Justice Department retreats from landmark disability rights protections

The Justice Department is backing away from a decades-old interpretation of federal disability law that helped hundreds of thousands of Americans avoid unnecessary confinement in nursing homes, psychiatric hospitals and other institutions.

In a June 18 legal opinion, the department’s Office of Legal Counsel concluded that neither the Americans with Disabilities Act nor Section 504 of the Rehabilitation Act requires states to provide services in the “most integrated setting appropriate” to a person’s needs.

"In prohibiting discrimination on the basis of disability, neither section 504 of the Rehabilitation Act nor Title II of the Americans with Disabilities Act (“ADA”) imposed an integration mandate on states in their treatment of mentally disabled individuals. Nor does either statute authorize the responsible Executive Branch agencies to impose such a mandate," the opinion said.

The opinion directly challenges the prevailing interpretation of the Supreme Court’s 1999 decision in Olmstead v. L.C., which held that unjustified institutional isolation of people with disabilities can constitute illegal discrimination.

The Justice Department acknowledged that its new interpretation is “out of step with the common understanding” of Olmstead among federal courts. Most federal appeals courts have treated the decision as requiring community placement when it is appropriate, the affected person does not oppose it and the placement can reasonably be accommodated.

DOJ took a further step in a July 20 Federal Register notice, declaring that its longstanding Olmstead enforcement guidance is “not enforceable” and saying the department will no longer rely on it when enforcing Title II of the ADA.

The department said it plans to reconsider the guidance under the Supreme Court’s 2024 Loper Bright decision, which ended the practice of courts automatically deferring to federal agencies’ reasonable interpretations of ambiguous laws.

What has — and has not — changed

The developments are significant, but they do not erase Olmstead or repeal the ADA.

The Justice Department cannot overturn a Supreme Court ruling through a memorandum or Federal Register notice. The integration requirement also remains written into existing federal regulations, and individuals may continue bringing lawsuits alleging unnecessary institutionalization.

Even DOJ’s opinion acknowledges that states following its new reasoning could still face private Olmstead claims and that future agency action could be challenged under the Administrative Procedure Act.

What has changed is the federal government’s enforcement position.

For decades, DOJ investigations, lawsuits and settlement agreements have pressured states to expand community-based mental-health care, personal assistance, supported housing and other services that allow people with disabilities to remain outside institutions.

The new position signals that the Civil Rights Division may conduct fewer investigations, abandon pending cases or settlements, and decline to support private plaintiffs challenging cuts to community services.

“This doesn’t overturn Olmstead, the ADA, Section 504, or the integration mandate,” The Arc, a national disability organization, said in an analysis. “But it’s another serious step away from federal enforcement of community living rights.”

Why home-based services may be especially vulnerable

The timing is particularly troubling for families because states are already preparing for major reductions in federal Medicaid support.

The 2025 federal reconciliation law is expected to reduce federal Medicaid spending by about $911 billion through 2034. Although the law does not directly repeal home- and community-based services, states facing shrinking federal aid may respond by reducing optional benefits, narrowing eligibility, freezing provider payments or limiting the number of people served, according to a KFF analysis.

That distinction matters because Medicaid generally requires states to cover nursing-home care for eligible recipients, while most home- and community-based services are offered at state discretion through optional benefits and waiver programs.

Those programs may pay for personal-care attendants, respite care, supported employment, adult day services, transportation, home modifications and help with daily activities.

In a budget crisis, states may therefore find it administratively easier to restrict community programs than institutional care — precisely the imbalance that Olmstead enforcement was intended to counter.

KFF has warned that states under fiscal pressure have restricted home care in the past and could again reduce payment rates, covered services or eligibility as the reconciliation law takes effect.

DOJ says previous administrations got the law wrong

The Office of Legal Counsel argues that courts and prior administrations expanded Olmstead beyond what the Supreme Court actually decided.

According to the memo, the ruling prohibited institutionalization “without justification” but did not establish a universal requirement that states provide treatment in the most integrated possible environment.

The opinion also contends that DOJ and the Department of Health and Human Services lacked statutory authority to impose such a broad mandate through regulation.

In practical terms, the department is arguing that more than two decades of bipartisan federal policy rested on an incorrect reading of the law.

The opinion recommends that DOJ rescind its integration regulation and related guidance. It also raises constitutional questions about whether Congress could compel states to organize disability services around a federal integration requirement.

Disability-law specialists strongly dispute that interpretation.

An American Bar Association analysis noted that Congress expressly identified segregation and institutionalization as forms of discrimination when it enacted the ADA. It also said federal integration regulations predate the ADA and were part of the legal framework the Supreme Court relied upon in Olmstead.

Texas lawsuit could become a test case

The administration’s position may first be tested in Texas v. Kennedy, a federal lawsuit challenging portions of the regulations implementing Section 504.

The case initially involved a much larger coalition of states, but several have withdrawn following opposition from disability groups. As of mid-July, advocacy organizations said Alaska, Florida and Texas remained in the case.

Texas cited the new DOJ opinion shortly after it was issued, arguing that the federal government now agreed with the substance of its challenge.

The memo’s author, Principal Deputy Assistant Attorney General Lanora Pettit, previously worked in the Texas attorney general’s office.

The case could give federal judges an opportunity to decide whether the integration regulations exceed DOJ and HHS authority. Any resulting appeals could ultimately place the issue before the Supreme Court again.

Members of Congress demand reversal

One hundred Democratic members of the House and Senate sent a letter to Acting Attorney General Todd Blanche on July 22 demanding that DOJ withdraw the opinion.

They called it a “dramatic departure” from federal law, judicial precedent and decades of enforcement under Republican and Democratic administrations.

The lawmakers warned that weakening the mandate could steer people toward nursing homes, psychiatric facilities, segregated workplaces and other restrictive settings instead of helping them remain with their families and communities.

Blanche is serving as acting attorney general while also holding the position of deputy attorney general.

What families should do now

People receiving Medicaid home- and community-based services should not assume that their coverage has automatically changed. The DOJ announcements do not themselves terminate benefits, waiver eligibility or existing care plans.

Families should nevertheless watch state Medicaid notices and budget proposals closely, particularly those involving:

• Personal-care hours or attendant services;
• Waiting lists for disability waivers;
• Provider-payment reductions;
• Changes in eligibility assessments;
• Closure or consolidation of community programs;
• Proposals that make institutional placement easier than receiving care at home.

Anyone threatened with institutionalization or denied services needed to remain in the community can still seek help from a state protection-and-advocacy agency, a legal-aid organization or a disability-rights attorney.

Private Olmstead claims remain possible, but people may increasingly have to rely on those organizations rather than expecting the Justice Department to intervene.

The bottom line

DOJ has not overturned Olmstead and has not formally announced that it will refuse to enforce every aspect of the ruling.

It has, however, rejected the broad integration mandate that guided federal enforcement for decades, recommended rescinding the underlying regulations and declared that it will no longer rely on its established Olmstead guidance.

That amounts to a major federal retreat — and, as states confront Medicaid funding pressure, it could leave some of the nation’s most vulnerable residents with fewer protections against being pushed into institutions.