1. Arnold v. Sarn Lawsuit –
Department of Health Services
Senate Committee on Healthcare and Medical Liability Reform
and
House Committee on Health and Human Services
February 4, 2009
2. Initial Litigation
• Filed on March 26,1981 in Maricopa County
Superior Court by the Arizona Center for Law
in the Public Interest.
• Plaintiffs alleged that DHS and the Maricopa
County violated their statutory duty to create a
comprehensive system of community-based
mental health care for the seriously mentally
ill (SMI) pursuant to A.R.S. § 36-550.
3. Trial Outcomes and Effects
• On January 16, 1985, the presiding judge
entered judgment for the plaintiffs.
• On June 14, 1985, court ordered DHS and
Maricopa to “provide a unified and cohesive
system of community health care” for the SMI.
• Supreme Court affirmed the initial judgment in
1989.
4. Trial Outcomes and Effects cont.
• In 1991, Court Monitor appointed presiding
judge to negotiate and monitor an
Implementation Plan or “Blueprint” to ensure
satisfaction of judgment by September 30,
1995.
5. Exit Criteria
• By late 1994, it was determined that satisfaction of Blueprint
would not be achieved by the initial date, so the parties and the
Court Monitor negotiated measures.
• First RHBA, ComCare is awarded contract for Maricopa SMIs
in 1992.
• Joint Stipulation on Exit Criteria and Disengagement approved
by the Court on February 12, 1996. Exit Criteria is the sole
method for determining that DHS is in compliance with the
Court’s order.
6. Exit Criteria cont.
• Exit Criteria requires DHS to:
1. Identify class members as either “priority” or “non-
priority.”
2. Create “community living arrangements with
appropriate supports” in order to reduce the class
member census at Arizona State Hospital.
3. Cooperate with Maricopa County to divert class
members from jail.
4. Strengthen the crisis system through funding
increases.
5. Establish a satisfactory quality management system.
6. Prove through Court Monitor’s report that the system
has met percentage targets outlined in the Exit
Criteria, pursuant to Appendix C.
7. Appendix C
• Establishes specific requirements for care of
SMI in Maricopa County.
• Establishes targets of compliance with
requirements that Court Monitor determines in
the annual report.
8. ComCare
• In early 1997, ComCare had projected an operating
deficit of $25M and continued to deteriorate during
the first half of that calendar year.
• At the beginning of FY 1998, DHS obtained a
gubernatorial declaration of emergency in the
behavioral health system, which allows the agency to
take over a RHBA’s operations.
• By September 1997, DHS had taken over all of
ComCare’s operations.
9. ValueOptions
• Following an Auditor General
recommendation, DHS puts out an RFP for a
for-profit with capitalization.
• ValueOptions is awarded contract at $XX
million per year and held the contract from
1999 – 2006.
10. ValueOptions cont.
• In FY 2001, Prop. 204 passes, raising Title
XIX eligibility from 33% of the FPL to 100%.
• 5 years previous to Prop. 204, spending would
increase $5M/year. After Prop. 204, spending
increased an average of $26M for the
remainder of ValueOptions’ contract.
11. Magellan
• Took over for ValueOptions in September
2007.
• Contract is for 3 years and worth $1.5B.
