United States District Court, Western District of Pennsylvania
COMMUNITY COUNTY DAY SCHOOL, A Pennsylvania non-Profit Corporation, et al., Plaintiffs,
THE SCHOOL DISTRICT OF THE CITY OF ERIE, Defendant.
REPORT AND RECOMMENDATION
CYNTHIA REED EDDY, UNITED STATES MAGISTRATE JUDGE
For the reasons that follow, it is respectfully recommended that the Motion to Dismiss filed by Defendant the School District of the City of Erie (ECF No. 7) be granted. It is further recommended that the District Court: (i) dismiss Count I of the Complaint with prejudice and (ii) dismiss Count II of the Complaint without prejudice to be litigated in state court.
A. Relevant Background Facts
Plaintiff Community Country Day School (“CCDS”) is a private school licensed by the Pennsylvania Department of Education (“PDE”) to educate students in grades 1 through 12. (Complaint ¶7.) CCDS is also an “Approved Private School” eligible to receive tuition reimbursements from the PDE for the purpose of providing special education services to students who are “seriously emotionally disturbed” within the meaning of the Individuals with Disabilities Education Act, 20 U.S.C. §1400 et seq. (Id. at ¶¶ 10, 39-40.) CCDS provides a unique academic program featuring small class sizes which help reinforce positive behavior expectations and promote modeling of positive behavior by other students. (Id. at ¶8.)
In addition to being an “Approved Private School, ” CCDS is certified by the Department of Public Welfare to maintain a Children and Youth Partial Hospitalization medical services program (“Partial Hospitalization Program”) pursuant to 55 Pa. Code §5210.35 et seq. (Compl. ¶ 11.) The medical services which CCDS provides through its Partial Hospitalization Program are federally subsidized Medicaid benefits pursuant to Title XIX of the Social Security Act, 42 U.S.C. §§1396 et seq., popularly known as the “Medicaid Act.” (Id. at ¶¶ 12-13.) Pursuant to law, the students in CCDS’s Partial Hospitalization Program receive a minimum of three hours of planned treatment programs per hospitalization day, in which a therapeutic milieu is emphasized. (Id. at ¶15; see also 55 Pa. Code §5210.39.) These treatment programs emphasize a therapeutic milieu and include: (a) therapeutic, recreational, social and vocational activities, (b) individual and group psychotherapy, (c) psychiatric, psychological, and social evaluations, and (d) medical evaluations and other activities. (Id.) Treatments and activities are incorporated into school classes through various methods, including the use of mental health specialists in CCDS’s classrooms, such that students in the PHP are educated alongside their peers who are not in the PHP. (Compl. at ¶16.)
CCDS has filed this lawsuit in its representational capacity vis-à-vis its students residing within the City of Erie who were enrolled by their parents and/or guardians for the purpose of receiving both educational services and partial hospitalization services at CCDS. (Compl. ¶¶ 2, 14.) Also named as Plaintiffs are Fananda Clinton and Juanita Correa, parents and natural guardians of students who similarly: (a) reside within the City of Erie, (b) are enrolled in CCDS’s academic programs and (c) participate in CCDS’s Partial Hospitalization Program. (Id. at ¶¶ 3, 14.) Each of these subject students (collectively referred to as the “Students”) was found to be in need of partial hospitalization services by a team which included a psychiatrist. (Id. at ¶14.) In addition, each of the Students is Medicaid-eligible, meaning that Medicaid funds pay for the medical services rendered to them through CCDS’ Partial Hospitalization Program. (Id. at ¶18.)
As parents and/or guardians of Medicaid recipients, the parents/guardians of the Students have the right under federal and state law to choose the provider of medical services for their children. See 42 U.S.C. §1396a(a)(23)(A); 62 Pa. Stat. §1405(a). This includes the right to choose CCDS as their provider of partial hospitalization medical services. (Compl. ¶¶ 19-20; 42 U.S.C. §1396a(a)(23)(A); 62 Pa. Stat. §1405(a).) Because the medical services and related therapies which CCDS provides through its Partial Hospitalization Program are integrated into the school’s unique academic program throughout the school day, Plaintiffs assert that it would be impracticable to provide medical treatment in the Partial Hospitalization Program for the Students and yet remove them from CCDS’s academic program in order to have them educated at another facility. (Compl. ¶ 17.)
