DAUGHERTY et al v. ROOB et al
Filing
371
ORDER denying 278 Plaintiffs' Motion for Leave to File First Amended Complaint; granting 281 Defendants' Motion for Partial Summary Judgment; denying 293 Plaintiffs' Second Motion for Partial Summary Judgment; and granting 353 and 355 the parties' motions for leave to supplement the summary judgment record. See Order for details. Signed by Judge Sarah Evans Barker on 4/20/2011. (PGS)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
Mary Daugherty et al.,
Plaintiffs,
vs.
Gargano et al.,
)
)
)
)
)
)
)
)
1:06-cv-00878-SEB-DML
Defendants.
ORDER
Plaintiffs brought this lawsuit pursuant to 42 U.S.C. § 1983 for alleged due process
violations associated with the procedures utilized by Defendants in processing Medicaid
applications. Importantly for purposes of the various motions presently before the Court
[Docket Nos. 278, 281, 293], Plaintiffs have brought this action against Defendants in
their official capacities as Secretary of the Family and Social Services Administration
(“FSSA”) and Director of the Office of Medicaid Policy and Planning (“OMPP”),
respectively. By stipulation, the parties have agreed to the certification of two classes:
Class 1 originally included “[a]ll current and future applicants for or recipients of
Medicaid with a ‘spend down,’ whose income exceeds program eligibility standards.”
[Docket No. 144]. The stipulation included Plaintiffs claims for relief for Class 1 under
two theories: (1) that Defendants’ standard notices (used to deny, reduce or terminate
benefits due to excess income) violate Due Process; and (2) that Defendants’ rules and
interpretations of Defendants’ standard for counting incurred medical expenses violate
Plaintiffs’ rights under Due Process and federal law. Id. Class 2 includes “all current and
future Medicaid recipients who have received or will receive a notice of action to reduce
or terminate benefits.” The parties stipulate that Plaintiffs’ claims for relief for Class 2
relate to a single theory: that “Defendants routinely violate the rights of beneficiaries to
have benefits continued upon appeal of an adverse action under Due Process and federal
law.” Id.
The factual underpinnings of this case were laid out in prior rulings and generally
are not in dispute here. See Daugherty v. Roob, 2009 U.S. Dist. LEXIS 27777,
1:06-cv-878-SEB-DML, at *1-6 (S.D. Ind. March 31, 2009). Briefly summarized to
facilitate a clear understanding of the instant dispute, the facts reveal that, at the time this
lawsuit was originally filed in 2006, Defendants had a policy known as the “spend-down
program” by which an individual who otherwise met the eligibility requirements for
Medicaid but whose monthly income exceeded the income standard could “spend-down”
his or her excess monthly income through incurred medical expenses. In 2006,
individuals obtaining benefits through the spend-down program were required to provide
verification that their incurred medical expenses exceeded their monthly spend-down
obligation. In June 2008, FSSA changed its policy relating to the spend-down program.
Specifically, pursuant to the 2008 policy, applicants were no longer required to show
ongoing medical expenses in excess of their spend-down limit.
FSSA is obligated, pursuant to 42 C.F.R. § 431.230, to maintain the benefits of a
2
recipient who files a timely appeal after receiving a notice of either the reduction or
termination of benefits. Plaintiffs allege that Defendants consistently fail to implement
this policy in a manner comporting with due process. Although Plaintiffs challenge
various aspects of Defendants’ practices relating to the proper maintenance of benefits
pending appeal, their focus is two-fold: First, they challenge the language of the notices
sent to members of Class 2 as insufficient to apprise those individuals of their appeal
rights and the method by which benefits may be maintained while that appeal is pending.
Second, Plaintiffs challenge FSSA’s reliance on a computer program, which utilizes a
default setting to terminate benefits on the “effective day” unless a caseworker expressly
intervenes in the event the applicant files a timely appeal. Defendants admit that there
have been instances in which benefits were not properly maintained despite the fact that
an applicant had filed a timely appeal. However, they assert that they are engaged in an
“on-going self-corrective process that has resulted in measurable improvement” in this
regard.
On March 31, 2009, the Court granted in part and denied in part the parties’
motions for summary judgment on Class 1 issues. [Docket No. 185]. Because, as
discussed above, Defendants made a policy change in June 2008 that “eliminated the
requirement of showing proof of ongoing or anticipated medical expenses in order to be
enrolled in the spend-down program,” the Court entered judgment in favor of Defendants
“on all Class 1 issues on the ground of mootness, except for the claims of Class 1
members whose applications for spend-down enrollment were denied between the filing
3
of the Complaint and FSSA’s adoption of its new spend-down enrollment policy in June
2008.” Id. at 5, 18.
