Wilhoite v. Missouri Department of Social Services
ORDER entered by Judge Nanette Laughrey. Defendants motion for summary judgment [Doc. # 166] is GRANTED with regard to all remaining claims of injunctive relief, all claims for monetary relief against DSS or individual Defendants in their official capacities, including punitive damages, and Intervenors procedural due process claims, and DENIED in all other regards. Plaintiffs claims in Plaintiffs motion for summary judgment [Doc. # 168] are GRANTED with regard to declaratory judgment on the statutory claims in Counts I and IV and attorney fees on the same, and DENIED in all other regards. Intervenors claims in Plaintiffs motion for summary judgment are DENIED. Intervenors request to conduct additional discovery as to which Defendant m ay be responsible for damages in their individual capacity is GRANTED. Any Defendant will be permitted to raise a qualified immunity defense no later than 30 days after all discovery of the individual Defendants is completed. The Court hereby DECLARES, with regard to Plaintiff Wilhoite, that Mo. Rev Stat. § 208.215.8 violates 42 U.S.C. § 1396, et seq., and that DSSs lien procedures violate 42 U.S.C. § 1396, et seq. (Kanies, Renea)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
RAMONA DENISE WILHOITE,
individually and on behalf of others
MISSOURI DEPARTMENT OF SOCIAL )
SERVICES, by and through its director,
Robert J. Levy,
RENÉ DAMPIER, et. al.,
Case No. 2:10-CV-03026-NKL
Plaintiff Ramona Wilhoite, individually, and Intervenor Rene Dampier, along with
the rest of the named Intervenors, claim that Defendant Missouri Department of Social
Services (“DSS”) has asserted liens against their private settlements that violate 42 U.S.C.
Section 1396p(a)(1) (“the federal anti-lien statute”) and the United States Constitution.
Pending before the Court are Defendant DSS’s motion for summary judgment [Doc. # 166]
and Plaintiff Wilhoite’s and the Intervenors’ motion for summary judgment [Doc. # 168].
For the following reasons, the Court grants DSS’s motion in part, and grants Wilhoite’s and
the Intervenors’ motion in part.
The Plaintiff in this case is Ramona Denise Wilhoite, individually and on behalf of
others similarly situated, and the Intervenor Plaintiffs in this case are Rene Dampier; Justin
Epperson; Donna Collinge; Shadow Dickerson; Kelly Forest; Kenley Esry; Kathleen
Mitchell; Sandy Stidham, as next friend for B.C., the surviving minor child of Chastity Cook;
Kathryne Harris; and K.E., through her next friend Kenley Esry.
Defendant Missouri Department of Social Services (“DSS”) is the state agency that
administers Medicaid benefits in Missouri. Individual Defendants Levy, Scott, Reeter,
Renne, Sherman, Rackers, Ditmore, Rehagen, Muck, and Hart are all former DSS employees.
Individual Defendants McCaslin, Creech, and Cicka currently work for DSS.
Wilhoite and all Intervenors settled personal injury claims with third-party tortfeasors.
Neither Wilhoite’s settlement, nor the settlements of any Intervenor, allocated the recovery
into categories of damage. DSS has acknowledged that it became aware through this lawsuit
that Wilhoite did not seek recovery for medical expenses in her third-party claim and that her
settlement did not include recovery for medical expenses. [Doc. # 175 at 20]. It is
undisputed that the amount of each of the Intervenors’ settlements exceeded the amount DSS
paid in medical costs on behalf of that Intervenor.1
After receiving notice of Wilhoite’s and each of the Intervenor’s lawsuits, DSS sent
a letter to each individual that contained the following paragraph:
DSS notes that it has only received unexecuted copies of the Intervenors’ settlement
agreements, but also notes that this does not create a genuine issue of fact because these
documents speak for themselves. For the purpose of this Motion for Summary Judgment, the
Court assumes, as does DSS, that the Intervenors executed these agreements.
Section 208.215, RSMo (Cum. Supp. 1998) grants [DSS] a lien upon any
funds to be paid as a result of any settlement or judgement obtained or made
by the above-named Medicaid recipient. This letter, therefore, is your notice
that [DSS] is asserting a lien against any settlement or judgement involving
the above-named Medicaid recipient.
E.g., [Doc. # 166-1 at 2]. Mo. Rev. Stat. Section 208.215.8 says, in relevant part: “The
department of social services...shall have a lien upon any moneys to be paid...in
settlement...on any claim for injuries...which resulted in medical expenses for which the
Wilhoite placed into her attorney’s trust account the amount asserted by DSS as the
lien amount. [Doc. # 90 at 4]. Dickerson and Mitchell took this same approach. Each of the
remaining Intervenors sent a check to DSS for the full lien amount claimed by DSS.
Wilhoite’s Amended Complaint [Doc. # 75] alleges that DSS asserted a lien against
her private settlement in excess of the portion of that settlement which compensated her
medical costs. Wilhoite alleges this is contrary to the Supreme Court’s decision in Ahlborn.
Count I of Wilhoite’s Complaint proceeds under Section 1983 and alleges individual
Defendants Levy, Creach, McCaslin, Scott, and Reeter, in their individual capacities,
violated her rights under the federal anti-lien statute and her right to procedural due process
under the Fourteenth and Fifth Amendments; Count II proceeds under Section 1983, alleges
that all Defendants violated her rights under the federal anti-lien statute, and requests
injunctive relief; Count III seeks attorney fees against all Defendants under Section 1988;
Count IV seeks declaratory judgment that Mo. Rev. Stat § 208.215.8 and DSS’s lien
procedures violate the federal anti-lien statute and the United States Constitution; Count V
asserts a violation of the Takings Clause against all Defendants; Count VI alleges a claim for
unjust enrichment against all Defendants; and Count VII alleges breach of contract against
Levy in his official capacity. On July 15, 2011, the Court granted in part DSS’s motion for
summary judgment, dismissing Counts II, VI, and VII and the constitutional claims within
Counts I and IV. [Doc. # 90 at 31].
