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Petties v. District of Columbia

November 22, 2002


The opinion of the court was delivered by: Paul L. Friedman, United States District Judge.


This matter came before the Court for consideration of plaintiffs' emergency motion for a temporary restraining order. Defendants filed an opposition, and oral argument took place on November 12, 2002. At the conclusion of the hearing, the parties agreed that the Court should treat the motion as one for a preliminary injunction. The Court granted the motion for preliminary injunction by Order of November 14, 2002. This Opinion sets forth the reasons for that decision.


A. A History of the Case

Plaintiffs, special education students and their parents, filed this class action lawsuit seven years ago because the District of Columbia Public Schools ("DCPS") had consistently failed to pay the costs of special education placements or related services to private providers, either fully or on a current or timely basis as required under the Individuals With Disabilities Education Act ("IDEA"), 20 U.S.C. §§ 1400 et seq. As a result of this failure, many of the private providers threatened to terminate the students' placements. On March 17, 1995, the Court granted plaintiffs' motion for a preliminary injunction, finding that "unless defendants fully and immediately fund all DCPS students currently in private special education placements and/or receiving related services from private providers and, in addition, give adequate written assurances that such payments will be made on a current basis in the future, many, if not all of those students will have those placements and/or services terminated, and there is no indication that appropriate alternative placements will be available to meet the students' individual needs." Petties v. District of Columbia, 881 F. Supp. 63, 64 (D.D.C. 1995) ("Petties I"). *fn1

As the Court explained, the purpose of the IDEA is to ensure that children with disabilities have available to them a free and appropriate public education that addresses their unique needs. Petties v. District of Columbia, 881 F.Supp. at 65; see 20 U.S.C. §§ 1400 et seq. To ensure that this goal is met, the IDEA directs the child's parents, teachers and other professionals to develop an Individualized Education Program ("IEP") for each special education student that sets forth the required instructions and services designed to meet the particular child's unique needs. See 20 U.S.C. § 1414(d). Once the IEP is developed, the school system must provide an appropriate placement that meets those needs and, if an appropriate public placement is unavailable, the school system must provide an appropriate private placement or make available educational-related services provided by private organizations to supplement a public placement. See 20 U.S.C. § 1412(a)(10); 34 C.F.R. §§ 300.349, 300.400-402.

The Court concluded that DCPS's failure to pay providers, and the resulting risk to the children's placements, violated the IDEA and its implementing regulations. See Petties v. District of Columbia, 881 F. Supp. at 65. The Court expressly held that "the IDEA prohibits the DCPS from making unilateral changes in placements or provision of related services by failing to pay timely or fully. Failing to make payments in whole or in part or cutting off funds for special education programs amounts to a unilateral change in students' placement, which is prohibited by the IDEA." Id. at 66 (citing Zvi D. By Shirley D. v. Ambach, 694 F.2d 904, 906 (2d Cir. 1982)).

The Court then determined that declarations submitted by plaintiffs at that time demonstrated that DCPS's payment practices would lead many providers of services to discontinue existing placements, to refuse to accept further placements of District of Columbia children for the 1994-95 and the 1995-96 school years, or to discontinue providing services to the DCPS students all together. "Thus, continued late and partial payments of tuitions and for related services by the DCPS will lead to unilateral changes in students' placements. In these circumstances, there is no question that the plaintiffs have a strong likelihood -- indeed, a virtual certainty -- of success on the merits. Simply put, "the right . . . to receive a free appropriate education . . . cannot be constricted by monetary limitations." Petties v. District of Columbia, 881 F. Supp. at 66-67 (quoting Cox v. Brown, 498 F. Supp. 823, 830 (D.D.C. 1980) and citing Fisher v. District of Columbia, 828 F. Supp. 87, 88-89 (D.D.C. 1993)).

