TALLAHASSEE, Fla. -- The state of Florida has agreed to spend up to $27 million in the next several months to resolve a lawsuit by Medicaid recipients opposed to being forced into nursing homes.

A federal court will monitor the arrangement that requires the Florida Agency for Health Care Administration and the Department of Elder Affairs to improve the way they inform Medicaid nursing home residents about making the transition from nursing homes to community-based programs.

A class action lawsuit was brought in early 2008 on behalf of 8,500 institutionalized Floridians who said the state was illegally forcing them to live in nursing homes when they should be able to live where they choose. They charged that nursing homes afraid of losing money pressured politicians to make it more difficult to qualify for community care.

The agreement calls for the improvements to be made during the fiscal year ending June 30, 2010.

It provides the court can order a trial if the state fails to comply with terms of the agreement. If the lawsuit is dismissed before a trial, the state must pay the plaintiffs, which include the AARP Foundation, Southern Legal Counsel and National Health Law Program, $400,000 to cover legal fees and expenses.

Telephone messages left for comment from the defendants were not immediately returned.

Americans who qualify for Medicaid and get sick or disabled enough to require substantial care typically have little problem gaining admission to a nursing home. However, obtaining Medicaid-supported services at home is substantially more difficult and often involves long waits.

Advocates for the elderly and disabled had counted on a 1999 Supreme Court case to change that. The Olmstead decision, as it is known, involved two Georgia women, both Medicaid beneficiaries with mental retardation who wanted community-based services, but were refused and were treated in institutions.

The high court said unjustified isolation of the disabled in institutions amounted to discrimination under the Americans with Disabilities Act. It ruled that states must provide community services if patients want them, if they can be accommodated and if it's appropriate.

Medicaid is the state-federal partnership that provides health coverage and nursing home care to the poor.

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