BRILL v. VELEZ et al

Filing 9

OPINION FILED. Signed by Judge Noel L. Hillman on 6/27/14. (js)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

ADA BRILL,
Plaintiff,
v.
JENNIFER VELEZ, COMMISSIONER,
NEW JERSEY DEPARTMENT OF
HUMAN SERVICES; and VALERIE
HARR, DIRECTOR, NEW JERSEY
DEPARTMENT OF HUMAN SERVICES,
DIVISION OF MEDICAL
ASSISTANCE AND HEALTH
SERVICES,
Defendants.

CIVIL NO. 1:13-cv-05643
(NLH/AMD)

OPINION

Appearances:
JANE M. FEARN-ZIMMER
ROTHKOFF LAW GROUP
911 KINGS HIGHWAY SOUTH
CHERRY HILL, NJ 08034
Attorney for plaintiff Ada Brill
MOLLY ANN MOYNIHAN
STATE OF NEW JERSEY
OFFICE OF THE ATTORNEY GENERAL
R.J. HUGHES COMPLEX
25 MARKET STREET
P.O. BOX 112
TRENTON, NJ 08625
Attorney for defendants Jennifer Velez and Valerie Harr

HILLMAN, District Judge
Before the Court is Defendants’ Motion to Dismiss pursuant
to Fed.R.Civ.P. 12(b)(1).

Plaintiff commenced this action by

filing a Complaint pursuant to 28 U.S.C. § 1983, naming as
defendants Jennifer Velez and Valerie Harr, respectively the
Commissioner of the New Jersey Department of Human Services and
the Director of the Division of Medical Assistance and Health
Services.

(Pl.’s Compl. [Doc. No. 1] ¶¶ 5-6.)

The Complaint

alleges violations of subchapter XIX of the Social Security Act
(“Federal Medicaid Act”), 42 U.S.C. §§ 1396 to 1396w-5 (West,
Westlaw through P.L. 113-92).

(See e.g., Id. ¶¶ 46, 48.)

Defendants now move to dismiss on the grounds that the case has
become moot.

For the reasons set forth below, the motion will

be denied.
I.

Jurisdiction and Standard for Motion to Dismiss Under
Rule 12(b)(1)

“Federal courts are courts of limited jurisdiction, and
when there is a question as to our authority to hear a dispute,
‘it is incumbent upon the courts to resolve such doubts, one way
or the other, before proceeding to a disposition on the
merits.’”

Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412,

418 (3d Cir. 2010) (citing Carlsberg Res. Corp. v. Cambria Sav.
& Loan Ass'n., 554 F.2d 1254, 1256 (3d Cir. 1977)).

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A motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(1) challenges the existence of a federal court’s
subject matter jurisdiction.

Fed. R. Civ. P. 12(b)(1).

“‘When

subject matter jurisdiction is challenged under Rule 12(b)(1),
the plaintiff must bear the burden of persuasion.’”

Symczyk v.

Genesis HealthCare Corp., 656 F.3d 189, 191 n.4 (3d Cir. 2011)
(citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406,
1409 (3d Cir. 1991)).
A motion to dismiss for lack of subject matter jurisdiction
may present either a facial or factual challenge to the
complaint.

Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d

884, 891 (3d Cir. 1977).

A facial challenge argues that “the

complaint, on its face, does not allege sufficient grounds to
establish subject matter jurisdiction.”

D.G. v. Somerset Hills

School Dist., 559 F. Supp. 2d 484, 491 (D.N.J. 2008).

A factual

challenge, by contrast, proceeds by attacking the
“jurisdictional allegations set forth in the complaint.”

D.G.,

559 F. Supp. 2d at 491.
When evaluating a facial attack, “the court must consider
the allegations of the complaint as true.”
at 891.

Mortensen, 549 F.2d

Upon a factual attack, however, the court need not

presume the truth of the allegations and “is free to weigh the
evidence and satisfy itself as to the existence of its power to

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hear the case.”

Mortensen, 549 F.2d at 891.

