Indiana State Advocacy Agency Has An Implied Right Of Action Under The Protection And Advocacy For Individuals With Mental Illness Act To Seek Injunctive And Declaratory Relief

Posted on May 5, 2010 by Michael Rigney

INDIANA PROTECTION AND ADVOCACY SERVICES v. INDIANA FAMILY AND SOCIAL SERVICES ADMINISTRATION (April 22, 2010)

In 1986, Congress enacted the Protection and Advocacy for Individuals with Mental Illness Act (the "Act"). The general purpose of the Act was to protect the rights of individuals with mental illnesses and specifically to assist states in operating protection and advocacy systems for those individuals. States are entitled to federal funds if they create such a protection and advocacy system. The system can be either a private entity or an independent state agency. Indiana created Indiana Protection and Advocacy Services ("Services"), an independent agency. The Act gives Services the authority to investigate instances of abuse and requires that Services have access to patient records. In 2006, Services opened investigations into two instances of possible abuse or neglect at the LaRue Carter Memorial Hospital. LaRue Carter is a psychiatric hospital operated by the Indiana Family and Social Services Administration ("FSSA"). In both investigations, Carter withheld patient records requested by Services. Services brought an action against the State of Indiana, FSSA, and three state officials in their official capacities. The complaint sought only injunctive and declaratory relief. The district court granted the relief. A panel of the Seventh Circuit reversed. The panel concluded that Services did not have a private right of action under the Act, could not sue under § 1983 because it was not a "person" under that section, and that the Eleventh Amendment barred the suit. Services sought rehearing en banc.

In their opinion, Chief Judge Easterbrook (dissenting) and Judges Posner (concurring), Flaum, Kanne, Rovner, Wood, Williams, Sykes, and Hamilton affirmed the judgment of the district court as modified to provide relief only against the named state officials. The Court first held that the Eleventh Amendment did not bar the suit. Although that amendment typically prevents a state or its agencies and officials from being sued in federal court by its own citizens, there are exceptions. Under the Ex parte Young exception, a state official who violates a federal law is considered to be acting outside his or her authority and not immune from suit. The required inquiry is whether the complaint seeks prospective relief for an ongoing violation of federal law. The Court found that inquiry satisfied with respect to the individually named state officials, although not with respect to the state and FSSA. Next, the Court concluded that the Act authorized Services’ suit. The Court undertook an analysis of whether Congress intended to create a private right and private remedy in the Act. Citing several provisions of the Act and interpreting the language, structure and purpose of the Act, the Court concluded that Congress did create a private right of action for access to patient records for protection and advocacy systems such as Services. In doing so, it rejected the defendants' arguments that the Act is simply an exercise of Congress's spending power, that the obligation to provide access to patient records is simply a condition inherent in accepting federal funding, and that the only remedy for the violation is to cut off the funding. Finally, on the merits, the Court had little difficulty in rejecting defendants' argument that the peer review records sought by Services were not "records" under the Act. It simply adopted the unanimous treatment given the question by the four circuits that have addressed the issue.

Judge Posner joined the Court's opinion "without reservation" but wrote separately on whether the Act provided a private cause of action. He wrote of several practical considerations that he believed supported the conclusion that the Act contained a private right of action.

Chief Judge Easterbrook dissented. Although he agreed with the conclusion that the Ex parte Young exception to Eleventh Amendment immunity applied, he disagreed with the conclusion that Services had a private cause of action. With respect to § 1983, Services is not a "person" and therefore cannot sue under that section. With respect to the Act itself, Chief Judge Easterbrook concluded that the Supreme Court's cases do not support the conclusion that a right of action can be implied in the Act.

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Financially Independent State Lottery is Not a State Agency For Sovereign Immunity Purposes

Posted on October 20, 2008 by Michael Rigney

BURRUS V. STATE LOTTERY COMMISSION  (October 6, 2008)

Indiana created the State Lottery Commission of Indiana (the “Commission”) in 1989 to operate lottery games in the state. The legislature set it up to operate as a “separate body politic and corporate” from the rest of state government. The legislature authorized up to $18 million in start up costs. The Commission only used $6 million and repaid that within the year. The lottery has been quite successful. It has generated over $3 billion in profits since its inception. The governor appoints the director and five commissioners who operate the lottery. The Commission has the authority to sue and be sued. It operates independently of the state, although it is heavily regulated by the state.  The Commission deposits all of its revenue into a fund separate from the state’s general revenue fund. The funds are first used to pay for the prizes and operating costs. Each quarter, the remaining funds are disbursed to the credit of the state teachers’ retirement fund ($7.5 million) and the pension relief fund ($7.5 million). Any quarterly surplus is transferred to a fund which is used to support local and state capital projects.

Between January and May of 2005, seven employees of the Commission were fired. They all sued the Commission under 42 U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964. Each alleged that he or she was fired as a result of his or her race. The Commission moved to dismiss the § 1981 claims on the grounds of sovereign immunity. The district court denied the motion. The Commission appeals.

In their opinion, Judges Bauer, Ripple, and Manion affirmed. The appeal raised only one issue – whether the Eleventh Amendment shields the Commission from the §1981 claims. The Court began with the basic proposition that unconsenting states, and their agencies, are immune from federal lawsuits under the Eleventh Amendment. Here, the parties simply disagreed over whether the Commission is a state agency. The Court listed the two factors that generally determine that issue. The first, and most important, is the degree of financial autonomy from the state. The other factor is the general legal status of the entity. The Court observed that the Commission’s complete lack of financial reliance on the state and the total lack of responsibility by the state for any of the Commission’s obligations strongly weighed against finding the Commission to be an agency of the state. While it is true that a judgment against the Commission would deprive the state of revenues it otherwise would have received but for the judgment, the panel noted that the Supreme Court had rejected that “state-benefit” theory of financial dependence.

The second prong of the test, general legal status, also supports the Court’s conclusion that the Commission is not an agency of the state. The Court pointed to a number of factors to support its conclusion: a) it sets its own budget, b) it controls its day-to-day operations, c) it sues in its own name, and d) it enters into contracts in its own name. The fact that the governor appoints the commissioners was given little weight by the Court given the Commission’s financial independence. Finally, the Court noted that the fact that the lottery is the subject of much state regulation does not change the result that the Commission is not an agency of the state and not immune from suit.

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