Plaintiffs contend that, by law, the education of the Students must be provided by Defendant, the School District of the City of Erie (the “School District”), as the agent for the PDE. (Compl. ¶25 (citing 55 Pa. Code §5210.37).) Since the 2008-2009 school year, however, the School District has provided no subsidy, or only a partial subsidy, for the education of students living within the Erie School District who were enrolled each year at CCDS and receiving medical services through CCDS’s Partial Hospitalization Program. (Compl. ¶¶ 30-38.) Since the 2008-2009 school year, CCDS has repeatedly requested that the School District pay for the education of Erie School District students at a “reasonable rate” while those students were attending CCDS’s Partial Hospitalization Program. (Id. at ¶ 43.) The School District has refused to make the requested payments on the basis that it did not refer or place any of the subject students in CCDS’s Partial Hospitalization Program. (Id. at ¶ 44.)
According to Plaintiffs, the School District maintains that it has the right to require any Erie students who require partial hospitalization services to receive those services exclusively from Sarah A. Reed Children’s Center of Erie Pennsylvania (“Sarah Reed”). (Compl. ¶ 45.) Appended to their complaint is an agreement pursuant to which the School District agreed to compensate Sarah Reed, during the 2011-2012 school year, for the costs of “all special education and regular education services for each student attending the educational portion of [Sarah Reed’s Partial Hospitalization] Program.” (Compl. ¶50; Compl. Ex. A §§ 2.b and 2.c.i.)
Plaintiffs claim that, by refusing CCDS’s requests for payment, the School District has essentially required the parents of the subject students to waive their rights under federal and state law to choose CCDS as the provider of partial hospitalization services for their children as a condition to receiving an education paid for by the School District. (Compl. ¶ 46.) Plaintiffs further claim that the School District’s refusal to pay for the education of CCDS’s students is contrary to federal and state law because it is the parents and guardians of students enrolled in CCDS’s PHP program who have the right to choose CCDS as their PHP provider, and it is impracticable for CCDS to separate its Partial Hospitalization Program from its educational program. (Compl. ¶ 47.)
Some of the subject students attending CCDS’s Partial Hospitalization Program are “seriously emotionally disturbed” within the meaning of the Individuals with Disabilities Education Act (“IDEA”), 20 U.S.C. §1400 et seq., and are therefore entitled to receive special education services under Part B of IDEA, id. at §§1401 et seq. (Compl. ¶39.) As a PDE- approved private school, CCDS is qualified to provide special education services to seriously emotionally disturbed students while they are in CCDS’ Partial Hospitalization Program. (Id. at ¶ 40.) In order for these students to receive reimbursable special education services, however, the School District, as the students’ local educational agency, must first approve and process an application for these services. (Id. at ¶ 41.) CCDS alleges that, despite its repeated requests that the School District process and approve applications for special education services for its seriously emotionally disturbed students, the School District has refused to do so. (Id. at ¶ 42.) As a result, Plaintiffs alleged, those seriously emotionally disturbed students at CCDS who are entitled to special education services under IDEA are unlawfully being deprived of those services. (Id. at ¶51.)