Moreover, when

considering a factual challenge, the Court is “not confined to
the allegations in the complaint ... and can look beyond the
pleadings to decide factual matters relating to jurisdiction.”
Cestonaro v. United States, 211 F.3d 749, 752 (3d Cir. 2000)
(citing Mortensen, 549 F.2d at 891).

“The defendant may

factually attack subject matter jurisdiction at any stage in the
litigation, including before the answer has been filed.”

D.G.,

559 F. Supp. 2d at 491.
In the present Motion, Defendants make a factual attack on
the Court’s subject matter jurisdiction, arguing that
Plaintiff’s claim has become moot.

Holland v. N.J. Res. Corp.,

2013 WL 4780763,*1 n.2 (D.N.J. Sept. 5, 2013)(citing Gordon v.
East Goshen Twp., 592 F. Supp. 2d 828, 837 (E.D. Pa. 2009).
Challenges based on the various justiciability doctrines,
including mootness, are properly brought under Federal Rule of
Civil Procedure 12(b)(1).

See, e.g. Lindell v. Landis Corp.

401(k) Plan, 640 F. Supp. 2d 11, 14 (D.D.C. 2009) (citing Worth
v. Jackson, 451 F.3d 854, 857 (D.C. Cir. 2006)).
Ballentine v. U.S., 486 F.3d 806 (3d Cir. 2007).
II.

Background

A. Medicaid

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See also,

Medicaid is a federal program implemented by participating
states.

See 42 U.S.C. §§ 1396 to 1396w-5.

It was created to

provide medical care to people “whose income and resources are
insufficient to meet the costs of necessary medical services.”
42 U.S.C.A. § 1396-1 (West, Westlaw through P.L. 113-92).

As a

condition for receiving federal funding, state Medicaid programs
must comply with the federal Act and related regulations.

See

Harris v. McRae, 448 U.S. 297, 301 (1980); 42 U.S.C. 1396a.
In particular, the Federal Medicaid Act requires states to
process applications and provide benefits with “reasonable
promptness.”

42 U.S.C.A. § 1396a(a)(3), (8); 42 C.F.R. 435.912.

Federal regulations further provide that determinations of
eligibility, except those based on disability, must be made
within forty-five days.

42 C.F.R. 435.912(c)(3).

The federal Act also requires participating states to
impose penalty periods of ineligibility for applicants who
transfer assets for less than their fair market value
(“Impermissible Transfer”) within a sixty-month look-back period
from the date of application.

42 U.S.C.A. § 1396p(c)(1)(A),

(B).
B. Procedural History
On March 22, 2012, Plaintiff applied to the Camden County
Board of Social Services (“Board”) for long-term care benefits
under New Jersey’s Medicaid program.
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(Pl.’s Compl. [Doc. No. 1]

¶ 2.)

Due to the fact that Plaintiff had purchased an annuity

the day before she filed her application, Plaintiff’s caseworker
sought guidance from the State on the issue of whether Plaintiff
must incur a penalty waiting period before receiving benefits.
(Id. ¶¶ 34, 41.)
Approximately fifteen months after filing her application,
by letter dated June 21, 2013, Plaintiff learned she would be
subject to a penalty period if the Board found her to be
otherwise eligible for benefits.

(Id. Ex. F.)

The Penalty

period was imposed because the State deemed several asset
transfers below fair market value, including the annuity
purchase. (Id.)

The letter also informed Plaintiff she had two

weeks to rebut the State’s findings by proving that the
transfers were not made for the purpose of becoming eligible for
Medicaid.

(Id.)

Plaintiff’s counsel submitted a letter to the

Board explaining why the annuity purchase should not count
toward a penalty period, but to no avail.

(Id. ¶ 38.)

On July 29, 2013, Plaintiff received the Board’s
determination stating that she was eligible for benefits but
would be subject to a penalty period until November 17, 2013.
(Id. Ex. H.)

In response to the Board’s determination,

Plaintiff filed this action seeking to enjoin Defendants from
treating her annuity purchase as an Impermissible Transfer and
from applying a “de facto policy of delaying determinations
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involving annuities.”