The Intervenors’ Amended Complaint [Doc. # 141] proceeds on the same basic theory
as Wilhoite’s Complaint, with the factual distinction that most Intervenors have actually paid
money to DSS on the lien asserted against them, rather than holding that amount in trust as
Wilhoite did. Intervenors’ Count I proceeds under Section 1983 and alleges that Defendants
Levy, Creach, McCaslin, Scott, and Reeter, in their individual capacities, violated
Intervenors’ rights under the federal anti-lien statute, procedural due process, and the Takings
Clause; Count II proceeds under Section 1983 and alleges that all Defendants violated
Intervenors’ rights under the federal anti-lien statute and requests injunctive relief; Count III
requests attorney fees from all Defendants under Section 1988; Count IV asks for declaratory
judgment against all Defendants that Mo. Rev. Stat § 208.215.8 and DSS’s lien procedures
violate the federal anti-lien statute and the United States Constitution; Count V alleges that
all Defendants violated the Takings Clause; and Count VI alleges that all Defendants were
unjustly enriched. On October 3, 2011, the Court granted partial summary judgment for
DSS, dismissing Counts II, VI, and the constitutional claims within Count I and IV as to
Intervenors Dickerson and Mitchell. [Doc. # 134].
Wilhoite’s Individual Claim for Declaratory Judgment that the Missouri
Statute Violates the Federal Anti-Lien Statute
Wilhoite seeks declaratory judgment that Mo. Rev. Stat. § 208.215 is preempted by
the federal anti-lien statute. The Court has already denied summary judgment for DSS on
Wilhoite now moves for summary judgment.
Declaratory judgment is
appropriate where there is an “actual controversy.” 28 U.S.C. § 2201. “The controversy
requirement of the Declaratory Judgment Act is synonymous with that of Article III of the
Constitution.” County of Mille Lacs v. Benjamin, 361 F.3d 460, 463 (8th Cir. 2004), cert.
denied, 543 U.S. 956. Thus, in order to demonstrate standing in an action for declaratory
judgment, a plaintiff must “demonstrate that he has suffered an injury in fact, that the injury
is fairly traceable to the actions of the defendant, and that the injury will likely be redressed
by a favorable decision.” Id. (internal alterations omitted).
An actual controversy exists in Wilhoite’s suit for declaratory judgment. First,
Wilhoite’s case is substantially similar in this regard to the case in Arkansas Dep’t of Health
and Human Servs. v. Ahlborn, 547 U.S. 268 (2006). There, the United States Supreme Court
considered a Medicaid beneficiary’s claim for declaratory judgment that Arkansas’s
Medicaid lien statute violated the federal anti-lien statute. The parties stipulated that
Arkansas had asserted a lien against the plaintiff that exceeded the portion of the Plaintiff’s
tort recovery meant to compensate for medical costs. The Supreme Court reached the merits
of the claim and held that “Arkansas' statute finds no support in the federal third-party
liability provisions, and in fact squarely conflicts with the anti-lien provision of the federal
Medicaid laws.” Id. at 280. The Supreme Court then specified that “Arkansas' third-party
liability provisions are unenforceable insofar as they compel a different conclusion.” Id. at
292. Although the Supreme Court did not specifically discuss the issue of standing, the
Supreme Court reached the merits of the plaintiff’s claim which suggests that the Supreme
Court believed the plaintiff had standing to pursue the claim.
Defendants argue that Wilhoite lacks standing because Defendants now admit that
Wilhoite’s third party complaint did not contain a claim for medical expenses. Defendants
fail to cite a case that says there is no case and controversy for purposes of standing when a
defendant makes an admission after the lawsuit is filed. In fact, standing is determined at the
commencement of the lawsuit. Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). Clearly,
at the time the lawsuit was filed, DSS had asserted a lien against Wilhoite’s settlement for
all her medical expenses paid by DSS. While Wilhoite did not give DSS the funds, she was
deprived of access to the funds because her lawyer could not give them to her until after the
lien was voluntarily removed or found to be invalid. To this date, while Defendants admit
her settlement does not cover medical expenses, it has not admitted a mistake or directly
withdrawn its lien.
Turning to the merits, Wilhoite argues that the terms of the Missouri statute do not
limit the amount of Missouri’s statutory lien to the portion of Wilhoite’s recovery that is
compensation for medical damages, as required by the Supreme Court’s interpretation of the
federal anti-lien statute in Ahlborn. DSS argues that the “plain language” of the Missouri
lien statute limits any lien by DSS to the appropriate amount. But the Court has already
addressed this issue of statutory interpretation, and concluded that “Missouri’s
statute...squarely conflicts with the anti-lien provision of the federal Medicaid laws.” [Doc.
# 90 at 19]. Although Wilhoite had not moved for summary judgment on the issue of
declaratory judgment at that time, such a motion is now before the Court, and summary
judgment for Wilhoite is appropriate.