Judgment on liability was granted in favor of Class 1 Plaintiffs “on the issue of the
legality of Defendants’ notices and standards that were employed to deny Class 1
members’ applications for spend-down enrollment between the date that the Complaint
was filed and FSSA’s adoption of the June 2008 policy.” Id. at 25-26. The Court entered
no findings with regard to the Class 2 claims because, in light of the FSSA’s
modernization effort taking place at that time, we surmised that the summary judgment
briefing was likely out-of-date by the time a ruling would be made. Therefore, we denied
the parties’ motions as moot and directed them to:
confer with the magistrate judge on developing a plan for further
proceedings, including obtaining current data and the status regarding
FSSA’s appeals processing and, if necessary, the resubmission of these
issues to the Court. The Court also direct[ed] the parties to clarify formally
whether Class 2 issues encompass FSSA’s administration of appeals of
adverse actions only in spend-down cases or more broadly to include
FSSA’s adverse actions in all Medicaid matters. If the former, the parties
should clarify whether the class includes adverse actions pertaining only to
enrollment eligibility before the 2008 changes or includes adverse actions
regarding other eligibility factors.
Id. at 29.
On November 15, 2010, Plaintiffs filed a Motion for Leave to File First Amended
Complaint. [Docket No. 278]. In support of that motion, Plaintiffs maintained that over
the course of the last four years since their original complaint was filed, Plaintiffs have
discovered that Defendants “took several actions to curtail appeal rights of Medicaid
4
beneficiaries.” Pl.’s Br. at 3. In light of the quickly approaching May 9, 2011 trial date,
Plaintiffs have proposed that the Court address their claims for injunctive relief prior to
trial but defer consideration of their new claims until after trial. For the reasons explained
below, Plaintiffs’ request for leave to amend is DENIED.
On November 22, 2010, Defendants filed a Motion for Partial Summary Judgment.
[Docket No. 281]. Defendants contend that the remaining members of Class 1 are
entitled to no relief and that any recovery on the part of the Class 2 plaintiffs should be
limited to prospective injunctive relief. Plaintiffs oppose Defendants’ motion suggesting
that this Court order FSSA to re-issue notices to members of both classes. For the
reasons detailed below, Defendants’ motion for partial summary judgment is GRANTED.
On December 2, 2010, Plaintiffs filed a Second Motion for Summary Judgment,
[Docket No. 293], seeking summary judgment on eight “points” relating to the notices of
adverse action used at the time of briefing, Defendants’ alleged failure to properly
maintain benefits pending appeal, and Defendants’ alleged failure to consider appeal
requests as timely in various circumstances. Defendants oppose Plaintiffs’ motion on the
various grounds as discussed in more detail below. For the reasons explained below,
Plaintiffs’ Second Motion for Summary Judgment is DENIED.
Legal Analysis
Our analysis of each of the parties’ pending motions is set out below. However, as
an initial matter, we note that the merits of Plaintiffs’ claims are consistently undermined
by the fact that the practices challenged by Plaintiffs have, throughout the almost five
5
years since this case was originally filed, been in a state of flux. This leaves Plaintiffs in
the unenviable position of either arguing against policies that have already been changed,
thereby mooting their arguments or continuously re-creating their lawsuit. Although we
are sympathetic to Plaintiffs’ dilemma, as with plaintiffs generally, they must at some
point commit to a theory of their case, and when that finally occurs, matters outside of the
asserted theories of relief are beyond our purview. See, e.g., Hays v. General Elec. Co.,
151 F. Supp. 2d 1001, 1006 (N.D. Ill. 2001).
I.
Plaintiffs’ Motion for Leave to Amend Complaint
As referenced above, Plaintiffs first requested leave to amend their complaint on
November 15, 2010 – more than four years after filing their original complaint and only
months before this case is set for trial. Plaintiffs’ opening brief fails to cite any authority
or provide any compelling reason to grant such leave. Indeed, it was not until reading the
proposed amended complaint itself, which was attached as an exhibit to Plaintiffs’ brief,
that we determined that Plaintiffs are seeking to add claims against ten new defendants in
their individual capacities as well as monetary damages for the harm allegedly caused by
Defendants to members of Classes 1 and 2. In addition, Plaintiffs seek in their amended
complaint to add James Bowman as an additional class representative based on events
that allegedly occurred in 2009-2010.
