“Out-of-State Vendors Are Prohibited.” What SDP Consumers Need to Know About the New FMS/Regional Center Crackdown

Across California, Self-Determination Program (SDP) participants are suddenly hearing the same message:

“We cannot pay out-of-state vendors.”

remote providers outside California are prohibited,
invoices will not be paid,
DDS “won’t allow it,”
or the FMS “won’t be reimbursed.”

But here is the critical question every SDP consumer should ask:

Where exactly does the law say that?

Because when you actually read the statute and DDS directives, the situation becomes far more complicated — and many consumers are now being subjected to service interruptions without formal denials, without due process, and without any meaningful way to challenge the decision.

The Law They Are Citing: WIC §4519

Regional Centers and FMS entities are increasingly invoking Welfare & Institutions Code §4519.

But §4519 was historically written to govern:

out-of-state placements,
institutional settings,
residential programs,
and services physically rendered outside California.

The statute repeatedly discusses:

residential placements,
transition back to California,
and border-state exceptions.

That structure matters.

Because it does not read like a modern statute about Zoom-based remote services delivered to a California resident sitting in their own home.

Then DDS Issued the November 22, 2023 Remote Services Directive

DDS later issued a specific directive concerning SDP remote services.

And the directive explicitly states:

“the participant is physically in California at the time remote services are utilized, even when the provider is in another state.”

Read that carefully.

DDS expressly contemplated:

the participant being in California,
while the provider is in another state.

Yet the directive never says:

“out-of-state providers are prohibited,”
“DDS approval is always required,”
or “FMS providers must refuse payment.”

That omission is massive.

If DDS intended to categorically prohibit remote out-of-state providers, why did the directive not say so?

Now Comes the July 14, 2025 Memo

Regional Centers and FMS entities are now increasingly relying on a later DDS memo dated July 14, 2025: “Purchase of Out-of-State Services.”

But when you actually read that memo, it still primarily discusses:

border-area services,
camps,
proximity to California,
cost effectiveness,
and residential placements.

The memo specifically explains that:

regional center directors may approve border-area services in neighboring states,
but residential placements still require DDS approval under subdivisions (a)-(c).

Notice what the memo does not clearly say:

it does not explicitly prohibit remote providers located outside California,
it does not state that all remote services are “out-of-state services,”
and it does not directly address the contradiction with the November 22, 2023 remote-services directive.

That is the legal ambiguity now affecting consumers statewide.

What Is Actually Happening on the Ground

Consumers report a remarkably consistent pattern:

The Regional Center does not issue a formal written denial.
No Notice of Action is sent.
No appeal rights are triggered.
Instead, the FMS suddenly refuses payment.
The FMS claims DDS or the Regional Center “won’t reimburse” them.
Providers stop services because invoices are unpaid.

This creates what is effectively a constructive denial.

Services are blocked without the Regional Center openly taking responsibility for denying them.

Why This Matters

Under SDP, the FMS is contracted to perform fiduciary and payment-processing duties.

Consumers reasonably ask:

If the FMS is being paid administrative funds to process participant-authorized expenditures, can it simply invent new restrictions that do not clearly appear in statute, regulation, or the governing service directive?

Especially:

in the middle of a budget year,
after services were already approved,
and without formal due process?

These questions raise serious concerns regarding:

SDP implementation,
administrative overreach,
participant rights,
continuity of care,
and Medicaid program integrity.

Because if:

DDS allocated funds for certified services,
the participant’s budget was approved,
the service was authorized,
but payment is informally obstructed anyway,

then consumers are entitled to ask where those allocated service dollars are ultimately going.

Consumers Should Understand This Clearly

An FMS does not have authority to independently rewrite SDP eligibility rules.

A Regional Center cannot lawfully avoid due process simply by pressuring the FMS informally rather than issuing a formal denial.

And consumers do not lose their rights merely because an administrative restriction is enforced through emails and invoice refusals instead of official notices.

We Are Collecting 4731 Complaints

If your FMS or Regional Center has:

refused to pay remote out-of-state providers,
blocked previously approved services,
cited unwritten DDS policy,
refused to issue a Notice of Action,
interrupted services without appeal rights,
or warned providers they will not be reimbursed,

document everything.