DSS also argues that even if Missouri’s lien statute violates federal law, it provides
sufficient procedural protections such that the statutory scheme as a whole should not be
found to violate federal law. This argument is unpersuasive. DSS argues that Wilhoite could
have informally contested her lien amount by informing DSS – as part of her correspondence
concerning the lien amount – that the portion of her settlement for medical costs was less
than the medical costs expended by DSS on her behalf. But DSS has presented no evidence
that it would have honored a request to limit a lien to the amount allocated in the settlement
for medical expenses and the procedures implemented by DSS and their actions suggest
DSS also argues that Wilhoite could have formally contested her lien amount by filing
suit in state court under Mo. Rev. Stat. § 208.215.9. But these procedural protections are
irrelevant to whether the Missouri statute is preempted under the reasoning of Ahlborn
because the post-lien procedures contained by § 208.215.9 do not require DSS to limit the
lien to the portion of a settlement for medical expenses. DSS “points to no provision of the
[Missouri] statute that prevents it from” demanding the entirety of the costs it paid on the
Medicaid recipient’s behalf, Ahlborn, 547 U.S. at 279 n.8. The Court thus concludes,
similarly to the Supreme Court in Ahlborn, that Missouri’s lien statute is preempted under
these circumstances because it imposed a lien on a settlement that does not compensate for
medical expenses paid by DSS. Id. at 292. There is no disputed fact issue bearing on this
question, and Wilhoite, not DSS, is entitled to summary judgment against Robert Levy, the
alleged Director of the Missouri Department of Social Services.2
Wilhoite’s Individual Claim Under Section 1983 for a Declaration that
DSS’s Lien Procedure Violated Her Federal Statutory Rights Under the
Whether Wilhoite Can Show a Violation
Wilhoite argues that DSS asserted a lien against her tort recovery in excess of that
allowed by Ahlborn. In Ahlborn, the plaintiff’s tort settlement did not distinguish what
portion was payment for medical expenses, but the parties stipulated that amount to the
reviewing federal court. Here, the parties agree on the amount of the lien DSS asserted
against Wilhoite, and that Wilhoite’s settlement “did not include recovery for medical
expenses.” [Doc. # 175 at 20]. The Court thus grants summary judgment for Wilhoite, and
denies summary judgment for DSS, on whether DSS violated Wilhoite’s rights under the
federal anti-lien statute. Federal law precluded DSS from asserting any lien on Wilhoite
under these circumstances, and the entire amount of DSS’s lien is invalid.
If Mr. Levy is no longer the director, the parties are ordered to take whatever steps
necessary to clarify the issue so that the Court’s order can be amended to apply to the current
The Court has found that DSS’s lien against Wilhoite was wrongfully imposed in
violation of federal law. The Court therefore declares that DSS is entitled to no portion of
the funds held in trust by Wilhoite’s attorney. See Ahlborn, 397 F.3d at 628 (remanding with
directions to enter judgment for the State in the amount of the lien that could properly be
asserted under federal law).
Wilhoite is incorrect, however, to the extent she argues that she is entitled to any form
of monetary relief against DSS or any other defendant in their official capacity. Such claims
are clearly barred by the Eleventh Amendment, which “protects a state official sued in his
official capacity from all claims except for certain forms of prospective equitable relief, such
as reinstatement.” Hopkins v. Saunders, 199 F.3d 968, 977 (8th Cir. 1999), cert. denied, 531
U.S. 873; see also Tristani, 609 F. Supp. 2d at 487 (“As the parties all appear to recognize,
the Eleventh Amendment would bar an action against the [department] (or an
official-capacity action against [an individual defendant]) seeking the return of the money
in question regardless whether the requested relief is properly characterized as legal or
equitable.”), grant of immunity aff’d, 652 F.3d at 378 n.19. Wilhoite’s primary case
suggesting to the contrary is McKesson Corp. v. Div. of Alc. Beverages and Tobacco, 496
U.S. 18, 31 (1990), which Wilhoite claims endorses disgorgement as a remedy in cases
against state governments. But that case made clear that it proceeded under the rule that
“[t]he Eleventh Amendment does not constrain the appellate jurisdiction of the Supreme
Court over cases arising from state courts.” Id. The Supreme Court noted that the Eleventh
Amendment continues to bar “original suit in federal court”, such as this one. Id. at 30.
Wilhoite also relies on Gilliard v. Craig, 331 F. Supp. 587, 593 (W.D.N.C. 1971),
which granted class representatives monthly restoration payments retroactive to the
beginning of the government’s illegal aid reductions. But that case was decided before the
Supreme Court’s opinion in Edelman v. Jordan, 415 U.S. 651, 668 (1974), which clarified
that the Eleventh Amendment bars claims for retroactive relief that require payment from
state treasuries, even where those claims are termed “equitable restitution.” For this reason,
Wilhoite’s claims for disgorgement must be dismissed; these claims seek retroactive relief
from Missouri’s treasury.
Thus, Wilhoite is not entitled to interest, damages for pain and suffering, or punitive
damages against DSS or any other defendant in their official capacity. Such claims would
seek retroactive relief from Missouri’s treasury, and Wilhoite has not argued that such relief
is ancillary to the declaratory relief ordered in favor of Wilhoite. See Hutto v. Finney, 437
U.S. 678, 691 (1978).
But the Eleventh Amendment does not bar Wilhoite’s claims against the defendants
in their individual capacity, that is, claims for damages that would be paid out of a
defendant’s own pockets. Hafer v. Melo, 502 U.S. 21, 30-31 (1991); ERWIN CHEMERINSKY,
FEDERAL JURISDICTION 443 (5th ed. 2007).
Wilhoite first claims she is entitled to damages from the defendants in their individual
capacity for pain and suffering. For this argument, Wilhoite cites Nicks v. Missouri, 67 F.3d
699, 702 (8th Cir. 1995), which affirmed damages for pain and suffering in a plaintiff’s
Section 1983 claim where the state-employee plaintiff had received worker’s compensation
“for a permanent partial disability resulting from the emotional stress caused by [a state
coworker’s] harassment.” But here, Wilhoite has presented no comparable evidence of pain
and suffering as a result of any action by a defendant. As for her claim for lost interest,
Wilhoite has not shown that she has lost any interest, particularly since the funds were being
held in an attorney trust account and, presumably, interest was paid on that account. While
nominal damages might be appropriate, it is unclear on the present record which defendant
is responsible for the payment of nominal damages since the Court cannot identify which
defendants worked for DSS at the time Wilhoite’s lien was imposed and their relative
responsibilities at that time. While Wilhoite asks for additional time to do discovery on this
issue, the de minimus nature of nominal damages does not warrant additional discovery.
Wilhoite also seeks summary judgment on her request for punitive damages, but
Wilhoite never pleaded punitive damages. She claims her general catchall tag to her
complaint raised a claim for punitive damages, but such generic language was not sufficient
to put Defendants on notice of a claim for punitive damages under these circumstances.
