injunctions" are ill-suited to civil contempt proceedings because they "require elaborate and reliable factfinding". Id. at 833-834. This Court reached a similar conclusion with regard to an injunction that prohibited "not only 'trespassing on, blockading, impeding or obstructing access to or egress from' the clinics, but also '[inciting], directing, aiding or abetting others in any manner, or by any means, to trespass on, blockade, impede or obstruct ingress or egress from such premises.'" National Org. for Women v. Operation Rescue, 37 F.3d at 661.
The timely-payment requirement here, in contrast, involves "discrete, readily ascertainable acts, such as * * * payment of a judgment, [that] properly may be adjudicated through civil proceedings since the need for extensive, impartial factfinding is less pressing." Bagwell, 512 U.S. at 833 (emphasis added). Indeed, there were no real disputes of fact here, since the defendants' compliance with the court's orders was determined from their own submissions to the court. While defendants contest the imposition of sanctions on appeal, they do not challenge the district court's finding that they failed to comply with its orders or its calculation of the fines.
Nor does the size of the fines in this case change the nature of the sanction from civil to criminal. In United States v. United Mine Workers, 330 U.S. 258, 305 (1947), the Supreme Court imposed and suspended, pending the union's compliance, a coercive fine of $2.8 million. In Bagwell the Court explained that this fine was nonetheless civil in nature: "[a]lthough the size of the fine was substantial, the conduct required of the union to purge the suspended fine was relatively discrete." 512 U.S. at 830 n.4. Once a sanction is characterized as criminal, the size of the fine is relevant to determine whether the contemnor is entitled to a jury trial. See id. at 837-838 & n.5. But size alone does not deprive a coercive fine of its civil nature, or entitle the defendants to a jury trial.
B. The Fines Imposed Were An Appropriate Means Of Coercing Compliance With The Court's Orders
Defendants also contend (Br. 37-40), that the district court misapplied civil contempt principles in imposing the fines. They contend that no fines should have been imposed because they were incapable of complying fully with the timely-payment requirement, and that the district court failed to take their good faith efforts into account or to mitigate the fines based upon their partial compliance with its orders. These contentions are wrong.
First, it must be emphasized that the district court resorted to contempt sanctions only after many months and many efforts to obtain the defendants' voluntary compliance. After the court monitor reported the defendants' massive violations of the timely-payment requirement in February 1995, and the plaintiffs' moved for contempt in March of that year, the district court first encouraged the defendants to come into compliance (see App. 153-157 & n.6), and deferred its finding of contempt until October 1995 (App. 164a-164j). Even then, the court did not impose sanctions. Instead, it appointed a Special Master to propose a plan to bring the defendants into compliance (App. 165-172), and again encouraged the defendants to cooperate in this effort (App. 164i, 167). Only in August 1996, nine months after the contempt finding, and 18 months after the court monitor had revealed the defendants' massive noncompliance with the payment requirement, and only after finding that the defendants still were not paying Evans care providers on a timely basis, did the court enter a Remedial Plan setting forth sanctions to be imposed if the defendants continued to violate the timely-payment requirement (App. 361-363, 366-379).
Notably, the court repeatedly reminded the defendants that they could not simply disobey court orders, and should move for modification of any requirements with which they could not comply (see App. 155, 164i, 176, 365). As the Supreme Court has made clear, "an order issued by a court with jurisdiction over the subject matter and person must be obeyed by the parties until it is reversed by orderly and proper proceedings." United Mine Workers, 330 U.S. at 293; Walker v. City of Birmingham, 388 U.S. 307, 317 (1967) (even where terms of injunction are of questionable validity, "the way to raise that question was to apply to the Alabama courts to have the injunction modified or dissolved"). Defendants agreed to pay care providers within 30 days when they entered into the 1983 Consent Order. Even after entry of the Remedial Plan in August 1996, they did not move for modification of that requirement until after the plaintiffs moved for the imposition of sanctions in the Spring of 1997. Thus, when the court found that the defendants still had not achieved full compliance during the period from entry of the August 1996 Remedial Plan until the plaintiffs' motion in April 1997, it was well justified in imposing sanctions in accordance with the Remedial Plan. See Spallone v. United States, 493 U.S. 265, 276 (1990) ("[g]iven that the city had entered a consent judgment committing itself to enact legislation implementing the long-term plan, we certainly cannot say it was an abuse of discretion for the District Court to have chosen contempt sanctions against the city * * * as a means of ensuring compliance").