Although Federal Rule of Civil Procedure 15(a)(2) directs that leave to amend a
complaint be freely given, Rule 16(b)(4)’s more exacting “good cause” standard applies
where, as here, a party seeks to amend pleadings outside the period specified in the case
6
management plan. Tschantz v. McCann, 160 F.R.D. 568, 570-71 (N.D. Ind. 1995).
Pursuant to the case management plan, the parties’ deadline “to amend the pleadings
and/or to join additional parties” was March 31, 2008. [Docket No. 135]. Plaintiffs have
offered no reason for their failure to seek to amend the complaint prior to that deadline,
let alone good cause on the basis of which the Court should allow amendments at this late
stage in the litigation.1 Furthermore, even if Plaintiffs were able to establish good cause,
we find that allowing Plaintiffs to amend their complaint in the substantial form proposed
by them here on the eve of trial and after years of extensive and costly discovery by the
parties, Defendants would be greatly prejudiced. Therefore, Plaintiffs’ Motion for Leave
to File First Amended Complaint is denied.
II.
Defendants’ Motion for Partial Summary Judgment
Defendants seek partial summary judgment establishing that the remaining
members of Class 1 are not entitled to any relief, and further that only prospective
injunctive relief is available to Class 2, pursuant to 42 U.S.C. 1983 and the Eleventh
Amendment.2 Plaintiffs respond that the Court can and should order Defendants to re-
1
In their reply brief, which, as Defendants point out, is an improper place to raise new
arguments, Plaintiffs reference regarding Defendants’ efforts to “stonewall discovery” and
withhold critical information. However, such complaints assuming they are true are more
appropriately addressed in the context of resolving discovery disputes, not in a motion to amend
the pleadings.
2
Defendants have argued alternatively that many members of both classes were not
harmed at all based on Defendants’ alleged constitutional violations. Because we agree with
Defendants with respect to their primary argument, we have not addressed this alternative
theory.
7
issue notices to members of both classes in order to mitigate any harm suffered as a result
of Defendants’ alleged due process violations.
The Eleventh Amendment bars a federal court from awarding damages resulting
from a § 1983 claim against any state official sued in his or her official capacity.
Edelman v. Jordan, 415 U.S. 651, 663 (1974) (“when the action is in essence one for the
recovery of money from the state, the state is the real, substantial party in interest and is
entitled to invoke its [Eleventh Amendment] sovereign immunity from suit even though
individual officials are nominal defendants”)(quoting Ford Motor Co. v. Dep’t of
Treasury, 323 U.S. 459, 464 (1945)). However, prospective relief directed at preventing
future constitutional violations is not barred. Ex parte Young, 209 U.S. 123 (1908). This
exception “permits federal courts to enjoin state officials to conform their conduct to
requirements of federal law, notwithstanding a direct and substantial impact on the state
treasury.” Milliken v. Bradley, 433 U.S. 267, 289 (1977).
In terms of exercising jurisdiction over official capacity defendants, the Seventh
Circuit in Lett v. Magnant explained these principles as follows:
Personhood is an essential element of a § 1983 claim, and in Will v.
Michigan Department of State Police, 491 U.S. 58, 105 L. Ed. 2d 45, 109 S.
Ct. 2304 (1989), the Supreme Court held that a state is not a “person” for
purposes of § 1983 and therefore cannot be sued in its own name. This
reasoning applies to arms of the state, such as state agencies, as well. Id. at
70. Because this action is for prospective relief, however, we reach a
different result in regard to the official capacity defendants. As Will
observed, ‘of course a State official in his or her official capacity, when
sued for injunctive relief, would be a person under § 1983 because
‘official-capacity actions for prospective relief are not treated as actions
against the State,’” id. at 71 n.10 (quoting Kentucky v. Graham, 473 U.S.
8
159, 167, 87 L. Ed. 2d 114, 105 S. Ct. 3099 n.14 (1985)), a distinction
which arises out of Ex parte Young, 209 U.S. 123, 52 L. Ed. 714, 28 S. Ct.
441 (1908) (actions for prospective relief against state officials not within
bar of Eleventh Amendment). See Wisconsin Hospital Ass’n v. Reivitz, 820
F.2d 863, 867 (7th Cir. 1987) (“A suit under Ex parte Young envisages a
situation in which state officials are being told in effect to leave the plaintiff
alone. The relief sought is against the officials; the state treasury is not
directly affected.”); see also Edelman v. Jordan, 415 U.S. 651, 664-65, 39
L. Ed. 2d 662, 94 S. Ct. 1347 (1974) (unlike Ex parte Young, where relief
was prospective only, suit for retroactive relief against state officials is in
essence one against the state because funds to satisfy award must inevitably
come from the general revenues of the State).