Further, because the evidence needed to allege a claim for punitive damages was known at
the beginning of this lawsuit, there is no excuse for not including the request in the original
complaint. Finally, Wilhoite has had sufficient time to amend her pleading or otherwise raise
the issue but has failed to do so. It is now too late. Any claim by Wilhoite for punitive
damages is dismissed.
However, Wilhoite is entitled to her reasonable attorney fees under 42 U.S.C. §
1988(6), which were ancillary to Wilhoite’s request for a declaratory judgment that Missouri
law and DSS procedures violated federal law. See Missouri v. Agyei, 491 U.S. 274 (1989).
Intervenors’ Claim Under Section 1983 that DSS’s Lien Procedure
Violated the Intervenors’ Federal Statutory Rights Under the Anti-Lien
Intervenors claim that DSS violated the Anti-Lien Act by asserting liens against them
in excess of that allowed by Ahlborn, and request summary judgment on this claim. DSS
also seeks summary judgment. While the parties agree on the amount of the lien imposed
by DSS on each Intervenor, they have not stipulated what amount of any Intervenor’s
settlement was meant to compensate that Intervenor for medical costs. Thus, the question
is whether either party has presented sufficient evidence that as a matter of law they are
entitled to summary judgment on this claim.
Burden of Proof
As a preliminary matter, neither party has expressly addressed who has the burden of
proof to show either the validity of the liens or the invalidity of the liens. However, that
issue need not be resolved at this time because regardless of where the burden of proof lies,
there is a disputed issue of fact precluding summary judgment on this record.
Disputed Issues of Facts
Intervenors argue that because the Intervenors’ settlement agreements disclaim all
liability for medical payments, DSS was precluded by Ahlborn from subjecting any portion
of the Intervenors’ recovery to a statutory lien. [Doc. # 176 at 28]. But the Eighth Circuit
in Ahlborn left open the possibility that a state could recover a portion of a Medicaid
recipient’s tort settlement “not technically denominated payments for medical care and
services” if “the third-party payment is properly recharacterized as a payment for medical
expenses, despite a different label applied by the parties.” Ahlborn, 397 F.3d at 627
(emphasis in original). In affirming the Eighth Circuit, the Supreme Court noted that “the
risk that parties to a tort suit will allocate away the State’s interest can be avoided...by
submitting the matter to a court for decision.” Ahlborn, 547 U.S. at 288. Ahlborn thus
makes clear that neither a state nor a court is bound by the language in a settlement
agreement that disclaims liability for medical payments.
A reasonable factfinder could find, after considering all the evidence, that the
Intervenors were compensated by their settlements for the full amount of their medical
expenses. The following facts could support such a finding.
DSS first points out that most Intervenors did not dispute the amount of medical costs
submitted to them by DSS prior to this lawsuit and did not argue before paying the lien that
this amount should be reduced due to the allocation of their settlement. DSS also claims that
at least three of the Intervenors pleaded medical expenses as damages in their state court
petition before entering settlements. [Doc. # 166-3 at 34]. DSS claims that some Intervenors
requested pro rata attorney fees for the entire amount of the lien claimed by DSS, and argues:
“If Intervenors’ third-party settlements did not include a recovery for medical expenses paid
by [DSS], then it would be improper for their attorney to request [DSS] to pay a share of their
attorney’s fees for the recovery in question.” [Doc. # 166 at 32]. DSS also claims that
Intervenors Dickerson, Mitchell, Forest, Esry, and K.E. all agreed in their settlement releases
to indemnify their tortfeasors for the full amount of their medical costs in any suit against
their tortfeasors by DSS. [Doc. # 166 at 30].3
On the current record, DSS is also not entitled to summary judgment on this claim.
At best, there is evidence that the Intervenors’ settlements included some compensation for
medical costs. But a reasonable juror, after considering the undisputed facts of the record,
could still conclude that the Intervenors’ settlements did not compensate them for the full
amount of their medical costs, and that DSS’s lien for the full amount of medical costs was
improper under Ahlborn. It is undisputed that all of the Intervenors entered settlements that
denied liability and that did not allocate damages. Such a settlement is especially suggestive
of a compromise between the parties that does not fully compensate the plaintiff for his or
her total damages from the alleged tort claim. It is unlikely that any such settlement fully
compensated the Intervenors for any particular category of damage, and this includes medical
costs. While it is statistically likely that most Intervenors did not recover for all of their
medical expenses, it is impossible to decide the issue without weighing the evidence in the
context of each case.
Intervenors admit that the releases executed by Intervenors Cook, Dickerson, and
Mitchell contain such indemnification clauses. [Doc. # 176 at 30]. Intervenors appear to
refute that Intervenors Forest, Esry, and K.E. agreed to indemnification. Because the
Court does not find this evidence dispositive, the Court need not consider at this time
whether to resolve this potential factual dispute.
DSS also argues that all the Intervenors’ statutory claims, even if established, are
barred by several defenses. Specifically, DSS claims that because the Intervenors failed to
notify DSS during their informal communications that DSS’s liens violated Ahlborn, they
should be equitably estopped from raising the issue now. But even the case cited by DSS
demonstrates that DSS must show that it was prejudiced by the delay. Grannemann v.
Columbia Ins. Group, 931 S.W.2d 502, 506 (Mo. Ct. App. 1996). DSS has not argued, or
presented evidence, that allowing the Intervenors’ statutory argument now will cause DSS
prejudice. Thus, the Court rejects this argument. Further, Intervenors’ earlier silence is not
inconsistent with their current claims unless it can be shown that they knew about Ahlborn
at the time they paid DSS. DSS has presented no such evidence. Nor did DSS take any
action based on Intervenors’ silence.
