Indiana child care agencies sue over lower reimbursements

A coalition of 110 child care agencies is asking a court to stop the Indiana Department of Child Services from reducing
reimbursements for foster and residential care agencies, saying the cuts are arbitrary and would harm children.

The
Indiana Association of Residential Child Care Agencies Inc. filed a lawsuit seeking an injunction to stop the cuts Monday
in Marion Circuit Court in Indianapolis.

The lawsuit says the state told it that rates for 2010 would be cut up
to 20 percent for foster care agencies and up to 14 percent for residential care. About 80 of IARCCA’s member agencies provide
residential care for troubled children, while the remainder provide foster or home-based care. Member agencies serve about
4,600 children.

IARCCA said the cuts won’t leave enough money for adequate care.

"Unless restrained
by this court, The DCS’s arbitrary reduction of reimbursement rates to providers will cause irreparable harm to the children
served by the providers," the lawsuit says.

Department of Child Services spokeswoman Ann Houseworth said DCS
was disappointed about the lawsuit but declined further comment on the litigation. "We will continue to focus on our
first responsibility of protecting Indiana’s abused and neglected children," she said Tuesday.

IARCCA Executive
Director Cathleen Graham said the agencies had been negotiating a contract with the state for the past 18 months. Agencies
that work with foster parents received notice of the cuts Dec. 4. Residential care agencies were first notified of cuts in
October but didn’t learn the full degree of the cuts until Nov. 30, she said. The contract takes effect Jan. 1.

Including
a 2.8 percent rate increase that was promised and then rescinded, residential care agencies face up to 16 percent reduction
in reimbursement rates, Graham said.

"We realize that this is a tough economy, and we’re willing to do our
part," Graham said. "But we cannot bear this kind of reduction; it will have a tremendous impact on children who
are already at a disadvantage in life."

Agencies are being forced to figure out how to provide services with
fewer staff, Graham said. Some already have reduced recreational activities for children and some have had to cut mentoring
and tutoring programs, she said.

The state said residential care agencies must sign the contract by Dec. 14 and
foster care agencies must agree to the provisions within five days of receipt or their children would be transferred to other
agencies, the suit alleges.

Most agencies signed the contract, but noted their protest, Graham said.

Houseworth
said there were no current plans to transfer any children.

The lawsuit also alleges that DCS violated state law
by not promulgating administrative rules for the setting of rates. It asks a judge to issue an injunction restraining the
DCS from cutting current rates without such rules.