B. Procedural History
Plaintiffs filed their two-count complaint (ECF No. 1) against the School District on January 23, 2014. Count I of the complaint asserts a claim under 42 U.S.C. §1983 premised upon the School District’s violation of two distinct federal statutory rights, namely: (i) the right of the Students’ parents and guardians to choose CCDS as the provider of partial hospitalization medical services for their children under the Medicaid Act’s freedom-of-choice provision, 42 U.S.C. §1396a(a)(23)(a); and (ii) the right of seriously emotionally disturbed students at CCDS to receive special education services pursuant to the IDEA. (Compl. ¶¶53-57.) Count II of the complaint alleges that the School District violated the Plaintiff parents’ corresponding right under Pennsylvania law to choose CCDS as its provider of partial hospitalization services. (Compl. at ¶¶ 59-63.) As relief, Plaintiffs seek a judgment that, among other things: (i) requires the School District to pay for the educational services that the Students have received or will receive at CCDS while in the School’s Partial Hospitalization Program, beginning with academic years 2008-2009 through 2012-2013 and continuing thereafter; and (ii) requires the School District to promptly process and approve applications to qualify seriously emotionally disturbed students to receive special education services at CCDS. (Compl. pp. 15-16.)
On February 14, 2014, the School District filed the pending motion to dismiss the complaint (ECF No. 7) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. In support of its motion, the School District argues that Count I fails as a matter of law because Plaintiffs have not alleged the violation of any right guaranteed by the Constitution or laws of the United States that is enforceable under §1983. The School District urges the dismissal of Count II on the grounds that the Pennsylvania statute invoked by the Plaintiffs neither supports the right they assert nor confers upon them a private right of action. (Def.’s Br. in Supp. of Mot. to Dismiss Compl. [ECF No. 8] at 7-20.) Plaintiffs filed their brief in opposition to the pending motion (ECF No. 14) on March 17, 2014. The School District filed its reply (ECF No. 19) on April 1, 2014. Consequently, the issues have been adequately joined and the motion is ripe for disposition.
C. Standard of Review
A motion to dismiss pursuant Rule 12(b)(6) challenges the legal sufficiency of the complaint. When reviewing a motion to dismiss, the district court must accept all well-pleaded facts and allegations, and must draw all reasonable inferences therefrom in favor of the plaintiff. Burtch v. Milberg Factors, Inc., 62 F.3d 212, 220 (3d Cir. 2011) (citing In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 314 (3d Cir.2010)). However, as the Supreme Court of the United States made clear in Bell Atlantic Corp. v. Twombly, such “[f]actual allegations must be enough to raise a right to relief above the speculative level.” 550 U.S. 554, 555 (2007). See also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (holding that, while the complaint need not contain detailed factual allegations, it must contain more than a “formulaic recitation of the elements” of a constitutional claim and must state a claim that is plausible on its face) (quoting Twombly, and providing further guidance on the standard set forth therein).
To determine the legal sufficiency of a complaint after Twombly and Iqbal, the United States Court of Appeals for the Third Circuit instructs that a district court must take a three-step approach when presented with a motion to dismiss for failure to state a claim. Santiago v. Warminster Twp., 629 F.3d 121, 130 n. 7 (3d Cir.2010) (noting that although Iqbal describes the process as a “two-pronged approach, ” it views the case as outlining three steps) (citing Iqbal, 556 U.S. at 675). First, “the court must ‘tak[e] note of the elements a plaintiff must plead to state a claim.” Id. at 130 (quoting Iqbal, 556 U.S. at 675) (alteration in original). Second, the court “should identify allegations that, ‘because they are no more than conclusions, are not entitled to the assumption of truth.’” Id. (quoting Iqbal, 556 U.S. at 679). Third, “‘where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.’” Id. (quoting Iqbal, 556 U.S. at 679).
Courts may generally consider the allegations of the complaint, attached exhibits, and matters of public record in deciding motions to dismiss. Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993). Factual allegations within documents described or identified in the complaint also may be considered if the plaintiff’s claims are based upon those documents. Id. (citations omitted). In addition, a district court may consider indisputably authentic documents without converting a motion to dismiss into a motion for summary judgment. Spruill v. Gillis, 372 F.3d 218, 223 (3d Cir. 2004); Lum v. Bank of America, 361 F.3d 217, 222 (3d Cir. 2004) (in resolving a motion to dismiss pursuant to Rule 12(b)(6), a court generally should consider “the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim.”).
D. Discussion and Analysis
1. Count I of the Complaint