DSS also claims that the Intervenors’ failure to contest the liens on Ahlborn grounds
through formal or informal procedures waived their right to do so in this lawsuit. “A waiver
is an intentional relinquishment of a known right.” Austin v. Pickett, 87 S.W.3d 343, 348
(Mo. Ct. App. 2002). “To rise to the level of waiver, the conduct must be so manifestly
consistent with and indicative of an intention to renounce a particular right or benefit that no
other reasonable explanation of the conduct is possible.” Id. The Intervenors argue that their
actions cannot constitute waiver because they were involuntary. Specifically, the Intervenors
argue that their actions were coerced by the threat of delay and expense of extra litigation,
by the inequality of bargaining power between the Intervenors and DSS, and because of the
Intervenors’ lower economic status. See Evans v. City of Chicago, 522 F. Supp. 789, 795
(N.D. Ill. 1980). The Court agrees that the Intervenors did not voluntarily waive their right
to argue that DSS’s procedure violated Ahlborn, where DSS’s lien notices expressed DSS’s
belief that it could recoup its entire medical costs from the Intervenors’ settlement and where
Missouri’s procedure for judicial review did not appear to allow a court to reduce a lien to
comply with Ahlborn.4
DSS argues that the Intervenors’ failure to contest their lien amount until filing this
lawsuit entitles DSS to the equitable defense of laches. “Laches applies when a claimant
inexcusably delays in asserting its claim and thereby unduly prejudices the party against
whom the claim ultimately is asserted.” Hubbard Feeds, Inc. v. Animal Feed Supplement,
182 F.3d 598, 602 (8th Cir. 1999). Assuming the defense of laches is available to this type
of claim, the Court rejects DSS’s argument because DSS has failed to show undue prejudice.
DSS merely argues that it was unduly prejudiced by the Intervenors’ delay because during
that period the class of individuals subject to Section 208.215 has continued to grow,
exposing DSS to greater and greater potential liability. To the extent that DSS implies that
the Intervenors should have instructed DSS on the effect of the Ahlborn decision, DSS’s
argument is not persuasive because DSS has not presented evidence that it was unaware of
Ahlborn’s holding or explained why the responsibility for this ignorance should not fall on
DSS – the agency charged with enforcing the relevant statute. In fact, the Intervenors have
While it is true that § 208.215 does permit a judge to consider equity when reducing a
lien, DSS does not explain why compliance with federal law is a matter of equity. And, more
importantly, why it was the responsibility of the Intervenors to make the argument.
presented evidence through Defendant Reeter’s deposition that DSS was aware of the effects
of Ahlborn. Further, the Defendants do not explain how the Intervenors’ use of DSS
procedures would have alerted DSS that future potential class members were the subject of
invalid liens. More importantly, DSS has continued to assert that its lien letter comports with
Ahlborn so there is no evidence they would have done anything differently.
Finally, DSS argues that because Intervenors Dickerson and Mitchell never paid
money to DSS, that DSS could not have violated Ahlborn with regard to these Intervenors.
But as the Court has previously held, it is the imposition of the lien at an amount greater than
that allowed in Ahlborn, and not merely the payment of that lien amount, that violates the
anti-lien statute as interpreted in Ahlborn. [Doc. # 90 at 21]. DSS’s defenses all fail.
Because there is a disputed issue of fact concerning Defendants’ liability to
Intervenors, the Court need not address the issue of damages. However, the Court’s order
concerning Wilhoite should be instructive. Further, because neither party is entitled to
summary judgment on the issue of liability, the Court grants Intervenors’ request to conduct
additional discovery to develop the record as to which Defendant may be responsible for
damages in their individual capacity. Because some Intervenors are seeking money
wrongfully paid to the Defendants, it would be hyper-proceduralistic to prevent them from
gathering this evidence, given the apparent confusion over those Defendants’ depositions.
One further matter requires clarification. In its current briefing, DSS has not argued
that the individual Defendants are entitled to qualified immunity on the Intervenors’ damage
claims. DSS may have viewed such an argument foreclosed by the Court’s previous ruling
denying summary judgment to DSS on its qualified immunity defense against Wilhoite.
[Doc. #90 at 26-28]. However, upon further consideration, the Court has concluded that
qualified immunity is not precluded merely because the Plaintiffs are seeking restitution of
money wrongfully withheld by the State of Missouri. As previously indicated, such a claim
cannot be made against the State and no individual defendant holds the money which the
State is alleged to have wrongfully taken. Therefore, the Court will permit any Defendant
to raise a qualified immunity defense, no later than 30 days after all discovery of the
individual Defendants is completed. The court does not mean to suggest that such a defense
is or is not available, but merely believes its earlier ruling concerning restitution may have
misled the Defendants.
Intervenors’ Constitutional Claims
The Court has already granted summary judgment for DSS and dismissed the Fifth
Amendment takings claims and claims that DSS violated the procedural due process rights
of Wilhoite [Doc. # 90] and of Intervenors Dickerson and Mitchell [Doc. # 134]. Remaining
are the claims of Intervenors Dampier, Epperson, Collinge, Forest, Esry, Stidham, Harris, and
K.E. that DSS violated their procedural due process rights and effected a taking in violation
of the Fifth Amendment. Both Intervenors and DSS have moved for summary judgment on
Procedural Due Process
The Intervenors first argue that the entirety of Mo. Rev. Stat. § 208.215 is preempted
by federal law, including the “portions of that statute that purport to grant judicial authority
to review the enforcement and apportionment of a lien.” [Doc. # 169 at 42-43]. The
Intervenors effectively argue that the statute provides no legitimate procedure and thus
violates the Due Process Clause. The Court has already held, however, that the Missouri
statute is not preempted in its entirety but is only preempted to the extent that it conflicts with
Ahlborn. See Ahlborn, 397 F.3d at 628 (8th Cir. 2005), aff’d, 547 U.S. 268.
DSS also suggests that the Court has already decided this issue because it noted that
“§ 208.215 and the Department’s procedures include informal and formal methods for
recipients to contest or establish or reduce the Department’s reimbursement amount ....”
[Doc. # 175 at 40]. But on the same page of that order the Court stated that Wilhoite had not
called into question those procedures. In this motion, the Intervenors have called those
procedures into question.