In addition to providing plaintiffs immediate injunctive relief, on June 29, 1995 the Court entered an order to ensure that DCPS's late or partial payment to private providers did not reoccur. The order required DCPS (1) to provide assurances to all private special education providers that payment would be made in full; (2) to pay all invoices in full within 30 calendar days of receipt or, if disputed, to notify providers in writing of the amount disputed and the specific reason for the dispute within 15 calendar days of receipt of the invoice; and (3) to provide the Court and plaintiffs' counsel with a monthly compliance report. Petties v. District of Columbia, No. 95-0148, Order ¶¶ 1-4 (D.D.C. June 29, 1995) ("Order of June 29, 1995"). The parties subsequently consented to a structured payment system, the Petties Automated Payment System ("PAPS"), which sets forth specific procedures and schedules for payments to private providers. See Petties v. District of Columbia, No. 95-0148, Order Modifying Automatic Payment System (D.D.C. Aug. 28, 1996). The Court thereafter entered orders supplementing the PAPS for each school year through the 2001-02 year. *fn2

B. The Current Circumstances

Now, seven years later, plaintiffs again seek injunctive relief because of DCPS's failure to make timely and full payments to private providers. Plaintiffs filed the instant motion seeking a mandatory injunction directing DCPS to make owed payments to two private providers who, unless they receive prompt payment for services already provided, represent that they will be forced to close their doors, leading to the immediate displacement of 151 special education students. In other words, seven years of litigation and court supervision have not taught DCPS that it must pay providers for educational services pursuant to the IDEA and the substantive and procedural orders of this Court, and that it cannot risk students' placements in an attempt to change DCPS payment policies. Regrettably for the special education students of the District of Columbia, it appears to be "deja vu all over again."

Educational Transition Services ("ETS") and Rock Creek Academy ("Rock Creek") are educational facilities that provide special education services to DCPS students. ETS was designed to provide interim placements for students for whom permanent placements have not yet been determined. Rock Creek is a permanent placement provider. See Plaintiffs' Memorandum of Points and Authorities in Support of Motion for Temporary Restraining Order and Motion for Preliminary Injunction ("Pls.' Mem."), Ex. C, Declaration of Kelley Brock, Ph.D. ("Brock Decl." ¶ 7. Both ETS and Rock Creek have operated from their inception under the framework established by the PAPS. See Pls.' Mem., Ex. A, Declaration of Richard K. Henning ("Henning Decl.") ¶ 2.

There are 151 DCPS students currently enrolled in ETS or Rock Creek who were placed with these providers pursuant to a DCPS hearing officer determination, a settlement agreement between DCPS and the student's parent, or an IEP. See Pls.' Mem. at 4; Brock Decl. ¶ 6. As the IDEA and the earlier opinions of the Court make plain, once there is an IEP in place, a hearing officer determination, or a placement pursuant to a settlement agreement, there can be no change in placement without providing a student and his or her parents with the full panoply of due process rights established by Congress, including (unless the matter is otherwise consensually resolved) an administrative due process hearing. See 20 U.S.C. § 1415; Petties v. District of Columbia, 881 F. Supp. at 65.

Plaintiffs represent that in June 2002, ETS and Rock Creek submitted to DCPS their projected average billing amount for July and August 2002, and that DCPS filed timely disputes of these proposals on July 2, 2002, all pursuant to the PAPS. See Pls.' Mem. at 6. *fn3 On August 2, 2002, DCPS submitted to ETS and Rock Creek a second, untimely dispute letter that indicated the aggregate amounts that DCPS had approved for reimbursement through Cycle 5, and a schedule of reimbursement amounts listed by student. See Henning Decl. ¶ 4; Henning Decl., Ex. 1, Letter Memorandum Re: Notification of Monthly Amounts to Be Paid to ETS, Inc. from PAPS for Months Encompassing Cycle 5, July and August 2002, dated August 2, 2002 ("Cycle 5 Letter"). The "approved" reimbursements were much smaller than the amounts submitted by invoice to DCPS by ETS and Rock Creek. See id. ¶ 14.

Although the basis for the lower amount proffered by DCPS was unclear from the Cycle 5 Letter, DCPS in effect unilaterally and retroactively to July 1, 2002 reduced by approximately 40% the rate at which DCPS will reimburse ETS and Rock Creek for services provided. See Henning Decl. ΒΆΒΆ 4, 8. DCPS also unilaterally and retroactively to July 1, 2002 implemented a new policy cutting reimbursement to ETS and Rock Creek for special education students whose monthly attendance rate falls below 60%. As of July 1, 2002, DCPS calculated reimbursement for those students at a per diem rate only for the days actually attended by ...

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