(Id. Wherefore Clause.)

Plaintiff also

requested costs, attorney’s fees, and “such other relief as the
court may deem just and equitable.”

(Id.)

By letter dated October 4, 2013, two weeks after Plaintiff
filed her Complaint, the Board reversed its previous
determination and informed Plaintiff that her annuity purchase
would not count towards her penalty period.
Supp. of Mot. to Dismiss [Doc. No. 5] Ex. A.)

(Defs.’ Mem. in
However, instead

of recalculating the penalty period without the annuity, the
Board rescinded Plaintiff’s eligibility determination, changed
her application status to “pending,” and requested additional
information.

(Id.)

Today, approximately six months after her

initial penalty period was set to expire, Plaintiff still has
not received benefits or a revised eligibility determination.
Defendants now move to dismiss the case as moot in light of
the Board’s reversal of its position regarding Plaintiff’s
annuity.

In particular, Defendants argue there is no longer a

live controversy because (1) Plaintiff sought to enjoin
Defendants from treating her annuity as an Impermissible
Transfer, and (2) the Board decided not to treat Plaintiff’s
annuity as an Impermissible Transfer.

(Id. 16.)

III. Discussion
Defendants contend the case is moot because, in light of
the Board’s change of heart, the Court can no longer provide the
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injunction requested by Plaintiff.

(Id. 17.)

contentions are wrong for two reasons.

Defendants’

First, Defendants have

not satisfied the standard that applies when a defendant
voluntarily ceases the conduct challenged by Plaintiff, and the
Court may still enjoin Defendants from reverting to the
challenged practices.

Second, this case cannot be moot because

the Court can provide meaningful relief other than the
injunction Plaintiff requested.
A. Voluntary Cessation of Challenged Activity
It is well settled that “voluntary cessation of allegedly
illegal conduct” does not generally moot a case.
County v. Davis, 440 U.S. 625, 631 (1979).

Los Angeles

When a defendant

voluntarily refrains from the conduct challenged by plaintiff,
he is still “free to return to his old ways.”
W. T. Grant Co., 345 U.S. 629, 632 (1953).

United States v.

Consequently, “the

court’s power to grant injunctive relief survives discontinuance
of the illegal conduct.”

Id. at 633.

However, voluntary cessation will moot a case if the
defendant can demonstrate that: “(1) it can be said with
assurance that there is no reasonable expectation . . . that the
alleged violation will recur, . . . and (2) interim relief or
events have completely and irrevocably eradicated the effects of
the alleged violation.”

Phillips v. Pa. Higher Educ. Assistance

Agency, 657 F.2d 554, 569 (3d Cir. 1981) (quoting Marshall v.
8

Whittaker Corp., 610 F.2d 1141, 1145 n.9 (3d Cir. 1979))
(internal quotation marks omitted).

The Defendant must shoulder

a “heavy burden” in establishing these two elements.

Phillips,

657 F.2d at 569 (quoting W. T. Grant Co., 345 U.S. at 633)
(internal quotation marks omitted).
In the present case, Defendants have not satisfied their
burden.

Defendants have not identified, nor can the Court

identify, any facts that would assure the Court it cannot
reasonably expect Defendants to revert back to their original
position after dismissal.

Without more, the sole fact that the

State voluntarily ceased the challenged conduct cannot provide
the requisite assurance.

To find otherwise would render the

requirement of assurance meaningless.
Moreover, the effects of the alleged violation have not
been completely or irrevocably cured.

The Board found that

Plaintiff was eligible for Medicaid but, due in part to her
annuity purchase, could not receive benefits until November 17,
2013.

Thus, the effect of the challenged conduct – i.e.

treating Plaintiff’s annuity purchase as an Impermissible
Transfer – was to delay the date when Plaintiff would begin
receiving benefits.

