Federal court finds Indiana DHS unlawfully discriminated against people with disabilities

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A federal district court has halted the state from reclassifying addiction recovery homes as commercial buildings, saying that doing so unlawfully treats people with disabilities differently in housing.

In orders this week, U.S. District Court Judge Tanya Walton Pratt ruled that the Indiana Department of Homeland Security, or DHS, violated the Fair Housing Act, Americans with Disabilities Act and Rehabilitation Act when it attempted to reclassify several nonprofit recovery homes as commercial structures, meaning they would be subject to stricter and more expensive safety requirements.

The plaintiffs in the cases, Next Step Recovery Home Inc., Inspiration Ministries Inc., Harmony Home of Huntington Inc. and Place of Grace Inc. — nonprofits that own and operate transition homes for those struggling with addictions or disabilities — argued that a reclassification was a clear violation of federal discrimination laws because they compared the recovery homes to foster or nuclear family homes, which are typically classified as residential structures.

Pratt sided with the plaintiffs for several reasons, including a lack of evidence from DHS to support that recovery group homes pose greater fire safety risks than foster or nuclear family homes and DHS’s vague and inconsistently applied definition of “tenants.”

“We are very gratified by these results,” Ken Falk, legal director of the American Civil Liberties Union of Indiana, which represented the nonprofits, said in a press release on Wednesday. “Discrimination against people with disabilities has no place in our communities, and we are pleased the Court recognized these unlawful actions for what they were.”

DHS did not respond to The Indiana Lawyer’s request for comment before Thursday’s deadline.

Different classifications

Indiana law divides buildings into two categories: Class 1 and Class 2.

A Class 1 structure typically includes commercial buildings, including offices and apartments. These structures are required to meet stricter construction and safety standards.

A Class 2 structure includes residential buildings such as family homes.

According to court documents, DHS had previously classified most of the recovery homes involved in the lawsuits as Class 2 structures because families had resided in them.

But after the nonprofits purchased the homes and prepared to open them, the nonprofits were informed by inspectors that the buildings would now be considered Class 1 structures and must have sprinkler systems installed before operating, which the nonprofits said would be very costly. Variances for specific safety measures can be requested if there’s an undue hardship.

DHS’s primary justification for classifying the recovery homes as commercial structures was fire safety.

Although Pratt recognized the importance of protecting the public from fires, she wrote that the department’s concerns about increased fire risks at recovery homes were “unfounded.”

“There is simply no evidence supporting Defendants’ assertion that fire risks are increased whenever an occupant enters a home independently of other occupants, regardless of whether all occupants must abide by the same rules while in the home and regardless of the fire safety measures actually in the home,” Pratt wrote in the orders.

Definitions

Another point of contention was DHS’s definition of “tenant.”

According to court documents, DHS determines whether an occupant is a distinct “tenant” based on whether all occupants enter into one agreement or whether each occupant enters into his or her own agreement.

But the department has struggled to use a clear definition of “tenant.”

In 2019, the district court found DHS in violation of federal disability laws in a similar case — New Horizons Rehabilitation, Inc. v. State. In that case, DHS asserted that under Indiana law, New Horizons residents — adults with intellectual and developmental disabilities — would each be considered individual “tenants.”

However, foster children, which the court and plaintiffs considered to be a comparable group, were not considered tenants; DHS did not explain the reason for the distinction, according to the court.

The court held that “[w]ithout being held to a strict definition of the word ‘tenant,'” DHS could treat adults with disabilities differently from foster children, which suggests discrimination.

Similarly to this week’s decisions, the court in 2019 also permanently enjoined DHS from classifying the New Horizons group home as a Class 1 structure.

After the New Horizons decision, DHS adopted a more “facially neutral” definition of tenant, but the court still finds issue that the department uniquely ensures that only group homes for disabled persons in residential neighborhoods are conditioned on Class 1 requirements.

According to court documents,  an occupant is an individual tenant if they enter into a formal or informal agreement with the home’s operator, independent of other occupants — which Pratt notes is the only way in which residential group recovery homes can operate.

“Defendants’ definition of ‘tenant’ is designed and interpreted to impose Class 1 building requirements on the Homes, but not similarly situated single-family residences, and there is no justification for this different treatment,” Pratt wrote.

Aside from a permanent injunction on DHS for all the homes, the court also awarded Place of Grace $206,232.11 because it was in a unique situation: It built its own homes rather than buying pre-existing ones.

Place of Grace originally planned for Habitat for Humanity of Greater Fort Wayne to build the Class 2 homes for around $230,000, but after inspectors informed the organization that the homes would be classified as Class 1 structures, the organization had to use a commercial builder, which constructed the homes for more than $500,000.