Nor did the district court err when it found that the defendants were capable of meeting the 30-day payment deadline (App. 486; see App. 461-464). The defendants contend that they were unable consistently to make payments on time because of the District's financial crisis and cash flow problems (see Br. 13-15, 19, 37-38). They also appear to contend (Br. 38 n.9) that passage of the District of Columbia Financial Responsibility and Management Assistance Act of 1995 (DCFRMA), Pub. L. No. 104-8, 109 Stat. 97, and creation of the position of Chief Financial Officer, relieved them of responsibility for compliance with the 30-day payment requirement.
These contentions are without merit. First, the creation of the DCFRMA did not alter the defendants' obligation to comply with the court's orders. The Mayor and other defendants in this case were sued in their official capacities (App. 72-73, 97-98). Thus it was not necessary to join the District of Columbia as a defendant; the District already was the real defendant. "[A]n official-capacity suit is, in all respects other than name, to be treated as a suit against the entity." Kentucky v. Graham, 473 U.S. 159, 166 (1985). As defendants concede (Br. 6), both the Control Board and the Chief Financial Officer are part of the District of Columbia government. See D.C. Code Ann. § 47-317.1(a) (1999); id. § 47-391.1(a). While DCFRMA changed the internal structure of the District government, those changes did not unilaterally modify the District's obligations under the court orders in this case. Cf. United States v. City of Yonkers, 856 F.2d 444, 458 (2d Cir. 1988) (having committed itself to enactment of legislation, "City cannot view itself as an entity separate from the City Council for purposes of complying with the Consent Judgment"), cert. denied, 489 U.S. 1065 (1989), rev'd in part on other grounds sub nom. Spallone v. United States, 493 U.S. 265, 276 (1990).
Second, the district court correctly rejected defendants' explanations for their alleged inability to pay on time. The defendants had consistently opposed the Special Master's recommendations that they be required to meet the 30-day payment deadline on the ground that they should retain the discretion to meet other obligations they deemed more important (App. 179; see App. 188, 192-193, 347-348). In February 1996, the Chief Financial Officer established the following priorities for payment: District of Columbia payroll, entitlement payments including Medicaid, and debt service, followed by payments to vendors. Among the vendors, payments for 24-hour care facilities and court-ordered payments were given priority (App. 349, 337-338). But it is not clear to what extent these priorities -- which should have placed most Evans providers near the top of the list for payment -- actually affected their payments.
In an affidavit submitted in response to the Special Master's January 1998 Report, Associate Chief Financial Officer Laura Triggs described the District's financial crisis since 1992, including the payment priorities established in 1995 (App. 474-478). This affidavit stated that "[d]espite the District's intent to pay all vendors in the Evans case within 30 days receipt of an acceptable invoice, it was not able to do so because of the fiscal crisis" (App. 477). This bald statement, however, which did not identify the time period to which it referred or explain whether the Evans vendors had been given any priority, is insufficient to prove that defendants were incapable of meeting the 30-day payment requirement during the months of October 1996 through February 1997, the period for which sanctions were imposed. In an affidavit submitted in support of the motion to modify the payment requirement in May 1997, the Controller of the Department of Human Services, Deloras Shepherd, had previously given a number of other explanations for the defendants' failure to pay non-Medicaid providers on time during the period for which sanctions were imposed (App. 434-439). According to the Shepherd affidavit, payments could not be made within 30 days because staff and resources were occupied with other tasks, including year-end financial reconciliations and audits (App. 436, 438); because some providers did not have long-term contracts, requiring an additional five days to process their payments (App. 436, 438); or because too many employees were on vacation (App. 438). These impediments are, as the Special Master found, "ordinary conditions of doing business which are within the defendants' control" (App. 463). They cannot excuse the defendants' failure to make timely payments to Evans class providers in violation of the court's orders.
