A Chicago federal judge has refused to dismiss suits by a fair housing group, alleging state officials discriminate against the mentally ill by barring them from a Medicaid-backed housing program.

The ruling was issued Sept. 29 by Judge Joan Gottschall, of U.S. District Court for the Northern District of Illinois, favoring West Chicago-based HOPE Fair Housing Center in its actions against state officials.

In 2014, plaintiffs Kimberly O'Connor, Tammy Mormino and HOPE took court action against Chicago-based Eden Management and state officials, including then-Gov. Pat Quinn and directors of the Department of Healthcare and Family Services, the Department on Aging and the Department of Human Services, among others. HOPE helps the disabled find housing. Eden runs supported-living facilities.

Mormino and O'Connor, who were physically impaired and living in institutions, said Eden violated federal anti-discrimination laws, by turning them away for housing, because they were also mentally ill. O'Connor died in 2016.

In addition, HOPE had people pose as applicants to Eden properties in Chicago, downstate Champaign and west suburban North Aurora. At those three sites, the "applicants" were allegedly told Eden's policy was to refuse housing to the mentally ill.

Since Eden accepts Medicaid and Social Security funds, plaintiffs alleged defendants' policies breached the federal Fair Housing Act and the Americans with Disabilities Act, which prohibit discrimination against the disabled, including mental illness. Further, plaintiffs asserted Illinois’ policies, which permit such policies to stand at state-licensed supportive living facilities which are funded, at least in part, by Medicaid, similarly violate those federal statutes. Plaintiffs asked the court to declare the housing providers and the state have violated federal law, and to prohibit them from using “no mental illness” screening policies. Plaintiffs also wanted other unspecified damages.

The state defendants were dismissed from the case in 2015, after Gottschall found that if any defendant harmed plaintiffs, it was Eden, not the state.

HOPE then had more people pose as applicants to suburban facilities operated by entities other than Eden, with the same alleged result. These entities were Tabor Hills in Naperville, Alden Gardens in Bloomingdale and East Gate Manor in Algonquin. HOPE filed suit against these entities, as well as again against the state, updating specific defendants and introducing new argument.

Plaintiffs settled with Eden in June 2016 and East Gate in May 2017. Settlement talks are under way with Alden Gardens and Tabor Hills, according to court papers.

The state defendants responded to the new suits with another motion to dismiss, but this time Gottschall was not persuaded.

The state contended it enjoys discretion as to how it implements Medicaid programs. However, Gottschall countered by quoting a 2012 federal appellate ruling that said, "although participation in Medicaid is optional, once a state has chosen to take part, it must comply with all federal statutory and regulatory requirements.” The judge added eligibility determinations must be consistent with Medicaid's objectives and individual rights under the Rehabilitation Act, which further erodes the state's position it can categorically deny housing to the mentally ill.

Gottschall pointed out this doesn't mean Illinois does not retain discretion to decide how to fill the limited number of slots in a facility. In addition, the judge pointed out plaintiffs are not contending facilities should no longer screen applicants or that all those with mental illness, without exception, must be placed in a facility. Rather, plaintiffs want an applicant's suitability for placement to be based on the applicant's "tenant or residential history and background," not simply whether they have mental illness.

The state also moved to dismiss the claim it violated the federal Fair Housing Act, on grounds plaintiffs were seeking government services, and were not prospective buyers or renters of a dwelling as the Act requires for a claim. Gottschall ruled residents of supported-living facilities have to pay a portion of their room and board, which qualifies them under the Act.

A status hearing was set for Oct. 12.

Plaintiffs are represented by the Chicago firms of Soule, Bradtke & Lambert, and Kalcheim Haber LLC, as well as by the American Association of Retired Persons Foundation Litigation, of Washington, D.C.

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Organizations in this Story

HOPE Fair Housing Center
245 West Roosevelt Road
West Chicago, IL - 60185

Illinois Department of Healthcare and Family Services
201 South Grand Avenue East
Springfield, IL - 62704

Kalcheim Haber, LLP
134 North La Salle, Suite 2100
Chicago, IL - 60602

Soule Bradtke & Lambert
533 Division Street
Elmhurst, IL - 60126

State of Illinois
301 S 2nd Street
Springfield, IL - 62707

U.S. District Court for the Northern District of Illinois
219 S Dearborn St
Chicago, IL - 60604

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