Cathcart v. Lake et al
Filing
28
ORDER granting in part and denying in part 21 Motion to Dismiss; granting in part and denying in part 22 Motion to Dismiss. Signed by Honorable Timothy D. DeGiusti on 3/9/2016. (mb)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
BEVERLY ANSLEY,
by and through Carol Cathcart,
Next Friend and Attorney-in-Fact,
Plaintiff,
v.
ED LAKE, Director of the Oklahoma
Department of Human Services; and
JOEL NICO GOMEZ, Director of the
Oklahoma Health Care Authority,
Defendants.
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Case No. CIV-14-1382-D
ORDER
Plaintiff Beverly Ansley, by and through her next friend and attorney-in-fact,
brings this action against Ed Lake, Director of the Oklahoma Department of Human
Services (“OKDHS”) and Joel Gomez, Director of the Oklahoma Health Care
Authority (“OHCA”). OKDHS and OHCA administer Medicaid, which is a
means-tested program. OKDHS denied Plaintiff’s application for Medicaid benefits
and Plaintiff challenges that denial, alleging Defendants violated her rights under
certain federal statutes and regulations that are enforceable under 42 U.S.C. § 1983.1
1
Plaintiff’s original complaint alleged Defendants failed to promptly issue a
decision regarding her eligibility for benefits. After her application was denied,
Plaintiff filed an Amended Complaint that frames the present dispute.
Defendants move to dismiss the Amended Complaint pursuant to Fed. R. Civ.
P. 12(b)(1) and 12(b)(6).
The following facts are taken from the Amended Complaint, accepted as true,
and viewed in the light most favorable to Plaintiff. Carroll v. Lawton Indep. Sch. Dist.
No. 8, 805 F.3d 1222, 1226 (10th Cir. 2015) (court accepts all well-pleaded factual
allegations in the complaint as true and views such allegations in the light most
favorable to the non-moving party). Plaintiff is in a nursing home, where, due to a fall,
she is unable to walk and has memory difficulties. She cannot care for herself and
requires assistance with most of her daily activities. By virtue of a Durable Power of
Attorney, her daughter acts as her attorney-in-fact. On February 17, 2014, Plaintiff
and her husband loaned cash and transferred their non-producing mineral interests to
their five children. In return, the children executed a promissory note in the amount
of $400,000.
One month later, Plaintiff applied for Medicaid benefits with OKDHS. In a
Notice of Denial, OKDHS informed Plaintiff her application was being denied for the
following reasons: (1) Plaintiff and her husband’s farmland could not be considered
an exempt resource because Plaintiff’s husband ended his farming partnership and
executed a lease of the farmland; (2) the promissory note executed by Plaintiff’s
children was a “countable resource” worth more than $2,000; and (3) the promissory
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note was a “transfer without receipt of fair market value.” Plaintiff’s husband
subsequently terminated the farming lease and entered into a crop share agreement for
the land. According to Plaintiff, this eliminated the underlying issues for OKDHS’s
first reason for denial. As to the promissory note, Plaintiff contends it is neither a
countable resource, liquid asset, nor a transfer without receipt of fair market value,
since it cannot be transferred.
Plaintiff’s action seeks both injunctive and declaratory relief. Plaintiff’s request
for injunctive relief asks the Court to order Defendants to cease denying Medicaid
coverage to Plaintiff and certify her eligible for such benefits “from the first day of the
third month prior to the month in which application was made, as allowed by statute,
and to pay Medicaid benefits accordingly.” See Compl., p. 7 (Prayer for Relief).
Plaintiff’s declaratory judgment action seeks a declaration that Defendants have
violated and continue to violate Plaintiff’s federal rights by failing to certify her as
eligible for Medicaid benefits. Id.
Defendants move to dismiss the Amended Complaint for three reasons. First,
Defendants contend the Amended Complaint alleges new information that was not
part of the original record, and therefore, this Court should exercise its discretion
under the prudential mootness doctrine and dismiss the action pending its
consideration of a new, amended application from Plaintiff. Second, Defendants
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contend the Amended Complaint fails to state a claim upon which relief can be
granted, as the statutory and regulatory provisions at issue do not grant an enforceable
right under § 1983. Lastly, Defendants request that the Amended Complaint be
dismissed on Eleventh Amendment immunity grounds to the extent Plaintiff seeks
retroactive injunctive and/or declaratory relief [Doc. Nos. 21, 22].2 Plaintiff has filed
her response in opposition [Doc. Nos. 23, 24]. The matter is fully briefed and at issue.