Save:

emails,
invoice refusals,
reimbursement warnings,
service authorizations,
approved budgets,
and provider termination notices.

A statewide pattern appears to be emerging.

And lawmakers, DDS oversight bodies, and the public deserve to know how SDP services are being restricted in practice — not merely what appears in official directives.

This is not legal advice. This is a template for a 4731 complaint that you might draft. We recommend you send it to your Senator, to inform them about the program issues, and ask the Senator to send it to the Department. This forces the Department to keep the Senator informed about resolutions.

4731 Complaint – Unlawful Constructive Denial of SDP Services Through FMS Refusal to Process Authorized Expenditures

Complainant: [YOUR NAME]

Entities Involved:

[YOUR Regional Center]
[FMS Name: YOUR FMS]
California Department of Developmental Services (DDS) (policy implications)

STATEMENT OF COMPLAINT

I am filing this complaint pursuant to Welfare & Institutions Code §4731 regarding the unlawful obstruction and constructive denial of authorized Self-Determination Program (SDP) services through actions taken by my Financial Management Services (FMS) provider in coordination with the regional center.

My approved SDP budget and IPP authorize services that are being delivered remotely to me while I remain physically located in California. The providers at issue are located outside California.

The November 22, 2023 DDS directive concerning SDP remote services expressly contemplates circumstances in which “the participant is physically in California at the time remote services are utilized, even when the provider is in another state.” Despite this, my FMS provider has refused to process and pay authorized expenditures on the assertion that Welfare & Institutions Code §4519 prohibits payment absent DDS approval.

However:

neither DDS regulations nor the November 22, 2023 directive expressly prohibit remote providers located outside California,
no formal written denial has been issued to me by the regional center,
no Notice of Action has been provided,
no appeal rights have been triggered,
and no formally promulgated regulation has been identified requiring the FMS to refuse payment under these circumstances.

Instead, the regional center has allegedly communicated privately to the FMS provider that reimbursement may be denied if the FMS processes these expenditures. As a result, the FMS is refusing to perform its contracted fiduciary function of processing participant-authorized payments despite approved SDP funding and authorized services.

The FMS is not authorized to independently create, interpret, or enforce substantive eligibility restrictions beyond governing statute, regulation, or formally issued DDS guidance. The FMS’s role is fiduciary and administrative. By refusing payment based on an asserted interpretation of §4519 that is not expressly stated in regulation or in the 11/22/23 DDS directive, the FMS is effectively imposing its own policy and creating a constructive denial of services outside lawful due-process channels.

This conduct causes multiple harms:

interruption of authorized SDP services,
deprivation of participant choice and control,
denial of continuity of care,
obstruction of approved IPP implementation,
and withholding of already-authorized SDP expenditures without formal adjudication.

Additionally, the regional center’s apparent use of informal communications to induce payment refusals while avoiding issuance of a formal denial improperly circumvents procedural protections guaranteed to consumers under the Lanterman Act, including notice and appeal rights.

ISSUES PRESENTED

Whether the FMS exceeded its lawful role by refusing to process authorized SDP expenditures based on its own interpretation of WIC §4519.
Whether the regional center improperly caused or induced constructive denial of services through off-record reimbursement threats while declining to issue a formal denial or Notice of Action.
Whether the current enforcement posture constitutes an underground policy or rule not formally adopted through lawful regulatory procedures.
Whether participants are being deprived of due-process protections through informal administrative obstruction rather than formal service denials.

REQUESTED REMEDIES

I request:

immediate cessation of informal payment refusals absent formal written denial procedures,
written clarification identifying the specific legal authority prohibiting these expenditures,
issuance of formal notices subject to appeal rights if services are being denied,
investigation into communications between the regional center and FMS concerning reimbursement threats or directives,
confirmation that the FMS may not independently impose service restrictions absent clear statutory or regulatory authority,
and restoration/processing of authorized SDP expenditures.

I further request that DDS and the regional center clarify whether remote services delivered to California participants by out-of-state providers are categorically prohibited, and if so, identify the formal authority establishing that prohibition.

Submitted by:
YOUR NAME