Before addressing the merits of the Intervenors’ claim, the Court must address
whether the Intervenors have standing to assert a procedural due process claim given that the
Court finds a genuine issue of material fact exists as to whether DSS asserted a lien against
the Intervenors in excess of that allowed by Ahlborn. This question is resolved by Carey v.
Piphus, 435 U.S. 247, 251 (1978), where two students were each suspended for twenty days
without any procedural due process, but would have been unsuccessful even if a presuspension process was available. The United States Supreme Court explained that the right
to procedural due process is “‘absolute’ in the sense that it does not depend upon the merits
of a claimant's substantive assertions” and that for this reason, “the denial of procedural due
process should be actionable for nominal damages without proof of actual injury.” Id. at 266.
Even if all of DSS’s liens against the Intervenors are found at trial to have complied with
Ahlborn, this would not interfere with the Intervenors’ right to pursue a claim for nominal
damages if DSS denied them the absolute right of procedural due process. Thus, the merits
of Intervenors’ claim must be addressed.
The Intervenors argue that they were entitled to a pre-deprivation hearing before DSS
asserted liens against them and that DSS provided no such hearing. DSS argues that the
Intervenors’ claim should be dismissed because Intervenors failed to seek lien reduction
through a lawsuit under § 208.215 or through informal negotiations.
“To state a procedural due process violation, [a plaintiff] must first demonstrate the
deprivation of a protected liberty or property interest.” Bonner v. Outlaw, 552 F.3d 673, 676
(8th Cir. 2009). “Without doubt, state procedures for creating and enforcing attachments,
as with liens, are subject to the strictures of due process.” Connecticut v. Doehr, 501 U.S.
1, 12 (1991). The Court has found that DSS has asserted a lien against the private settlement
of the Intervenors; this constitutes the deprivation of a protected property interest. Accord
Tristani v. Richman, 609 F. Supp.2d 423, 480 (W.D. Pa. 2009), aff’d in part, vacated in part,
652 F.3d 360 (issue not raised on appeal).
The Court must next determine the amount of process due Intervenors. “Generally,
where deprivations of property are authorized by an established state procedure...due process
is held to require predeprivation notice and hearing in order to serve as a check on the
possibility that a wrongful deprivation would occur.” Keating v. Nebraska Public Power
Dist., 562 F.3d 923, 928 (8th Cir. 2009) (internal quotes and alterations omitted). The
Supreme Court has recognized “two notable exceptions” to this rule: (1) “where there is a
need for quick action by the State when there is a compelling or overriding interest in a
summary adjudication”; and (2) “where the deprivation results from a random and
unauthorized act by a state actor.” Id. Where the Supreme Court has excused a predeprivation hearing because of the need for quick action, it “has emphasized the availability
of a prompt post-deprivation administrative hearing to challenge the governmental action in
finding that due process was satisfied.” Moore v. Warwick Pub. Sch. Dist. No. 29, 794 F.2d
322, 327 (8th Cir. 1986).
In Connecticut v. Doehr, 501 U.S. 1 (1991), the U.S. Supreme Court addressed an
issue similar to the one in this case. In that case it evaluated whether a Connecticut statutory
scheme which allowed a private party to obtain an ex parte, prejudgment attachment of
another party’s property without any showing of exigency was a violation of due process.
The Supreme Court first rejected the argument that the attachment was not subject to due
process because it was a temporary or partial impairment to property, rather than a permanent
deprivation. Id. at 12. It then identified what must be weighed to determine what process is
 the private interest that will be affected by the official action;  the risk
of an erroneous deprivation of such interest through the procedures used, and
the probable value, if any, of additional or substitute safeguards; and lastly 
the Government's interest, including the function involved and the fiscal and
administrative burdens that the additional or substitute procedural requirement
Id. at 10 (internal quotes omitted). Also see Mathews v. Eldridge, 424 U.S. 319, 335 (1976).
Addressing the first factor, the Intervenors argue that DSS’s liens encumbered their
settlement and prevented them access to their money. This is significant because Intervenors
could not have qualified for Medicaid unless they were indigent. However, while the
Intervenors’ settlements were subject to DSS’s lien, the record reflects that the Intervenors
had an opportunity to bring suit in state court under § 208.215(9) to challenge the lien,
pursuant to which a state judge “may determine what portion of the recovery shall be paid
to [DSS] against the recovery”. In making this decision, the state judge “shall consider
competent evidence pertaining to the following matters:”
(1) The amount of the charge sought to be enforced against the recovery when
expressed as a percentage of the gross amount of the recovery; the amount of
the charge sought to be enforced against the recovery when expressed as a
percentage of the amount obtained by subtracting from the gross amount of the
recovery the total attorney's fees and other costs incurred by the participant
incident to the recovery; and whether the department should, as a matter of
fairness and equity, bear its proportionate share of the fees and costs incurred
to generate the recovery from which the charge is sought to be satisfied;
(2) The amount, if any, of the attorney's fees and other costs incurred by the
participant incident to the recovery and paid by the participant up to the time
of recovery, and the amount of such fees and costs remaining unpaid at the
time of recovery;
(3) The total hospital, doctor and other medical expenses incurred for care and
treatment of the injury to the date of recovery therefor, the portion of such
expenses theretofore paid by the participant, by insurance provided by the
participant, and by the department, and the amount of such previously incurred
expenses which remain unpaid at the time of recovery and by whom such
incurred, unpaid expenses are to be paid;
(4) Whether the recovery represents less than substantially full recompense for
the injury and the hospital, doctor and other medical expenses incurred to the
date of recovery for the care and treatment of the injury, so that reduction of
the charge sought to be enforced against the recovery would not likely result
in a double recovery or unjust enrichment to the participant;
(5) The age of the participant and of persons dependent for support upon the
participant, the nature and permanency of the participant's injuries as they
affect not only the future employability and education of the participant but
also the reasonably necessary and foreseeable future material, maintenance,
medical rehabilitative and training needs of the participant, the cost of such
reasonably necessary and foreseeable future needs, and the resources available
to meet such needs and pay such costs;
(6) The realistic ability of the participant to repay in whole or in part the
charge sought to be enforced against the recovery when judged in light of the
factors enumerated above.