STANDARD OF DECISION
A complaint must contain “a short and plain statement of the claim showing
that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A complaint will survive
a Rule 12(b)(6) motion to dismiss if it contains “sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
“A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678. That the Court accepts them as true,
however, does not mean the allegations in a complaint are in fact true; a plaintiff is not
required to prove her case at the pleading stage. Glover v. Mabrey, 384 F. App’x 763,
2
In lieu of filing a separate motion to dismiss, Defendant Lake adopts the
statements and arguments raised in Defendant Gomez’s motion.
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772 (10th Cir. 2010) (unpublished). The complaint must allege facts which “give the
court reason to believe that this plaintiff has a reasonable likelihood of mustering
factual support for these claims.” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d
1174, 1177 (10th Cir. 2007) (emphasis in original).
Even in this post-Iqbal/Twombly era, in reviewing a motion to dismiss pursuant
to Rule 12(b)(6), the Court neither assesses the legal feasibility of the complaint nor
does it weigh the evidence which might be offered at trial. Skinner v. Switzer, 562
U.S. 521, 529-30 (2011) (“on a motion to dismiss for failure to state a claim, the
question below was ‘not whether [the plaintiff would] ultimately prevail’ on [her] ...
claim ... but whether [her] complaint was sufficient to cross the federal court’s
threshold[.]”) (citation omitted); Lymon v. Aramark Corp., 728 F. Supp. 2d 1207,
(D.N.M. 2010) (“In adjudicating a motion to dismiss, a court may neither grant the
motion because it believes it is unlikely the plaintiff can prove the allegations . . . nor
may it ‘weigh potential evidence that the parties might present at trial’ in assessing the
motion’s merit[.]”) (citing Robbins v. Oklahoma, 519 F.3d 1242, 1246 (10th Cir.
2008); Duran v. Carris, 238 F.3d 1268, 1270 (10th Cir. 2001)).3
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The Court may, however, weigh the evidence and make factual findings when
considering a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction.
Los Alamos Study Group v. U.S. Dept. of Energy, 692 F.3d 1057, 1063 (10th Cir.
2012).
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Granting a motion to dismiss remains “a harsh remedy which must be
cautiously studied, not only to effectuate the spirit of the liberal rules of pleading but
also to protect the interests of justice.” Dias v. City & Cnty. of Denver, 567 F.3d 1169,
1178 (10th Cir. 2009) (quoting Duran v. Carris, 238 F.3d 1268, 1270 (10th Cir. 2001)
(internal quotation marks omitted)). “Thus, ‘a well-pleaded complaint may proceed
even if it strikes a savvy judge that actual proof of those facts is improbable, and that
a recovery is very remote and unlikely.’” Id. (quoting Twombly, 550 U.S. at 556).
DISCUSSION
The Medicaid program was established in 1965 as Title XIX of the Social
Security Act. See 42 U.S.C. §§ 1396 et seq. Medicaid is a needs-based entitlement
program providing joint federal and state funding of medical care for specified classes
of individuals found to be unable to pay their own medical costs. See 42 U.S.C. §
1396d. For eligibility purposes, individuals are divided into two groups: those who are
“categorically needy” and those who are “medically needy.” Title XIX requires states
to provide medical assistance to the “categorically needy” – those individuals who
qualify for Medicaid because they receive some form of federal cash assistance. Hern
v. Beye, 57 F.3d 906, 910 (10th Cir. 1995) (citing 42 U.S.C. § 1396a(a)(10)(A)(i); 42
C.F.R. §§ 436.100 et seq.). Conversely, states may, at their option, cover “medically
needy” individuals – people who do not qualify as categorically needy but
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nevertheless cannot afford adequate medical care. Id. (citing 42 U.S.C. §
1396a(a)(10)(A)(ii); 42 C.F.R. §§ 436.300 et seq.). The Amended Complaint contends
Plaintiff is medically needy. See Compl., ¶ 24 (“Mrs. Ansley is without sufficient
income or resources to pay for her nursing home care. Mrs. Ansley is unable to
provide for her own medical care, shelter, clothing, and other necessities.”).
Defendants, however, contend Plaintiff’s request is the result of strategic “Medicaid
planning” and flies in the face of Medicaid’s purpose, which is to provide for the
needy, and not those who reduce or eliminate certain assets that would otherwise
render them ineligible. Mot. to Dismiss, p. 2.
At the onset, the Court, in its discretion, declines to dismiss this case under the
prudential mootness doctrine. “The party asserting mootness bears the heavy burden
of persua[ding] the court that the challenged conduct cannot reasonably be expected
to start up again.” Rio Grande Silvery Minnow v. Bureau of Reclamation, 601 F.3d
1096, 1121 (10th Cir. 2010) (quoting Friends of the Earth, Inc. v. Laidlaw Envtl.
