Shapiro admin rules for Pennsylvania Medicaid recipients spark lawsuit from people with disabilities

Earlier this year, some Pennsylvanians with disabilities and their families won a major victory.

Commonwealth Court struck down
two rules that affected people with intellectual disabilities and autism in Pennsylvania’s Medicaid program, saying the state didn’t follow a required process for implementing those rules as regulations and “they must be considered null and void.”

One rule limited how long the program would pay for support services when people traveled out of state, while the second limited how many hours per week relatives could work as paid caregivers. The decisions, one national advocate said, affected “whether people with disabilities have a real choice in where and how they live.”

But Democratic Gov. Josh Shapiro’s administration responded by reimposing similar limits on many of these same Medicaid participants through agreements and consent forms, saying the court’s rulings were about process, not the underlying policies, and arguing the state has a responsibility to protect the integrity and financial stability of the Medicaid program.

The administration gave participants an Aug. 6 deadline to sign new agreements or else they could face an “involuntary termination” from the services they use.

The response drew widespread opposition from families, advocates, and providers. The opposition escalated on Wednesday, as four Pennsylvanians with intellectual and developmental disabilities filed a class action lawsuit challenging the new relative caregiver and travel rules, which their lawyers say “gravely impact” them and their families.

Critics warn the rules — which affect thousands of people — could force some family caregivers to provide uncompensated work, which is an especially critical issue given what some see as a staffing crisis. They also say the rules limit meaningful travel opportunities for people with disabilities and could ultimately lead to a reduction in services, or force people into institutional care.

Gladys Stefany, a Pike County resident, has an adult daughter with disabilities who receives services through Medicaid. Stefany also works with other families to help them self-direct their own care, hire employees, and comply with state rules. She opposes the state’s approach.

“It just seems to me they’re trying to end-run around the court to do what they wanted to do to begin with,” Stefany told Spotlight PA.

New lawsuit

In the new lawsuit, the plaintiffs are from Allegheny, Cumberland, Lebanon, and Montgomery Counties.

Attorneys with the Public Interest Law Center and a partner law firm seek to block the Pennsylvania Department of Human Services from enforcing the rules through contracts and forms, which they argue bypasses the regulation process.

“We see this as a really outrageous action that the state has taken to flout a Commonwealth Court ruling,” Madison Gray, a staff attorney with the Public Interest Law Center, told Spotlight PA.

The dispute centers around a specific aspect of Medicaid, a health insurance program jointly funded by the federal government and states. The issue focuses on what’s known as waiver services, which allow people to receive care in their home or community instead of an institutional setting.

The changes the Shapiro administration rolled out following the court rulings this year apply to people in participant-directed services models, which can give people with disabilities or their representatives more control over how care is provided, including by hiring support service professionals.

The revised work–hour rule, known as the “40/60 Rule,” limits the number of hours that Medicaid will pay relatives, legal guardians, and others for certain services. The hours are generally capped at 40 hours per week for a single worker — and 60 hours per week when multiple relatives or legal guardians do the work.

The rule affects in-home and companionship supports, ones in which a caregiver provides supervision and assistance with daily activities, such as eating, toileting, bathing, or dressing, according to the lawsuit. The lawsuit says the new version of the rule is “essentially identical” to the previous one canceled out by Commonwealth Court.

The other rule involves travel, and generally requires waiver-funded services to occur within Pennsylvania. That’s a stricter geographic limit than what the Shapiro administration enforced earlier this year, according to court records. The administration has said that people “may choose to pay for services using private funds” or “ reach out to the county to discuss whether there are options for service delivery.”

The Public Interest Law Center suit said the travel policy prevents people from attending a wide range of important events, such as out-of-state weddings and family reunions, the Special Olympics, disability rights lobbying days in the nation’s capital, and other events “outside the region that their non-disabled peers may enjoy.” The travel restriction applies to services provided by both relatives and nonrelatives.

One of the plaintiffs is MichaelAnn Byrne, a 29-year-old Cumberland County resident who has a rare degenerative brain disorder, and “suffers from progressive loss of motor control, memory, and cognitive abilities,” according to the lawsuit.

She still loves to travel, and going to New Orleans for Mardi Gras is one of her “big bucket list” items, her mother, Sherry Byrne, told Spotlight PA. MichaelAnn used to carry Mardi Gras beads to manipulate and fidget, until “her disabilities took away her ability to do so,” according to the lawsuit.

“MichaelAnn doesn’t have a lot of time left,” Sherry Byrne told Spotlight PA, “and as a mom, I’m just trying to give her her dreams before that time comes.”

MichaelAnn is nonverbal, uses a wheelchair, requires a central line for nutrition, and needs to bring her mother and a paid staff member for these types of trips, according to the lawsuit. “She needs someone to ride with her at all times because she frequently chokes and can aspirate into her lungs,” the lawsuit says.

“It’s made me angry, because that’s the one thing she has left,” Sherry Byrne said of travel. “And it’s like they’ve taken it away.”

The Shapiro administration declined to comment on the lawsuit but has defended its approach.

In a statement to Spotlight PA earlier this month, before the new lawsuit was filed, a Department of Human Services spokesperson told Spotlight PA “these policies are not entirely new and not unique to Pennsylvania.” The agency “is required to both protect the financial stability of the Medicaid program and to abide by federal and state laws and regulations governing wages and overtime, Medicaid claiming requirements, and ensuring health and safety,” the spokesperson, Brandon Cwalina, said.

In a July video, a Shapiro administration official described the external pressure states are facing. Kristin Ahrens, deputy secretary for the state Office of Developmental Programs, said there has been a coordinated response from federal agencies and Congress in recent months focused on “fraud, waste, and abuse,” and she said “increased federal scrutiny of relative caregiving is inevitable.”