RSMo § 208.215(9). Further, pursuant to RSMo § 208.215(11), the state court can “reduce
and apportion” DSS’s lien amount “proportionate to the recovery of the claimant” and “may
consider the nature and extent of the injury, economic and noneconomic loss, settlement
offers, comparative negligence as it applies to the case at hand, hospital costs, physician
costs, and all other appropriate costs.”
The Intervenors argue that such a lawsuit is not adequate to protect their due process
rights because the statute only permits the judge to consider a list of factors that does not
include the limitation imposed by the Ahlborn court. The Court disagrees and finds that §
208.215 is adequate to protect the Intervenors’ due process rights.
Even if the statute does not expressly authorize the state judge to reduce the lien to
reflect the Intervenors’ federal rights under Ahlborn, it does provide a forum to raise
Ahlborn. And even if a state judge found that the statute did not permit the lien to be reduced
to comply with Ahlborn, the Intervenors would have a right to challenge the statute as a
violation of the supremacy clause of the U. S. Constitution. Further, any adverse ruling could
be appealed. Due process guarantees a right to a hearing, not a right to a correct decision.
The fact that the statute did not notify the Intervenors that federal law provided them more
rights than the statute listed, doesn’t mean they were not provided notice. They got notice
of the lien and notice of a forum in which they could challenge the lien. While it is
understandable that Intervenors would not know about Ahlborn, there is nothing in the due
process clause that requires a state to tell a litigant of possible challenges they can make.
Turning to the second factor, the Intervenors argue that the risk of erroneous
deprivation is high because DSS automatically asserts a lien for the full amount of medical
costs it paid on behalf of Medicaid beneficiaries, and asserts without explanation that
additional safeguards would be “relatively easy to impose.” [Doc. # 169 at 49].
The Intervenors’ argument is not persuasive. Intervenors have not shown that if there
had been a pre-lien hearing, that DSS would have used a different standard for determining
the lien or that Intervenors would have a better opportunity to raise Ahlborn. Therefore,
there is no evidence that the risk of erroneous deprivation would be affected by the timing
of the hearing to challenge the lien.
Finally, the Court finds that DSS’s interest in asserting a lien without a predeprivation hearing is substantial. The U.S. Supreme Court in Doehr found that the private
plaintiff’s interest in ensuring the availability of assets to satisfy the judgment was “de
minimis” where he failed to allege that the defendant “was about to transfer or encumber his
real estate or take any other action during the pendency of the action that would render his
real estate unavailable to satisfy a judgment.” Id. The Doehr court also found that “the State
cannot seriously plead additional financial or administrative burdens involving
predeprivation hearings when it already claims to provide an immediate post-deprivation
hearing.” Id. The Intervenors claim, without explanation, that DSS “would not undergo
significant burden” in establishing additional procedures. [Doc. # 169 at 49].
Here, although DSS has not made an allegation that any of the Intervenors are at risk
for transferring or encumbering their settlement amounts, such a finding, as to the class of
Medicaid beneficiaries in general, is implied by Congress’s decision to pass a law requiring
states that participate in Medicaid to “have acquired the rights” of Medicaid beneficiaries to
payments for medical costs, 42 U.S.C. § 1396a(a)(25)(H), and by federal courts finding this
law to be a valid exception to the federal anti-lien act to the extent it complies with Ahlborn.
Tristani v. Richman, 652 F.3d 360, 375 (3rd Cir. 2011). And although there is nothing in the
record to suggest that a pre-deprivation hearing would cost Missouri more than the postdeprivation hearing it already offers, such a hearing runs the risk of wasting state funds since
there is no guarantee at the time of such a hearing that the beneficiary would have the
information needed to seek a reduction of the lien on Ahlborn grounds. Until there is a
settlement, there is no basis for arguing what the exact amount of the loan should be, but if
DSS waits to hold a hearing and impose a lien only after the beneficiary has entered her
settlement, as would be required to ensure that DSS did not waste state funds by initiating
a hearing before full information was available, then DSS would have frustrated federal
Medicaid law by providing the beneficiary a window in which to transfer or encumber her
settlement before the state could recoup its authorized share.
Considering all factors in Mathews, the Court finds that a pre-lien hearing was not
Intervenors’ Takings Clause Claim
Intervenors claim that DSS’s liens on the Intervenors’ settlements constitutes a taking
of private property for public use without just compensation, as prohibited by the Fifth
Amendment to the U.S. Constitution. Both Intervenors and DSS seek summary judgment
on this claim. Intervenors rely heavily on the Supreme Court’s decision in Webb’s Fabulous
Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 164-65 (1980), which held that under the
“narrow circumstances” of that case Florida violated the Takings Clause by retaining the
interest earned on interpleader accounts deposited in the state court’s registry. In discussing
that case, Intervenors admit that while the services provided by the clerk of court “could
have constituted just compensation for taking the interest,” such an argument was precluded
because the Supreme Court found that the clerk of court collected a separate fee for that
purpose. [Doc. # 169 at 40]. Here, DSS argues that DSS’s services in paying for the
Intervenors’ medical expenses constituted just compensation for DSS’s liens on the
Intervenors’ settlements, citing Mulk v. Ohio Dep’t of Job & Family Servs., 2011 WL
5507093 at *7 (Ohio Ct. App. 2011) (“Further, appellants did receive compensation in the
form of the initial payment of their medical expenses.”).
Intervenors do not point to any separate fee collected by DSS. Rather, Intervenors
argue that “there is no evidence that the monies Intervenors recovered were related in any
way to the medical services they received.” [Doc. # 169 at 41]. That is correct and for that
reason summary judgment must be denied because there is a disputed issue of fact whether
the Defendants did take more of Intervenors’ property than was permitted by law. If they did
not, then there is no taking without just compensation.
