K.W. v. Armstrong: court rules Idaho's secret Medicaid budget tool for adults with developmental disabilities violated due process
What happenedThe ACLU of Idaho brought a class action, K.W. v. Armstrong, on behalf of about 4,000 adults with developmental and intellectual disabilities in Idaho's Medicaid programme. Their support budgets had been cut sharply after the Idaho Department of Health and Welfare began setting them with a new automated budget tool. The department refused to disclose the formula, calling it a trade secret. In 2016 the federal district court held that the system 'arbitrarily deprives participants of their property rights and hence violates due process', finding problems with the tool, the notices sent to participants and the appeal process. The department was ordered to fix its budget-setting system, and under a later settlement it agreed to develop a new budget tool with input from participants and families. Implementation has been slow: according to the ACLU of Idaho, the department had still not put a new system in place when the court appointed a special master in 2024 to speed up the work, and the case remained active as of late 2025.
Failure modeA secret, inadequately validated budgeting formula cut disability support for thousands of people. They could neither see nor effectively challenge how their budgets were calculated.
What might have helpedThe court's findings suggest that disclosing how budgets are calculated, testing the tool to confirm it reflects people's assessed needs, and offering a real appeal with a human review could have prevented arbitrary cuts.
Partly mitigated Since thenUnder a class settlement approved in 2016, Idaho's Department of Health and Welfare agreed to build a new budget system (a 'supports budget model') with input from the ACLU, participants and families. It also agreed to let people see their assessment documents, fund representatives for budget appeals, allow increases for documented health or safety needs, and keep each participant's highest past budget in place until the new model is ready.
Still openThe ACLU of Idaho says the state has still not put a fair new system in place, and in 2024 the court appointed a Special Master to speed things up. The department's own page describes the changes as still being worked on. Participants are protected by frozen budgets rather than a fixed tool.
LessonThe case suggests that a court order to rebuild an automated tool can take years longer than planned. The interim measures, such as disclosure, funded appeals and frozen budgets, did more for the people affected than the promised new model has so far.
Sources: acluidaho.org · healthandwelfare.idaho.gov
Updates: 2026-09-30: The ACLU of Idaho reports that Idaho Medicaid still had not deployed a compliant replacement budget tool years after the ruling and settlement; a special master was appointed in 2024, and the case was still active as of late 2025.