Nebraska developmental disability service sues DHHS for new training mandate

LINCOLN — A developmental disability service provider is suing Nebraska’s Department of Health and Human Services over a 2024 order the provider claims was unconstitutional.

Integrated Life Choices (ILC) filed a complaint in Lancaster District Court Aug. 25 against DHHS and Developmental Disabilities Director Tony Green. The complaint claims the department violated the constitutional separation of powers by unilaterally mandating providers switch to a new emergency safety intervention program called The Mandt System.

In February 2024, DHHS issued a bulletin requiring providers to exclusively use Mandt for staff training by July 2025. Providers that did not comply faced decertification and a loss of Medicaid funding, according to the complaint.

In a press release from the Pacific Legal Foundation, which is helping represent ILC in the lawsuit, The Mandt System is a for-profit program designed for both children and adults. With ILC’s services being adult-focused, the release argues that The Mandt System is not suited for all Nebraska providers.

Furthermore, the mandate was expensive. The release claims that implementing the new training cost ILC at least $60,000 to cover its 10 trainers, and comes with recurring costs every two years.

ILC attempted to stand its ground and maintain the group’s former training program, which the complaint alleges DHHS approved in 2021. But starting on July 2, DHHS stopped referring new clients to ILC, forcing the provider to comply, according to the complaint.

“In Nebraska’s developmental disabilities system, referrals function like the doctor’s note you need before seeing a specialist — they are the formal authorization that allows a provider to begin serving a new client under the state’s waiver program,” the release explained. “Without them, no new clients can enter ILC’s services, threatening both its financial viability and its ability to serve vulnerable Nebraskans.”

The complaint alleges that the department’s mandate executed legislative power without legislative approval, thus violating powers reserved for the Legislature, not the executive branch. However, multiple lawmakers said they weren’t certain that this authority would normally fall to them.

State Sen. Machaela Cavanaugh of Omaha, a vocal critic of DHHS in recent years, said she wasn’t certain the department needed legislative approval to implement this type of program. She said she’s heard that The Mandt System is well-respected but noted that the lawsuit touches on a longstanding issue of a lack of transparency within DHHS and a history of unilateral changes it has put in place without following proper procedure.

Cavanaugh argued that DHHS should have followed its own regulatory process when implementing the mandate, which would have come with a public hearing or an equivalent step in gathering public feedback.

The complaint also alleges DHHS violated due process and Nebraska’s Administrative Procedure Act. It claims DHHS issued the bulletin without following the “notice-and-comment rulemaking procedures” outlined by the American Psychological Association and argued that the review and appeal process the department offered providers was inadequate.

Sen. Dan Quick of Grand Island, a Democrat on the Legislature’s Health and Human Services Committee, agreed that this has been a common problem with DHHS.

The complaint highlights a bill Quick introduced earlier this year, Legislative Bill 565, which seeks to crack down on authoritative bulletins issued specifically by DHHS’ Division of Developmental Disabilities. The amended bill would rescind guidance documents issued by the division after July 1, 2022, and pause new bulletins until July 1, 2027, unless the changes were required for federal compliance.

Quick said he brought the bill after hearing concerns from multiple providers that the division was using guidance documents and provider bulletins as a means of implementing major changes without following the department’s regulatory process. He said many of these changes came with high costs.

Quick’s top concern, however, was how such administrative disputes would impact the services’ clients.

“They’re the ones who get hurt in this whole process,” Quick said.

LB 565 stalled in committee, but Quick said after the session he met with DHHS. He claimed officials told him the department had settled the dispute with providers and that the reason for the bulletins is that DHHS’ regulatory process could not keep up with the pace of new federal guidance.

However, when Quick relayed that information to providers, they told him a different story. They claimed that the issue was not settled and that they would have no problem complying with new federal orders.

DHHS said the agency can’t comment on pending litigation.

Sen. Merv Riepe of Ralston, a Republican lawmaker on the HHS Committee, said the lawsuit touches on a gray area between state agency authority and legislative oversight. He couldn’t say whether DHHS overreached with the bulletin but noted the case may boil down to whether ILC had a contract that the department was trying to alter midway through.

“If you don’t have it in writing, you don’t have a real foundation,” Riepe said.