Servs. (TOC), Inc., 528 U.S. 167, 189 (2000) (alterations in original, internal quotation
marks omitted)). A case is considered moot either “when the issues presented are no
longer live or the parties lack a legally cognizable interest in the outcome.” Chafin v.
Chafin, __ U.S. __, 133 S.Ct. 1017, 1023, 185 L.Ed.2d 1 (2013). Indeed, a federal
court’s duty “is to decide actual controversies by a judgment which can be carried into
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effect, and not to give opinions upon moot questions or abstract propositions.” Leser
v. Berridge, 668 F.3d 1202, 1207 (10th Cir. 2011) (quoting Mills v. Green, 159 U.S.
651, 653 (1895)).
Under the prudential mootness doctrine, even if a case is not constitutionally
moot, a court may dismiss the case if the case “is so attenuated that considerations of
prudence and comity for coordinate branches of government counsel the court to stay
its hand, and to withhold relief it has the power to grant” by dismissing the claim for
lack of subject matter jurisdiction. Rio Grande Silvery Minnow, 601 F.3d at 1121
(citation omitted); MBIA Ins. Corp. v. F.D.I.C., 708 F.3d 234, 245 (D.C. Cir. 2013).
In the present case, the issue surrounding Plaintiff’s farmland was but one basis for
the denial of her application for Medicaid coverage. Even assuming the application
was reversed as to the farmland issue, Plaintiff’s application was still denied because,
according to OKDHS, the $400,000 promissory note was a countable resource worth
more than $2,000 and constituted a transfer without receipt of fair market value.
OKDHS has expressed no intent to revisit this issue; thus, the matter of Plaintiff’s
Medicaid eligibility remains “live,” and a ruling by this Court would impact any
legally cognizable interest. Accordingly, Defendants’ request for dismissal for lack
of subject matter jurisdiction is denied.
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Defendants next argue that Plaintiff has failed to establish a cause of action
under § 1983 via the statutes cited in the Amended Complaint. “To state a claim under
§ 1983, a plaintiff must allege the violation of a right secured by the Constitution and
laws of the United States, and must show that the alleged deprivation was committed
by a person acting under color of state law.” West v. Atkins, 487 U.S. 42, 48 (1988)
(citing Parratt v. Taylor, 451 U.S. 527, 535 (1981)). Plaintiff alleges the
determination regarding her ineligibility for Medicaid benefits violated rights
guaranteed by 42 U.S.C. § 1396a(a)(8), 42 U.S.C. § 1396p(c)(2)(C), 42 U.S.C. §
1396p(c)(1)(I), and 42 U.S.C. § 1382b(a)(3). Section 1983 actions may be brought
against state actors to enforce rights created by federal statutes as well as the
Constitution. Gonzaga Univ. v. Doe, 536 U.S. 273, 279 (2002). In order to confer a
private right of action, however, Congress must have spoken “with a clear voice” and
manifested an “unambiguous” intent to confer individual rights. Id. In making this
determination, the Court examines the following three factors:
First, Congress must have intended that the provision in question benefit
the plaintiff. Second, the plaintiff must demonstrate that the right
assertedly protected by the statute is not so vague and amorphous that its
enforcement would strain judicial competence. Third, the statute must
unambiguously impose a binding obligation on the States. In other
words, the provision giving rise to the asserted right must be couched in
mandatory, rather than precatory, terms.
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Hobbs ex rel. Hobbs v. Zenderman, 579 F.3d 1171, 1179 (10th Cir. 2009) (quoting
Blessing v. Freestone, 520 U.S. 329, 340-41 (1997)).
Section 1396a(a)(8) provides “[a] State plan for medical assistance must ...
provide that all individuals wishing to make application for medical assistance under
the plan shall have opportunity to do so, and that such assistance shall be furnished
with reasonable promptness to all eligible individuals[.]” Id. Defendants concede that
the weight of authority, which includes decisions from this district and the Northern
District of Oklahoma, provides § 1396a(a)(8) can be enforced through a § 1983
action. Mot. to Dismiss, p. 12 n. 8; Resp. to Mot. to Dismiss, p. 8. In light of this wellestablished federal law, the Court also finds §1396a(a)(8) meets the Blessing test and
creates a private right of action.
Section 1396p(c)(2)(C) provides, in relevant part, “[a]n individual shall not be
ineligible for medical assistance ... to the extent that a satisfactory showing is made
to the State ... that (i) the individual intended to dispose of the assets either at fair
market value, or for other valuable consideration, (ii) the assets were transferred
exclusively for a purpose other than to qualify for medical assistance, or (iii) all assets
transferred for less than fair market value have been returned to the individual[.]” Id.