She added that while federal Medicaid cuts that passed last year don’t specifically target programs for people with disabilities, “Pennsylvania legislators are likely to have some really tough decisions to make about funding Medicaid services in general.”

“In the face of all the hurdles that I just walked through, we remain deeply committed to home- and community-based services for people with intellectual disabilities and autism,” Ahrens added.

The Shapiro administration has begun the work of updating regulations, and that process “will include the opportunity for public comment,” according to Cwalina.

Court victories

The court victories from earlier this year involved two families in Northumberland County.

In one case, the plaintiff was Bret Dunkelberger, an adult in his 30s who has several medical conditions and behavioral disorders, including severe autism, according to court records.

He lives with his mother, Kathleen Dunkelberger, a direct service provider who formed a corporation, Bret’s Adventure, that has been approved by a county agency to provide him care, according to an appellate court summary of the case. The court opinion from February described Kathleen Dunkelberger, who is also a registered nurse, as an officer and employee of the company.

“Because the two reside in a rural area, it is hard to secure and retain care providers,” the appelate court’s summary said.

The other case involved a similar situation. The plaintiff was Patrick Errickson, an adult in his 30s with several medical conditions, including autism, according to court records. The court’s summary described him as living with his parents. They also are direct service providers and also formed a corporation, Patrick’s Progress, that a county agency has approved to care for him.

“Errickson has significant needs; they reside in a rural area; and it is hard to secure and retain care providers,” according to the court’s summary. “Errickson is quite large, and potential providers can be intimidated.”

Errickson and his parents had, since before 2019, spent time each year — including the entire months of November through March — in Florida, according to court records. In legal filings, an attorney for Patrick Errickson said the practice allowed him “to maintain the physical activity and socialization set forth in his” individual support plan, and it “diminished the negative behaviors resulting from ‘cabin fever’ during the winter months indoors in rural Pennsylvania.”

In each case, the plaintiffs successfully challenged the department’s enforcement of the weekly work-hour rule and the travel restrictions.

After the decisions, other groups got involved.

In March 2026, six associations joined together, urging Commonwealth Court to change the status of the Dunkelberger opinion so it would set a precedent for others across the state. Doing so would “help to provide clarity and predictability” and “avoid duplicative litigation over the same issues in the future,” according to their attorney, Michael Oliverio.

Combined, the organizations said they represent providers in every county in the state, who serve the majority of Pennsylvanians receiving home- and community-based services under the state’s Medicaid waiver programs.

Joseph Kelley III, the attorney for the two plaintiffs, also wanted the opinions to set a precedent, saying the outcome had “a potential direct impact on the lives of tens of thousands of” people with intellectual disabilities and autism spectrum disorder. His filings in each case included 10 letters of support from groups and individuals.

In early May, Commonwealth Court approved having the opinions
set a precedent.

But the fight over the issue wasn’t over.

Growing opposition

The Shapiro administration rolled out changes in response to the court rulings for people in the participant-directed services models, saying agreements signed prior to May 8 would be considered invalid.

For the weekly hour limit, Cwalina said, “there is an exception for providing care in emergency circumstances.” During her video presentation in July, Ahrens talked about a benefit of the limit, saying “individuals receiving care only from family members with no access to nonfamily members can result in significant loneliness.”

The administration also addressed the travel issue.

When Commonwealth Court issued its opinions earlier this year, the travel policy allowed up to 90 days of services, and these did not need to be in a bordering state, according to court records in the Dunkelberger and Errickson cases.

But under the changes the Shapiro administration has rolled out, waiver-funded services generally must occur within Pennsylvania or a neighboring state for people covered by the new policy. Cwalina added that there are exceptions in other states for medical treatment, and that beneficiaries are still “free to travel like any other Pennsylvanians.”

During her video presentation in July, Ahrens acknowledged the travel limitation is “a real pain point for some of you.”

But she said the court decisions removed “any limitation on the length of time that someone can receive services in another state, which creates pretty major risks related to monitoring of health and safety, and monitoring of services.” She added the federal government has raised concerns about “the frequency of on-site monitoring,” and she said the state needs to limit travel until it has assurances that participants and services “can be effectively monitored on site and in person.”

During a Medical Assistance Advisory Committee meeting in late May, multiple people voiced concerns about the Shapiro administration’s approach. Kathleen Dunkelberger was one of them.

She has objected in other ways. In one July email to state officials, she sent what she called “a formal demand” to “immediately cease using my son’s name, circumstances” or lawsuit “as justification for imposing new contractual restrictions on Pennsylvanians with disabilities and their families.”

She’s glad others are also objecting. She thinks the court cases for her son and Patrick Errickson sent an important message.

“People needed this victory to know that you can stand up for what’s right,” she told Spotlight PA. “You can stand up for justice, even against Goliath.”

In mid-August, six different organizations signed a letter urging the Shapiro administration “to pursue these changes through formal rulemaking.” These same organizations had filed the brief in support of having the Dunkelberger case set a precedent.

But the rollout of the policies continued. A Department of Human Services spokesperson said, as of early September, more than 8,300 beneficiaries or their delegates had submitted updated, signed agreements — 93% of those required to do so.

There’s been conflict over that process. People who signed agreements but noted they had reservations about doing so were told they were invalid and needed to sign new ones by Sept. 28, according to the Public Interest Law Center lawsuit.

For now, some people with disabilities and their relatives are hoping that litigation will bring another legal victory.

“These families are very desperate to keep their loved ones at home and in the community,” said Gray, the Public Interest Law Center attorney. She said the state’s actions have made the situation “more precarious” and “more desperate” for them.

___

This story was originally published by Spotlight PA and distributed through a partnership with The Associated Press.