Notwithstanding the Board’s change of

position regarding the annuity, Plaintiff remains without
benefits roughly six months after she would have begun receiving
them under the Board’s original decision.
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Therefore, the effect

of the Board’s decision to treat Plaintiff’s annuity purchase as
an Impermissible Transfer has not been cured.
Accordingly, Defendants have not made the necessary
showing to establish that the Board’s letter of October 4, 2013
rendered the case moot, and the Court may still issue the
injunction requested by Plaintiff.
B. Meaningful Relief
Furthermore, Defendants’ sole focus on the relief requested
by Plaintiff is misplaced.

A case is not moot if the court can

provide meaningful relief to the plaintiff.

Church of

Scientology of Cal. v. United States, 506 U.S. 9, 12 (1992).
Consequently, before dismissing a case as moot, the court must
be sure the plaintiff would not be entitled to any meaningful
relief.

See Id.

Federal courts are not limited to the relief requested in
the pleadings.

Federal Rule of Civil Procedure 54(c) provides

that, except in default judgments, courts “should grant the
relief to which each party is entitled, even if the party has
not demanded that relief in its pleadings.”
54(c).

Fed. R. Civ. P.

While plaintiffs cannot recover for claims they never

alleged, courts should grant the relief justified by the facts
for any claim stated.

See USX Corp. v. Barnhart, 395 F.3d 161,

165 (3d Cir. 2004).

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The standard for stating a claim is quite liberal.

All

that is required under Rule 8(a)(2) is a “short and plaint
statement of the claim showing that the pleader is entitled to
relief, so that the defendant has fair notice of what the . . .
claim is and the grounds upon which it rests.”

Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 555 (quoting Conley v. Gibson,
355 U.S. 41, 47 (1957)) (internal quotations omitted).

The

notice requirement is met “so long as the court can discern from
the facts a cognizable basis for relief.”

Barroso v. N.J.

transit Corp., 2011 WL 111577, *3 (D.N.J. Jan. 13, 2011)
(quoting Etienne v. Oyake, 347 F. Supp. 2d 215, 219 (D.V.I.
2004)).
PRACTICE

See also, 5B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL
AND

PROCEDURE § 1357 (3d ed. 2004) (“[T]he district court is

under a duty to examine the complaint to determine if the
allegations provide for relief on any possible legal theory.”).
As long as the issues are pled, a plaintiff does not have to
identify each specific theory of relief.

Bechtel v. Robinson,

886 F.2d 644, 649 n.9 (3d Cir. 1989).
Defendants characterize Plaintiff’s Complaint as being
premised on the Board’s “initial determination that the
purchased annuity be treated . . . as an impermissible
transfer.”
5] 16.)

(Defs.’ Mem. in Supp. of Mot. to Dismiss [Doc. No.

While the Complaint addresses the Board’s treatment of

the annuity at length, the issues and allegations in the
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Complaint also state a more general claim of failing to proceed
with reasonable promptness.
Plaintiff’s Complaint is more than sufficient to state a
claim based on a violation of the federal mandate to make
eligibility determinations with reasonable promptness.

The

Complaint specifically refers to the forty-five day processing
requirement and alleges that the deadline had long passed by the
time the Board issued its first eligibility determination.
(Pl.’s Compl. ¶¶ 39-41.) Furthermore, according to the
Complaint, Plaintiff waited fifteen months for the State to
determine whether her annuity purchase would be deemed an
Impermissible Transfer.

(Id. ¶¶ 2, 37.)

The Complaint also

alleges that, following the State’s initial determination
regarding the annuity, Plaintiff waited an additional month for
the Board to determine she was eligible for benefits.
37, 41.)

(Id. ¶¶

In total, according to the complaint, Plaintiff waited

over sixteen months for an eligibility determination that should
have been made within forty-five days.
If sufficiently proven, the Court can remedy this claim
with an injunction against further violation of the reasonable
promptness requirement.

Such a remedy would indeed be

meaningful since Defendants have managed to draw out Plaintiff’s
eligibility determination six months (and counting) beyond the
date when Plaintiff’s original penalty period would have ended.
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IV.

CONCLUSION

For the foregoing reasons, Defendants’ Motion to Dismiss
shall be denied.

_s/ Noel L. Hillman _____
NOEL L. HILLMAN, U.S.D.J.

At Camden, New Jersey

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