Judges Cauthron and Miles-LaGrange of this district previously found this section
satisfied all prongs of the Blessing test in that (1) Congress intended this section to
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benefit plaintiff, (2) it was not so “vague and amorphous” that its enforcement would
“strain the judicial competence,” and (3) the section unambiguously imposes a binding
obligation on the states. Clayton ex rel. Clayton v. Lake, No. CIV-13-M, 2014 WL
223061, at *3 (W.D. Okla. Jan. 24, 2014); Lemmons v. Lake, No. CIV-12-1075-C,
2013 WL 1187840, at *3 (W.D. Okla. Mar. 21, 2013), vacated as moot, Lemmons v.
Lake, No. CIV-12-1075-C, 2013 WL 6913757, (W.D. Okla. June 28, 2013). The
Court agrees with these decisions and finds § 1396p(c)(2)(C) confers a private right
of action. The statute contains the rights-creating language indicating congressional
intent to invoke an individual entitlement for a certain benefitted class; it does so in
clear terms and its use of the word “shall” indicates a mandatory, as opposed to a
discretionary, instruction.
Conversely, the Court finds § 1396p(c)(1)(I) fails to contain the requisite
“rights-creating” language. Relevant here, it only requires a promissory note to meet
certain criteria before it may be considered an “asset.” Lastly, § 1382b(a)(3) provides
that “[i]n determining the resources of an individual (and [her] eligible spouse, if any)
there shall be excluded ... other property which is so essential to the means of
self-support of such individual (and such spouse) as to warrant its exclusion ... except
that the Commissioner of Social Security shall not establish a limitation on property
(including the tools of a tradesperson and the machinery and livestock of a farmer)
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that is used in a trade or business or by such individual as an employee[.]” Id. The
Court finds this section also fails the Blessing test in that it does not contain the rightscreating language indicating congressional intent to invoke an individual entitlement
for a certain benefitted class. Rather, it only provides the methodology which must be
used in determining an applicant’s resources.
Therefore, although certain statutory provisions may be inapplicable, the Court
finds the Amended Complaint nevertheless states a cause of action under § 1983. At
this juncture, the Court is not required to assess the legal feasibility of the Amended
Complaint or weigh the evidence. The crux of Plaintiff’s pleading is the alleged
wrongful denial of her Medicaid eligibility. As stated above, even if the Court were
to believe Plaintiff would likely not prevail on some of the authorities set forth in the
Amended Complaint, such belief would not justify the harsh remedy of granting
Defendants’ motion, on this issue, at this stage of the proceedings.
Turning to Defendants’ challenge to the nature of the relief requested, the Court
finds Defendants’ motion should be granted in part. The Amended Complaint seeks
the following relief:
(1)
Preliminary and permanent injunctions ordering Defendants
to cease denying Medicaid coverage to Plaintiff, and
ordering Defendants to certify Plaintiff eligible for
coverage from the first day of the third month prior to the
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month in which application was made, as allowed by
statute, and to pay Medicaid benefits accordingly;
(2)
Declaratory relief that Defendants have violated and are
violating Plaintiff’s federal rights by failing to certify her
eligible for Medicaid benefits;
(3)
That the relief awarded herein shall be at least effective as
of the first day of the third month before the month in
which the application was made, in accordance with 42
U.S.C. § 1396a(a)(34);
(4)
An award of attorney’s fees and costs; and
(5)
Any other relief deemed just and equitable.
Compl., p. 7 (Prayer for Relief). Among other things, the Eleventh Amendment
generally bars suits brought by individuals against state officials acting in their official
capacities. In Ex parte Young, the Supreme Court announced an exception to Eleventh
Amendment sovereign immunity by holding a plaintiff may obtain prospective
equitable relief against a state official in federal court. Ex parte Young, 209 U.S. 123,
158-59 (1908); Garramone v. Romo, 94 F.3d 1446, 1452 (10th Cir. 1996) (“While the
Eleventh Amendment bars actions for monetary damages to be paid by the state ... it
does not bar claims against state officers for prospective relief[.]”) (citing Young).
The doctrine has several limitations, two of which are relevant here: it applies
only to ongoing violations – not suits seeking retroactive or compensatory wrongs.
Papasan v. Allain, 478 U.S. 265, 277-78 (1986) (“Young has been focused on cases
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in which a violation of federal law by a state official is ongoing as opposed to cases
in which federal law has been violated at one time or over a period of time in the
past”). Further, the doctrine does not permit an award for relief that is the practical
equivalent of money damages, even if it is characterized as equitable. Edelman v.
