So is it illegal, then, to unnecessarily institutionalize someone? Yes. The Supreme Court held in 1999 that illegal discrimination exists when a person with disabilities is unnecessarily institutionalized. The case is called Olmstead v. L.C. The Court based its decision that unnecessary institutionalization is a form of discrimination on two rationales. First, placing people with disabilities who are capable of living in the community in institutions perpetuates the stereotypes that such individuals are unworthy or incapable of participating in community life. Second, confinement in an institution deprives the individual of participation in a broad spectrum of important activities, such as “family relations, social contacts, work options, economic independence, educational advancement, and cultural enrichment.” The Court recognized that institutionalization implies discrimination: “[T]o receive needed medical services, persons with mental disabilities must, because of those disabilities, relinquish participation in community life they could enjoy given reasonable accommodations, while persons without mental disabilities can receive the medical services they need without similar sacrifice.”
The next step in using the Olmstead decision to argue against service cutbacks is to apply it to someone already in the community, and served by the state based, for example, on a Medicaid Waiver decision that otherwise the person would be in an institution. Surely, institutionalizing this person would be unnecessary. We know that already. Just as surely, it would make no sense for the person to be compelled to enter the institution simply to invoke his or her Olmstead rights to leave.
Courts have agreed with this line of reasoning to forbid community services reductions that would result in needless institutionalization.