The state of Florida has agreed to spend up to $27 million to settle a class action lawsuit brought by Medicaid recipients who argue they were forced into nursing homes.

The lawsuit was filed in early 2008 on behalf of approximately 8,500 elderly and disabled Medicaid recipients who allege that Florida’s Medicaid program made it prohibitively difficult to obtain funding for home- and community-based care. By doing so, they argued, Medicaid essentially coerced them into nursing homes.

The recent settlement, which was finalized in mid-September, will require Florida to spend up to $27 million to improve Medicaid recipients’ access to home- and community-based care settings. Under the terms of the agreement, the improvements must be established by June 30, 2010, the end of the current fiscal year (Fla. Medicaid Patients Settle Lawsuit with State, Miami Herald/AP, Sept. 18).

Plaintiffs argued that Florida violated principles of the Olmstead decision, the 1999 U.S. Supreme Court ruling which indicated that the unjustified institutional isolation of people with disabilities is a form of unlawful discrimination under the Americans with Disabilities Act.

The lawyers further noted that improving accessibility to home- and community-based care will save the state millions of dollars in the long run, since nursing-home care is often many times more expensive.