With respect to Medicaid payments, the defendants submitted an affidavit asserting that there was not always sufficient cash available at the beginning of each month to pay Medicaid vouchers after "core and critical" payments were made, so that the Medicaid payments to providers were delayed (App. 429-430). If the Medicaid payments could be delayed until the second or third week of the month, defendants contended, they would be paid on time (App. 431). But this argument is short-sighted. Payments made later in the month would simply deplete funds available in the next month. If invoices were submitted every month, the defendants were required to make payments every month, whether they made those payments 30 days or 45 days after submission. After the first month, the same cash flow problems would occur -- just 15 days later in the month. Moreover, as the Special Master reported, the defendants had proven their ability to make their Medicaid payments on time in subsequent months. Indeed, the Triggs affidavit stated that Medicaid payments had been made within 30 days of submission beginning in August 1997 because of "the employment of new financial managers and their development and implementation of new policies and procedures to ensure the availability of cash," indicating that the impediment to timely payment in earlier months may have been poor management, rather than cash flow (App. 477).
In short, the district court did not err in refusing to permit the defendants to shift the burdens of their management and cash flow problems to the private entities that contracted to provide care to the Evans class members. Most of the providers are small non-profit organizations largely dependent upon payments from the District of Columbia to continue their operations (App. 180-181, 207). Their clients are among the most vulnerable and most dependent citizens of the District of Columbia (see App. 204-206). The District's unreliable payment practices had already placed the providers in an economically untenable position that threatened their ability to care for class members and other mentally retarded residents (see App. 189). As the district court wrote in entering the Remedial Plan in August 1996 (App. 364-365):
Defendants' unrelenting contempt of this Court's orders, and their seeming inability to bring themselves into compliance therewith, have created chaos for the care providers vested with day-to-day responsibility for the members of this plaintiff class. The plaintiffs comprising this class, as defendants well know, are ill-equipped to adjust to or defend against the city's failure to assist their care providers in giving them the care and treatment they desperately need.
Finally, the defendants are wrong when they assert that the district court failed to mitigate the sanctions based upon their partial compliance with the orders. For non-Medicaid invoices, fines were imposed only for invoices that were overdue, and only in months that they were overdue. In the case of the Medicaid payments, fines were imposed only for the number of days past the due date that the payment was due. Given the history of the defendants' reluctant compliance with all of the court's orders in this case, the magnitude of their noncompliance with the payment requirement leading up to entry of the Remedial Plan, their failure to come into compliance voluntarily, and the critical importance of timely payment to the providers, substantial fines proved necessary to compel full compliance.
The district court expressly recognized that the District's financial crisis had made compliance with the timely-payment requirement more difficult, and it delayed even the threat of contempt sanctions to give the District time to put its financial house in order. Defendants, however, continuously and unjustifiably ignored their payment obligations imposed by the court's orders. The district court displayed sufficient patience with the defendants, imposing a limited contempt order only after years of delinquent payments had caused significant financial hardship and uncertainty for the providers charged with the daily care of Evans class members. The court's measured response is legally correct and totally supportable.
II. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN DENYING THE MOTION TO MODIFY THE PAYMENT REQUIREMENT
In May 1997, the defendants moved to modify the 1983 Consent Order and the 1996 Remedial Plan to expand the time for payment of Evans class providers from 30 to 45 days. The district court denied the motion, but modified the sanctions provisions of the Remedial Plan, effective prospectively from the date of the court's February 10, 1999 Order (see App. 489-490). Under these revisions, if defendants failed to pay undisputed invoices within 30 days, but paid them within 45 days, no fines would be imposed. But if they did not pay within 45 days, fines would be imposed for the entire overdue period following the 30th day. The court also modified the fines to $10,000 per day for overdue Medicaid payments, and to $1,000 per day for non-Medicaid payments (App. 489-490). This Court should reverse the district court's denial of the defendants' motion only for an abuse of discretion. Computer Prof'ls For Soc. Responsibility v. United States Secret Serv., 72 F.3d 897, 903 (D.C. Cir. 1996).
The standard for modification of an injunction under Rule 60(b)(5) of the Federal Rules of Civil Procedure is set forth in Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367 (1992). A party seeking modification of an injunction bears the burden of proving "that a significant change in circumstances warrants revision of the decree." Id. at 383. If this showing is made, the district court should then "consider whether the proposed modification is suitably tailored to the changed circumstance." Ibid. A moving party is entitled to a modification if it establishes that unanticipated, significant changes in factual conditions make compliance with the injunction "substantially more onerous," "unworkable," or "detrimental to the public interest." Id. at 384. Modification, however, should generally be denied if the changes in factual conditions "were anticipated at the time it entered into a decree." Id. at 385.(4)
The court did not abuse its discretion in refusing to extend the 30-day payment deadline to 45 days in this case. First, although the extent of the District's financial crisis in 1994 and 1995 may not have been anticipated, the defendants' potential inability or refusal to pay the vendors on a timely basis was clearly anticipated by the parties and dealt with in unambiguous, mandatory terms in the 30-day payment requirement of the 1983 Consent Order. The defendants' failure to provide the resources necessary to provide even minimally adequately care for the class members has been a concern in this case from its very inception. The complaint alleged, for example, that the defendants failed adequately to maintain the buildings at Forest Haven, to provide adequate supplies, including food, to serve the most basic needs of its residents, to provide sufficient staff, and to provide an adequate budget to improve conditions at the institution (see App. 75-78).
All three of the consent orders include provisions requiring the defendants to provide adequate funding, to seek adequate funding, or to make timely payments to provide the services essential to the care of class members (see App. 111 (Plan of Implementation to specify source of funding for placement of residents in community residential facilities); 112 (defendants to "make every reasonable effort to obtain sufficient funding" to carry out deinstitutionalization of residents); 119 (defendants to report annually, at submission of Mayor's budget, on resources available for class member services); 122-123 (defendants' budget request to include adequate resources for deinstitutionalization and to seek adequate funding for operation of Forest Haven); 126-127 (defendants to submit annual reports on resources and budget)). Notably, while many of these provisions require the defendants only to seek funding or report on funding sources, paragraph IX.10 of the 1983 Consent Order mandates payment of "all vendors" "no later than thirty days following their submission of acceptable vouchers" (App. 138). It is apparent that, in light of prior financial deficiencies by the defendants, the parties intended this requirement to be absolute.
Second, as set forth in Part I above, defendants failed to prove that compliance with the 30-day payment requirement was sufficiently onerous or that their proposed change was tailored to changed circumstances. Expansion of the payment period to 45 days would only transfer the burdens of the defendants' own management and cash flow problems to the more vulnerable providers and their clients, the Evans class members. Retaining the 30-day payment requirement, with a 15-day grace period, allows the defendants considerable flexibility, but does not remove the discipline of a monthly payment schedule. As explained above (pp. 37-38, supra), defendants' proposed expansion of the payment period would simply shift cash shortages from one month to the next and impose the burdens of delayed payments upon the mostly small, non-profit providers. In any event, the modification of the sanctions provisions means that, if the defendants make their payments within 45 days, they will not be penalized for failure to comply with the 30-day deadline. Retention of the 30-day payment requirement will prevent the defendants from taking even more than 45 days to pay care providers, and then arguing, as they do now, that they should not be sanctioned for paying only a few days late.