Jordan, 415 U.S. 651, 668 (1974). But if monetary damages are necessary in
conjunction with prospective declaratory or injunctive relief, then “[s]uch an ancillary
effect on the state treasury is a permissible and often an inevitable consequence of the
principle announced in Ex parte Young.” See id.; Hutto v. Finney, 437 U.S. 678, 692
(1978) (holding that award of attorneys’ fees ancillary to injunction did not violate the
Eleventh Amendment); Lewis v. N.M. Dept. of Health, 261 F.3d 970, 977 (10th Cir.
2001).
The Tenth Circuit has adopted the following factors to determine whether the
doctrine applies: (1) whether the action is against the state officials or the state itself;
(2) whether the alleged conduct by the state officials constitutes a violation of federal
law; (3) whether the relief sought is permissible prospective relief or analogous to a
retroactive award of damages; and (4) whether the suit implicates “special sovereignty
interests” and is the “functional equivalent” of a form of legal relief against the state
that would otherwise be barred by the Eleventh Amendment. Elephant Butte Irr. Dist.
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v. Dept. of Interior, 160 F.3d 602, 609 (10th Cir.1998) (citations omitted) cert. denied,
526 U.S. 1019 (1999).
Plaintiff’s suit is brought against the individual defendants in their official
capacities. Compl., p. 1. Plaintiff has asserted, in this Court’s view, a non-frivolous
violation of federal law, i.e., the wrongful denial of her Medicaid eligibility.
Therefore, the first two factors have been met. As to the third factor, the Court finds
Plaintiff’s request for preliminary and permanent injunctive relief is not barred under
the Eleventh Amendment, as it is prospective in nature. See Branson Sch. Dist. RE-82
v. Romer, 161 F.3d 619, 631 (10th Cir.1998) ( “[A] suit against a state official in his
or her official capacity seeking prospective injunctive relief is not ... against the state
for Eleventh Amendment purposes.”). However, Plaintiff’s request for declaratory
relief is retroactive, and thus barred, since she seeks a declaration that Defendants
violated her rights by not granting her application for Medicaid benefits. See
Buchwald v. Univ. of N.M. School of Medicine, 159 F.3d 487, 494-95 (10th Cir.
1998); Meiners v. Univ. of Kansas, 239 F. Supp. 2d 1175, 1198 (D. Kan. 2002)
(“although the Eleventh Amendment does not prohibit a suit brought in federal court
to prospectively enjoin a state official from violating federal law ... declaratory relief
is not the type of remedy designed to prevent ongoing violations of federal law, and
the Eleventh Amendment ‘does not permit judgments against state officers declaring
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that they violated federal law in the past.’”) (citations omitted), aff’d, 359 F.3d 1222
(10th Cir. 2004).
Nevertheless, to the extent Plaintiff seeks retroactive payments in the event this
Court deems her eligible for Medicaid, as indicated in the Amended Complaint, the
Court finds such payments are ancillary to her request for non-monetary prospective
relief and not barred by Young. See Morenz v. Wilson-Coker, 415 F.3d 230, 237 (2d
Cir. 2005) (“[T]he order that payments begin retroactively is not compensation for
accrued liability, but is rather an incident of the present eligibility determination
required by the Medicaid statute itself. ... Back payments are therefore necessary to
compliance with the district court’s prospective order.”).
Lastly, regarding the fourth factor, the Court finds the injunctive relief that is
permitted under law only enjoins an alleged continuing violation of federal law and
does not implicate special sovereignty interests. See J.B. ex rel. Hart v. Valdez, 186
F.3d 1280, 1287 (10th Cir. 1999) (“A state’s interest in administering a welfare
program at least partially funded by the federal government is not such a core
sovereign interest as to preclude the application of Ex parte Young.”) (citing Doe v.
Chiles, 136 F.3d 709, 720 (11th Cir.1998)); Lewis v. N.M. Dep’t of Health, 261 F.3d
970, 978 (10th Cir. 2001) (“Because the plaintiffs in the present case are challenging
the administration of New Mexico’s Medicaid plan, we conclude it is analogous to
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Valdez and special sovereignty interests are not implicated.”). Accordingly, in light
of the foregoing analysis, Plaintiff is entitled to rely on Ex parte Young in support of
her request for prospective injunctive relief and back payments, but not her request for
declaratory relief.
CONCLUSION
Accordingly, Defendants’ Motions to Dismiss [Doc. Nos. 21, 22] are
GRANTED IN PART and DENIED IN PART as set forth herein.
IT IS SO ORDERED this 9th day of March, 2016.
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