NOVAK et al v. INDIANA FAMILY AND SOCIAL SERVICES ADMINSTRATION (FSSA) et al

Filing 94

CLOSED REMANDED to Marion Superior Court pursuant to 28 U.S.C. § 1367(c). Signed by Judge Richard L. Young on 2/29/2012.(PG)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

RAYMOND C. NOVAK and ROSEM ARIE )
NOVAK,
)
Plaintiffs,
)
)
vs.
)
)
INDIANA FAMILY AND SOCIAL
)
SERVICES ADMINISTRATION, ANNE )
MURPHY in her official capacity as
)
Secretary of FSSA and INTERNATIONAL )
BUSINESS MACHINES CORPORATION, )
Defendants.
)

1:10-cv-677-RLY-DKL

ORDER OF REMAND

Following settlement or dismissal of all federal claims, the only claim which
remains in this litigation is for judicial review of a state administrative agency decision
denying medicaid benefits to Raymond Novak, who has since deceased. His spouse
remains a plaintiff and continues to appeal the agency decision. On February 7, 2012,
this court entered an order to show cause as to why the matter should not be remanded to
state court in light of the general presumption in this circuit that supplemental jurisdiction
should be relinquished. Leister v. Dovetail, Inc., 546 F.3d 875, 882 (7 th Cir. 2008).

Since the entry of the order to show cause, Plaintiff has filed a response urging the
court to retain jurisdiction and conduct the judicial review. She argues that judicial
-1-

economy would be better served because briefing is complete and the case has been on
the docket for 18 months. She also contends that at age 82, she would face undue
prejudice by the delay which would occur upon remand.

In addition, following the court’s order to show cause, the Seventh Circuit
affirmed a remand by a district court which was challenged on the basis of judicial
economy. In so doing it stated:
When federal claims drop out of the case, leaving only state-law claims, the
district court has broad discretion to decide whether to keep the case or
relinquish supplemental jurisdiction over the state-law claims. A general
presumption in favor of relinquishment applies and is particularly strong
where, as here, the state-law claims are complex and raise unsettled legal
issues.
RWJ Management Co., Inc. v. BP Products North America, Inc., __ F.3d __, 2012 WL
499043 *1 (7 th Cir. February 16, 2012).

This court sees two critical questions at the heart of this dispute, both of which
impact the State of Indiana’s interpretation of its own administrative rules and procedures
as well as federal guidelines for procuring medicaid assistance. The first question of
import is: When can a person petition a court for the an order approving the transfer of
assets for the benefit of the community spouse? If such a petition can be pursued
preemptively, prior to an assessment, it would seem somewhat counterintuitive and
contrary to at least three decisions from other states which have considered this timing
issue. See e.g., Alford v. Mississippi Div. of M edicaid, 30 So. 3d 1212, 1221 (Miss.
-2-

2010) cert. denied, 131 S. Ct. 224, 178 L. Ed. 2d 135 (U.S. 2010); Amos v. Estate of
Amos, 267 S.W.3d 761, 763 (Mo.Ct.App. 2008); Arkansas Dept. of Health and Human
Services v. Smith, 262 S.W.3d 167 (Ark. 2007).

Even if an asset transfer can be pursued prior to an assessment, there remains the
question of whether the assets which the state court ordered transferred must actually be
transferred in order for the Community Spouse Resource Allowance to be calculated on
the basis of that state court order. This question, as well as the first, impacts greatly upon
Indiana’s administrative oversight of the medicaid benefits procural process. These are
questions which “are complex and raise unsettled legal issues.” RWJ Management Co.,
Inc. v. BP Products North America, Inc., at *1. The propriety of deferring to Indiana
courts to conduct the judicial review of this administrative decision and to answer these
unsettled questions outweighs any prejudice which Mrs. Novak may experience. Further,
the fact that the briefs have already been prepared, suggests that any delay on remand will
not be significant as the same briefs can be presented immediately to the state court for its
perusal. Indeed, the briefs were prepared prior to the settlement of the last pending
federal claim, which settlement prompted the presumption in favor of the court’s
withdrawal of supplemental jurisdiction.

-3-

Accordingly, pursuant to 28 U.S.C. § 1367(c), this action is ORDERED
REMANDED forthwith to the M arion Superior Court.

SO ORDERED 02/29/2012
__________________________________
RICHARD L. YOUNG, CHIEF JUDGE
United States District Court
Southern District of Indiana
Copies to:
Daniel K. Burke
HOOVER HULL LLP
[e-mail]

Andrew W. Hull
HOOVER HULL LLP
[e-mail]

Aaron D. Charfoos
KIRKLAND & ELLIS LLP
[e-mail]

Laurie E. Martin
HOOVER HULL LLP
[e-mail]

Adam Clay
INDIANA ATTORNEY GENERAL
[e-mail]

Steven D. McCormick
KIRLAND & ELLIS LLP
[e-mail]

Wendy Netter Epstein
KIRKLAND & ELLIS LLP
[e-mail]

Scott Richard Severns
SEVERNS & ASSOCIATES
[e-mail]

Jason L. Fulk
HOOVER HULL LLP
[e-mail]

Anne M . Sidrys
KIRKLAND & ELLIS LLP
[e-mail]

Zachary D. Holmstead
KIRKLAND & ELLIS
[e-mail]

Diana M. Watral
KIRKLAND & ELLIS LLP
[e-mail]

Anna May Howard
SEVERNS & STINSON LAW FIRM
[e-mail]

-4-