Nor did the district court abuse its discretion in making the changes in the sanctions provisions effective only prospectively. The 1983 Consent Order and the 1996 Remedial Plan require the defendants unequivocally to pay all Evans providers within 30 days. As explained in Part I above, the district court did not abuse its discretion in imposing sanctions, in accordance with the 1996 Remedial Plan, for defendants' failure to comply with this requirement for the period from September 1996 through March 1997. For the same reasons, it would not be an abuse of discretion to apply the same sanctions provisions for the period from April 1997 to January 1998.
The district court's judgment should be affirmed.
BILL LANN LEE
Acting Assistant Attorney General
MARK L. GROSS
LINDA F. THOME
Department of Justice
P.O. Box 66078
Washington, D.C. 20035-6078
I certify that copies of the foregoing brief for the United States as appellee were sent by first class mail this 12th day November, 1999, to the following counsel of record:
Lutz Alexander Prager
Assistant Deputy Corporation Counsel
Office of the Corporation Counsel
One Judiciary Square
441 Fourth Street, NW, 6th Floor South
Washington, DC 20001-2714
Joseph B. Tulman, Esq.
University of the District of Columbia
David A. Clarke School of Law
4200 Connecticut Avenue, NW
Building 38, Room 207
Washington, DC 20008
John L. Jacobus
Steptoe & Johnson, LLP
1330 Connecticut Avenue, NW
Washington, D.C. 20036
I certify that the foregoing brief contains no more than 12,500 words.
LINDA F. THOME
U.S. Department of Justice
P.O. Box 66078
Washington, DC 20035-6078
1. As the district court explained, the defendants disputed "only the duration of the delays, not their existence" and admitted that some vendors had not been paid since October 1994 (App. 154 & n.3).
2. The district court also found the defendants to be in violation of provisions requiring them to maintain adequate case manager ratios and to provide adequate community living arrangements and habilitation services (App. 164e-164f, 164h). Those findings are not at issue in this appeal.
3. The Special Master reported that, "[w]ith minor exceptions," the defendants did not dispute the accuracy of this calculation (App. 448). According to the Special Master, the defendants contended that some unpaid invoices were disputed or had been reported unpaid in error; some unpaid invoices had been counted twice; and some were not paid because contracts with the providers were not in place (App. 457). The Special Master stated, however, that the figures in her report did not include erroneously reported or double-counted invoices. Nor did they include disputed payments if the defendants had submitted adequate documentation. The Special Master did not accept the defendants' contention that lack of a contract should excuse nonpayment, however, since the Remedial Plan had required defendants to conclude contracts with all Evans class providers by October 1996 (App. 458).
4. Modification also "may be warranted when the statutory or decisional law has changed to make legal what the decree was designed to prevent." Rufo, 502 U.S. at 388. Defendants do not rely upon this justification. They do suggest, in a footnote (Br. 4 n.1), that the legal basis for portions of the 1978 Order was undercut by Youngberg v. Romeo, 457 U.S. 307 (1982). We emphatically disagree with any assertion that the relief set forth in the court's orders is no longer required by federal constitutional or statutory provisions. See id. at 314-325 (describing right to minimally adequate training); cf. Olmstead v. L.C., 119 S. Ct. 2176, 2185-2188 (1999) (unjustified institutionalization of persons with disabilities constitutes discrimination in violation of the Americans with Disabilities Act of 1990, 42 U.S.C. 12132). In any event, defendants have never moved to modify the substantive requirement that they provide habilitative care and community living arrangements to class members, and they do not challenge that requirement in this appeal. Indeed, the District has stated, with respect to the court orders in this and other cases involving the Department of Human Services, that "[i]n the absence of the orders, the Department would provide these same services and attempt to reach certain professional or industry standards for care" (App. 340).