DSS’s Motion for Summary Judgment must also be denied because paying the
Intervenors’ medical expenses does not mean that DSS can recover Intervenors’ settlement
for pain and suffering claim or permanent disability, even though Missouri paid for the
Intervenors’ medical treatment. While some common law rules might permit such an
argument, federal law specifically prohibits the application of those common law principles.
So the fact that Missouri provided free medical care does not give them the right to take all
of the Medicaid recipient’s settlement, unless permitted by federal law.
Intervenors’ Claim for Declaratory Judgment that the Missouri Statute
Violates the Federal Anti-Lien Statute
The Intervenors also ask for declaratory judgment that the Missouri statute and DSS’s
lien procedures violate the federal anti-lien statute and the U.S. Constitution, and DSS moves
for summary judgment on the same. But the Court has found that it cannot determine on this
record whether DSS asserted a lien on any Intervenor in excess of that allowed under
Ahlborn. Thus, a genuine issue of material fact exists as to whether Ahlborn was violated
with regard to the Intervenors, and the Intervenors are not entitled to summary judgment on
DSS also argues that declaratory judgment on the Intervenors’ statutory claims would
be improper because no case or controversy exists as to those claims. Intervernors Mitchell
and Dickerson have not yet paid any money to DSS, so the same controversy discussed in
Wilhoite’s case also exists in their cases. As to the remaining Intervenors, DSS points out
that these Intervenors paid money to DSS years ago, and argues that their case is thus moot
because it “could not have any practical effect on the parties.” Citing Perez v. Sec’y of
Health, Educ. & Welfare, 354 F. Supp. 1342, 1345 (D. Puerto Rico 1972). This argument
is not persuasive. In Perez, the plaintiff sought declaratory judgment that he should not have
been denied disability benefits without a hearing. The court dismissed the action as moot
after plaintiff was granted a full hearing, noting that the “plaintiff was given a hearing on this
cause and there is nothing the defendant could do but what it has already done.” Id. at 1346.
Here, the Intervernors allege that DSS asserted a lien against them in violation of federal law
and ask for declaratory judgment that the Missouri statute and DSS’s procedures violate
federal law. DSS has not claimed that it has returned to the Intervenors the money they paid
under these liens. Thus, the reasoning of Perez does not apply and DSS is not entitled to
summary judgment on these claims.
Intervenors’ Claim for Injunctive Relief
The Court has already granted summary judgment against Wilhoite’s claim for
injunctive relief, holding that the possibility of future violation is too remote. [Doc. # 90 at
29]. In order to issue an injunction, “[t]he court must determine that a cognizable danger of
future violation exists and that danger must be more than a mere possibility.” Rogers v.
Scurr, 676 F.2d 1211, 1214 (8th Cir. 1982). Although some Intervenors actually paid money
to DSS to satisfy DSS’s liens, and differ in this regard from Wilhoite’s position, the
Intervenors have not explained how this difference renders any less remote the possibility
of future violation. This case is easily distinguished from the cases relied on by Intervenors,
all of which deal with the conditions of families’ ongoing monthly payments under Aid to
Families with Dependent Children grants. See Percey v. Blum, 524 F. Supp. 324, 326 (N.D.
N.Y. 1981); Doe v. Swank, 332 F. Supp. 61, 62 (N.D. Ill. 1971); Gilliard v. Craig, 331 F.
Supp. 587, 589 (W.D.N.C. 1971). In contrast, this case deals with DSS’s one-time
imposition of a lien on the Intervenors, who could not find themselves in the same position
again unless they both had an accident that incurred medical costs and continued to qualify
for Medicaid. The Intervenors have provided no evidence as to the likelihood of this
occurring, and the possibility of such an occurrence is intuitively remote. The Court thus
grants summary judgment for DSS on Intervenors’ claims for injunctive relief.
Wilhoite and Intervenors argue that because they have asked the Court to apply settled
principles of law announced by Ahlborn, the Court’s decision should be applied retroactively
to the date of the Ahlborn decision, citing James B. Beam Distilling Co. v. Georgia, 501 U.S.
529, 538-44 (1991). Wilhoite and Intervenors do not explain how such a holding would
relate to Wilhoite’s and Intervenors’ Complaints or what effect such a holding would have
on the case. The case on which Wilhoite and Intervenors rely also explains that “retroactivity
must be limited by the need for finality,” which includes res judicata and statutes of
limitation or repose. Id. at 541. Without providing more facts about the possible impact of
this requested ruling, Wilhoite and Intervenors have not established that they are entitled to
summary judgment on this issue at this time and the Court dismisses the claim without
Accordingly, it is hereby ORDERED that the Defendant’s motion for summary
judgment [Doc. # 166] is GRANTED with regard to all remaining claims of injunctive relief,
all claims for monetary relief against DSS or individual Defendants in their official
capacities, including punitive damages, and Intervenors’ procedural due process claims, and
DENIED in all other regards. Plaintiff’s claims in Plaintiff’s motion for summary judgment
[Doc. # 168] are GRANTED with regard to declaratory judgment on the statutory claims in
Counts I and IV and attorney fees on the same, and DENIED in all other regards.
Intervenors’ claims in Plaintiff’s motion for summary judgment are DENIED. Intervenors’
request to conduct additional discovery as to which Defendant may be responsible for
damages in their individual capacity is GRANTED. Any Defendant will be permitted to
raise a qualified immunity defense no later than 30 days after all discovery of the individual
Defendants is completed.
The Court hereby DECLARES, with regard to Plaintiff Wilhoite, that Mo. Rev Stat.
§ 208.215.8 violates 42 U.S.C. § 1396, et seq., and that DSS’s lien procedures violate 42
U.S.C. § 1396, et seq.
s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: August 27, 2012
Jefferson City, Missouri
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