History of addiction doesn’t automatically mean people are disabled, federal judge rules

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A history of addiction doesn’t automatically mean a person is disabled and people hoping to be protected by federal law must prove their disability on a case-by-case basis, a federal judge ruled this week in a lawsuit involving Costa Mesa.

If upheld, the March 4 ruling by U.S. District Court Judge James V. Selna could fundamentally change the way cities regulate sober living homes that have come to dominate many neighborhoods in Southern California.

Selna’s order undercuts arguments from sober living operators who say that everyone with a history of addiction is automatically entitled to legal protection — and that privacy laws forbid them from sharing residents’ personal details that might prove disability.

It’s a major win for Costa Mesa, which has been waging a lonely and costly battle over the city’s tough new zoning laws aiming to control the growth of sober living and other group homes.

“The court’s ruling once again validates Costa Mesa’s decision to adopt reasonable rules and push back against bogus lawsuits by abusive operators who benefit financially from exploiting people suffering from addiction while also disrupting our community,” said Mayor Katrina Foley by text.

“The entire city council, and I as mayor, remain steadfast in our commitment to protect all residents, including those exploited by unscrupulous operators of sober living homes.”

Casa Capri filed suit against Costa Mesa after it was denied city permits to house up to 28 women in eight units. The company argued that it lost money because it was forced to close homes, and that Costa Mesa’s rules discriminate against the disabled, a violation of the federal Americans with Disabilities Act and Fair Housing Act.

A crux of the dispute was who exactly is disabled, and how that status is established. Since Casa Capri wouldn’t provide detail on that, the judge granted the city’s motion for summary judgment, which ends the case.

But the fight is not over.

“We will be appealing this latest order,” said Isaac R. Zfaty, an attorney for Casa Capri, via email.

“As with the other cases that our team has filed against Costa Mesa (and other local municipalities) as a result of the myriad violations of our clients’ rights, we believe that there has been erroneous applications of the law by the District Court.

“We are confident that the 9th Circuit Court of Appeals will reverse this latest decision.”

Meantime, Costa Mesa will pursue Casa Capri to recover all its costs, said attorney Sy Everett of Everett Dorey LLP, which represents the city.

Costa Mesa’s zoning rules prohibit sex offenders, violent felons and drug dealers from operating sober homes. The city also requires that such homes provide 24/7 supervision of clients, mandate a minimum 650-foot separation between facilities, and require a special city permit, which operators say has been virtually impossible to get.

Everett has been defending Costa Mesa in six similar suits, and the city has similar motions for summary judgment pending in four of them.

So far, Costa Mesa has prevailed in two: One, filed by Yellowstone Women’s First Step House, which went before a jury; and this one, filed by Casa Capri, which was tossed by the judge.

“The Court’s ruling is another clear victory for Costa Mesa and validates the city’s ordinance as fair and just,” said Everett. “As the prevailing party, Costa Mesa will recover all costs associated with this lawsuit. Costa Mesa will request that the remaining lawsuits be dismissed to put an end to this meritless litigation.”

The legal fight so far has cost Costa Mesa some $7 million, roughly 4% of the city’s annual budget.

The Southern California News Group has spent years probing deaths, sexual assaults, drug use and illegal paying-for-patients in California’s loosely-regulated addiction treatment industry, dubbed the Rehab Riviera.

Orange, Los Angeles, Riverside and San Bernardino counties have more than half of California’s licensed addiction rehabs, and many more for-profit sober living homes, which are unlicensed and unregulated groups of people just trying to live substance-free lives together.

Costa Mesa has one of the highest concentrations of such facilities in the state — a function of reasonably-priced homes close to the beach — and neighbors argue that the homes often generate illegal activity and fundamentally alter the character of communities.

Indeed, the city battled Casa Capri’s allegations by charging that it ran afoul of the law in an eye-popping “unclean hands” defense. Casa Capri couldn’t recover any damages from the city because its business operations were “illegally conducted in the first place,” the city argued.

Sworn testimony taken last year alleged that Casa Capri took illegal referral fees, directed sober living clients to an affiliated outpatient treatment program in exchange for 20 percent of billing proceeds, and allowed unauthorized people to administer medications.

Testimony also alleged that Casa Capri got kickbacks from a urine-testing operation and participated in insurance fraud by sending urine samples for expensive analysis, whether or not initial tests found drugs were present, according to the city’s filing.

Casa Capri’s owner and others have said they’ve done nothing wrong.

Many cities are grappling with an explosion of addiction treatment centers and sober living homes, but are reluctant to regulate them for fear of lawsuits. Costa Mesa may be blazing a legal trail that they can follow.

Indeed, the County of Orange has adopted its own version of Costa Mesa’s zoning rules, and authorities hope other cities will follow the lead.

Testimony in the Casa Capri case established that sober living homes have been closing in Costa Mesa and opening up in nearby communities that don’t have such strict laws.