965 F.2d 251, 255 (7th Cir. 1992).
In determining the permissible scope of the relief sought by Plaintiffs, the Court
engages in a “straightforward inquiry into whether [the] complaint alleges an ongoing
violation of federal law and seeks relief properly characterized as prospective.” Idaho v.
Coeur d’Alene Tribe of Idaho, 521 U.S. 261, 296 (1997)(O’Connor, J. concurring)).
Here, Defendants, quite correctly, point out that any request for damages or
retroactive payment of Medicaid benefits to either class is barred by § 1983 and the
Eleventh Amendment. See McVicker v. Hartfield, 2009 U.S. Dist. LEXIS 74848, at *2324 (S.D. Ohio, Aug. 6, 2009) (“Because an injunction to provide funds to pay or
reimburse plaintiffs for [past acts of denial of eligibility for benefits or past refusals to
pay benefits] would require payment from the state treasury, plaintiffs’ claims for benefits
are barred by the Eleventh Amendment.”). Plaintiffs maintain, however, that the only
relief they seek is a requirement that new notices be issued by Defendants which fully
comply with due process requirements by providing class members a meaningful
9
opportunity to be heard – an opportunity that was previously unavailable to them.
The Supreme Court addressed the availability of notice relief in Green et al. v.
Mansour, 474 U.S. 64 (1985). In that case, two classes of plaintiffs brought a lawsuit
against the Michigan Department of Social Services claiming that the defendant’s
calculations of benefits under the federal Aid to Families with Dependent Children
violated federal law. Before the case was heard, however, Congress amended the relevant
statutes effectively mooting the plaintiffs’ claims. The district court thus granted the
defendants’ motions to dismiss and held that because the remaining claims for declaratory
and notice relief related solely to past violations of federal law, they were barred by the
Eleventh Amendment. The Supreme Court agreed with the district court’s holding,
explaining that “[b]ecause ‘notice relief’ is not the type of remedy designed to prevent
ongoing violations of federal law, the Eleventh Amendment limitation on the Art. III
power of federal courts prevents them from ordering it as an independent form of relief.”
474 U.S. 64, 71 (1985). The Court expressly distinguished the type of notice relief
requested in Mansour, i.e. where there was no continuing violation of federal law to
enjoin, with notice relief that is “ancillary to the grant of some other appropriate
[prospective] relief.” Id.
In our March 31, 2009 order, we determined that the claims of the majority of the
Class 1 members were moot as a result of the June 2008 policy change enacted by
Defendants. Therefore, as in Mansour, we hold here that the notice relief that Plaintiffs
seek with respect to the remaining members of Class 1 is barred by the Eleventh
10
Amendment and, accordingly, no genuine issue of material fact related to Class 1 remains
for determination at trial. With regard to potential relief for members of Class 2, notice
relief may be warranted following trial but only to the extent that it would constitute a
potential ancillary remedy.
III.
Plaintiffs’ Second Motion for Partial Summary Judgment
Plaintiffs’ Second Motion for Partial Summary Judgment reflects the ongoing
difficulty in this lawsuit referenced earlier. Despite the Court’s prior order limiting the
relevant issues in the case to those raised by the Class 2 plaintiffs as well as a sub-set of
Class 1 plaintiffs (specifically, those whose claims fail for lack of remedy as previously
discussed), Plaintiffs’ motion for summary judgment relies on new evidence and claims
unrelated to the continuation of benefits during an appeal of an adverse benefits
determination.3 As noted above, efforts at this late stage in the litigation to expand the
issues of the case are improper. Therefore, regarding the eight “points” upon which
Plaintiffs seek summary judgment, only the following arguably remain pending as a part
of this litigation: (1) the adequacy of the appeal notifications sent to Class 2 plaintiffs as
pertaining to their right to appeal and to the continuation of benefits pending appeal; (2)
whether Defendants violate the Due Process rights of members of Class 2 when they fail
3
Specifically, Plaintiffs assert that Defendants’ standard forms of Notice “remain as
deficient as ever.” However, with the exception of the claims discussed above, the Court has
previously determined that the claims of Class 1 were moot as a result of Defendants’ June 2008
policy change. By attempting to insert these issues back into the case, Plaintiffs in effect ask that
we reconsider that order in light of developments which have occurred thereafter. We decline to
do so since a ruling otherwise would require a substantial expenditure of resources by both the
parties and the Court and would result in undue prejudice to Defendants.
