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Seven years ago, Shawn Engman, a Minnesotan with developmental disabilities, moved from a group home into a facility run by a program called Family Residential Services (FRS), also known as Adult Foster Care. In these facilities, up to four residents live and receive care directly in their provider’s home.

“The FRS environment has done my cousin just a world of good,” said Evan O’Connor, Engman’s legal guardian. “It’s like he’s a part of the family and he’s never quite had that kind of experience before.”

But when Engman was diagnosed with complex central sleep apnea earlier this year, his provider, Strasser Family Foster Services, couldn’t afford to hire additional staff required to care for an individual on an adaptive supportive ventilation machine. This was due to a recent Medicaid reimbursement change. 

After his case worker approved Engman for additional crisis respite services — which would have allowed his provider to receive additional funding — the state denied the request, according to a lawsuit filed in federal court on Monday. 

The lawsuit was filed on behalf of Engman and the Minnesota Association of Residential Service Homes. It alleges that Minnesota’s Department of Human Services is intentionally dismantling its Family Residential Services program through a shift to a new, less flexible Medicaid reimbursement system, which only applies to Family Residential Programs and another program.

The suit also alleges Human Services violated Minnesota’s Jensen settlement, which required the state to adopt policies that required people with disabilities to be placed in the least-restrictive settings that would fit their individual needs. Jason Steck, Engman’s lawyer, said Engman and other residents with disabilities should have a say in where they get to live. 

“They’re not permitting him any voice,” Steck said. “We’re taking literally the most integrated setting possible and eliminating it.”

Human Services said in response to a request for comment that they are reviewing the details of the lawsuit.

The lawsuit comes amidst allegations of widespread fraud in Minnesota’s social services programs. 

Earlier this month, the agency disenrolled thousands of providers in 14 Medicaid programs deemed at high risk for fraud due to incomplete paperwork or documentation. The thousand providers who fall under Family Residential Services are not a part of one of the programs deemed at high-risk for fraud. 

“I don’t think this should have been a target. It’s not a target for fraud,” said Sen. Bill Lieske, R-Lonsdale.

The flat-rate system at the heart of the lawsuit went into effect earlier this year and was introduced at the Legislature as a cost-saving measure. Sen. Lieske, who opposes the rate change, said the state won’t end up saving money through the program. 

Instead, he said, the rate change will cause facilities to close and residents will be forced to move to settings that will end up costing the state more money.

“I believe there’s at least a handful that have already shut down because of the flat-rate system and I’m sure there’s going to be more,” Lieske said “It does cost money to take care of people and that’s the discussion, but is it the right place to be making cuts?”

O’Connor and Engman are appealing the state’s decision to deny Engman crisis respite services. O’Connor said he worries Engman will ultimately be placed back into a group home.

“It’s very scary to me, just the thought of him going back to that,” O’Connor said. “My cousin Shawn has the autonomy and the right to choose where he would like to live, and it’s being taken away.”

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Ellie Roth

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Minnesotans can live and receive care directly in their provider’s home. A lawsuit says a reimbursement rate change is gutting that program.

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Provider trade group alleges intentional dismantling of social services program

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