11
to maintain benefits pending appeal for those who file timely appeals; and (3) whether
Defendants violate the rights of members of Class 2 when they fail to consider an appeal
request as timely, for purposes of continued benefits pending appeal, in several
circumstances cited by Plaintiffs.4
As to these issues, however, Plaintiffs have failed to establish that no genuine
issues of material fact remain. First, the lack of citation to any legal authority in
Plaintiffs’ brief as well as the limited evidence submitted by Plaintiffs provides an
insufficient basis on which the Court is empowered to grant judgment as a matter of law.
We note, for example, that Plaintiffs’ entire argument relating to the rights of members of
Class 2 specifically is confined to the final three and a half pages of their 21 page opening
brief. See Pls.’ Br. at 18-21. In that scant discussion, Plaintiffs attack the reliability of
FSSA data, but then rely on it to show that Defendants’ attempts to modernize its
procedures pertaining to maintenance of benefits have failed. Even without regard to the
evidence proffered by Defendants in an effort to show their improvement in their
procedures in this regard, Plaintiffs have failed to establish a lack of genuine issues of
material fact such that summary adjudication of this issue is proper and trial can be
4
Specifically, Plaintiffs challenge Defendants’ practice of considering an appeal untimely
in the following circumstances: (1) the appeal request arrives within three (3) days following the
effective date of the action; (2) the appeal request arrives on the next business day when the
deadline for the appeal falls on a weekend or holiday; (3) the appeal request arrives by mail with
a postmark that is prior to the effective date of the action; (4) the appeal request arrives within 10
days of the date that the recipient was provided with the notice of action; (5) the agency receives
an appeal request from a recipient whose benefits have been reduced or terminate but for whom
the agency has no record of having issued a Notice of Action.
12
avoided. In addition, as was true at the time of our March 31, 2009 Order, the initial
briefs filed by the parties reflect facts that are no longer accurate, to wit, relating to
notices of benefits reduction or termination at times when Defendants’ practices were
otherwise. As Plaintiffs acknowledged in their reply brief, “Defendants . . . announced a
major policy change on the day that its [responsive] summary judgment brief on the topic
was due.” Pls.’ Reply at 8. Both parties filed motions at the end of March seeking leave
to supplement the summary judgment record based on updated evidence. [Docket Nos.
353, 355]. The briefing regarding these motions has been completed only in the past few
days and includes arguments regarding the ultimate issues to be decided at trial.5 Third,
the parties continue to conduct discovery the results of which may bear on the issues
raised in Plaintiffs motion. See Docket No. 359. Thus, we find that the issues Plaintiffs
have raised should be resolved at trial and any ruling await the full development of all
remaining issues on their merits. Therefore, Plaintiffs’ Second Motion for Partial
Summary Judgment is DENIED.
Conclusion
For the reasons stated above, Plaintiffs’ Motion for Leave to File First Amended
Complaint [Docket No. 278] is DENIED, Defendants’ Motion for Partial Summary
5
The majority of the evidence that the parties seek to add to the summary judgment
record is unopposed. Furthermore, we find Plaintiffs’ reason for failing to previously
supplement the record, i.e. the need to evaluate 1,200 computer files that were difficult to
decipher, persuasive. Thus, although we have ultimately decided to deny Plaintiffs’ Second
Motion for Summary Judgment, the parties’ motions for leave to supplement the summary
judgment record are granted.
13
Judgment [Docket No. 281] is GRANTED, and Plaintiffs’ Second Motion for Partial
Summary Judgment [Docket No. 293] is DENIED. The parties’ motions for leave to
supplement the summary judgment record [Docket Nos. 353, 355] are GRANTED.
IT IS SO ORDERED.
04/20/2011
Date:_________________________
_______________________________
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana
14
Copies to:
Harry Kennard Bennett
ken@hkbennettlaw.com
Anna May Howard
SEVERNS & STINSON LAW FIRM
amh@severns.com
Ryan Michael Hurley
BAKER & DANIELS - Indianapolis
ryan.hurley@bakerd.com
Lindsay R. Knowles
SEVERNS & ASSOCIATES
lringler@severns.com
Harmony A. Mappes
BAKER & DANIELS - Indianapolis
harmony.mappes@bakerd.com
Scott Richard Severns
SEVERNS & ASSOCIATES
sseverns@severns.com
Robert K. Stanley
BAKER & DANIELS - Indianapolis
robert.stanley@bakerd.com
15
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?