United States District Court, D. Maine
YVONNE R. RICHARDSON, by her Conservator Barbara Carlin, and the MAINE POOLED DISABILITY TRUST, on its own behalf and on behalf of its current and future participating beneficiaries over age 64, and on behalf of all other similarly situated individuals, Plaintiffs,
RICKER HAMILTON, in his official Capacity as Commissioner of the MAINE DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant.
ORDER ON MOTION TO DISMISS
A. WOODCOCK, JR. JUDGE
Medicaid beneficiary and a pooled special needs trust bring
this action seeking injunctive and declaratory relief against
the Commissioner of the Maine Department of Health and Human
Services (MDHHS), alleging improper treatment of deposits
into pooled special needs trusts for purposes of benefits
eligibility determinations in violation of the Medicaid Act,
42 U.S.C. §§ 1396 et seq. The Medicaid
beneficiary deposited into the trust the proceeds of the sale
of her home, and MDHHS treated this asset transfer as one
that did not give the beneficiary equal value. As a result,
MDHHS notified the Medicaid beneficiary that it would
temporarily suspend certain benefits as a penalty. The
beneficiary administratively appealed MDHHS's
determination to a state of Maine Administrative Hearing
Officer; her appeal is still pending and has been stayed
pending this Court's adjudication of this action. The
Commissioner moves to dismiss the Plaintiffs' claims on
the ground that the Medicaid Act requires it to treat such
asset transfers in the manner that it does.
Court dismisses the Medicaid beneficiary's claims as
unripe. The Court also dismisses Count I because it is not
cognizable and Count II because the Medicaid Act provides for
the penalty that the MDHHS imposes upon transfers into pooled
special needs trusts for the benefit of persons over age
April 13, 2017, Yvonne Richardson and the Maine Pooled
Disability Trust (MPDT) filed a complaint pursuant to 42
U.S.C. § 1983 on behalf of themselves and a purported
class against Mary Mayhew in her official capacity as
Commissioner of the MDHHS. Compl. (ECF No. 1). The
Complaint contains two counts, each representing a theory of
how MDHHS violates the Medicaid Act in its treatment of
deposits into the MPDT by individuals over age sixty-four as
transfers of assets for less than fair market value.
Id. at 8-9. Count I, brought by Ms. Richardson and
“others similarly situated”, alleges that Ms.
Richardson and others “receive fair market value from
the expenditures the MPDT can make on her behalf pursuant to
its fiduciary duties to them.” Id. Count II,
apparently brought by MPDT alone, alleges that “no
statute imposes a transfer of assets penalty for transfers to
an exempt pooled special needs trust such as the MPDT.”
Id. at 9.
12, 2017, the Commissioner filed a motion to dismiss the
Complaint pursuant to Rule 12(b)(6). Def.'s Mot. to
Dismiss (ECF No. 7) (Def.'s Mot.). The
Plaintiffs responded and requested oral argument on June 2,
2017. Pls.' Opp'n to Def.'s Mot. to Dismiss
and Req. for Oral Arg. (ECF No. 8) (Pls.'
Opp'n). On June 5, 2017, the Court granted the
motion for oral argument. Order (ECF No. 10). The
Commissioner replied to the Plaintiffs' response on June
16, 2017. Def.'s Reply in Supp. of Mot. to Dismiss
Compl. (ECF No. 11) (Def.'s Reply).
Court issued an interim order on the motion to dismiss on
December 28, 2017, in which it identified one issue the
parties had not sufficiently briefed and other issues the
parties had not addressed at all. Interim Order on Mot.
to Dismiss (ECF No. 14). The Court invited the parties
to submit supplemental memoranda on ripeness, standing, and
enforceability via § 1983 of the relevant provisions of
the Medicaid Act, and it ordered the parties to be prepared
to discuss them at oral argument. Id. at 6-7. On
January 25, 2018, the Plaintiffs and Defendant filed
supplementary memoranda. Def.'s Supplemental Mem. in
Support of Mot. to Dismiss (ECF No. 17) (Def.'s
Supp. Mem.); Pls.' Resp. to Interim Order
(ECF No. 18) (Pls.' Supp. Mem.). The Court heard
oral argument on February 9, 2018. Min. Entry (ECF
is a “cooperative federal-state program that provides
federal funding for state medical services to the
poor.” Frew v. Hawkins, 540 U.S. 431, 433
(2004). Maine's Medicaid plan, like all state Medicaid
plans, must comply with certain requirements imposed by
Congress as a condition of participation in the program.
Armstrong v. Exceptional Child Ctr., Inc., 135 S.Ct.
1378, 1382 (2015). One of these is that it “comply with
the provisions of section 1396p.” 42 U.S.C. §
1396a(a)(18). In 1988, Congress enacted § 1396p(c)
“which requires a period of ineligibility for Medicaid
benefits in response to the applicant's transfer of
assets for the purpose of obtaining benefits.”
Peebler v. Reno, 965 F.Supp. 28, 29 (D. Ore. 1997).
The penalty ineligibility period is “directly
proportionate to the value of the assets that were
general rule, if an individual sixty-five or older applies
for Medicaid for nursing facility, assisted living, or home
and community-based waiver services, and has made a transfer
of assets for less than fair market value within the prior
sixty months, that transfer will disqualify the individual
for that Medicaid coverage for a penalty period based on the
amount of the transfer. Compl. ¶ 2; 42 U.S.C.
The Alleged Facts 
R. Richardson is a resident of St. Joseph's Manor nursing
facility in Portland, Maine. Compl. ¶ 14. She
appears by Barbara Carlin, who was appointed as conservator
for Ms. Richardson by the Cumberland County Probate Court.
Id. ¶ 5. MPDT is a corporation established
under the laws of the state of Maine with its principal
office and place of business in York County, Maine.
Id. ¶ 6. It is a pooled special needs trust
under 42 U.S.C. § 1396p(d)(4)(C). Id. Since its
inception in 2002 through 2016, the MPDT has enrolled 171
disabled individuals as participants, including forty-three
over the age of sixty-four at the time of their enrollment.
Id. ¶ 9.
Hamilton is Commissioner of the MDHHS and as Commissioner is
responsible for the administration of the Medicaid program in
the state of Maine. Id. ¶ 7. He has his
principal office in Kennebec County, Maine, and the MDHHS has
an office in Cumberland County. Id. His actions in
this case have been and continue to be taken under color of
Yvonne Richardson's Experience
Richardson receives Medicaid benefits to help pay for the
cost of her nursing facility care. Id. ¶¶
15, 16. After she sold her home, $38, 500 of the proceeds
from the sale was deposited into the MPDT in January 2017.
Id. ¶ 15. As a result, the MDHHS issued a
notice threatening to temporarily suspend Medicaid coverage
for her care at St. Josephs Manor effective April 1, 2017 but
advising her that MDHHS might reconsider if she provided
information that showed: (1) the transfer was made for a
reason other than to obtain MaineCare; (2) she did receive
something of equal value in return; (3) the transferred
assets have been returned; or (4) the penalty would place her
in severe hardship. Id.; Id. Attach. 2 Notice
Terminating Medicaid Coverage at 1 (MDHHS
Notice). Ms. Richardson timely requested an
administrative “fair hearing” to contest the
MDHHS decision. Compl. ¶ 16. Pending a decision
in that appeal, her Medicaid benefits have been continued.
Id. ¶ 16. The administrative hearing officer
stayed the fair hearing pending this Court's adjudication
of this case. Pls.' Supp. Mem. at 2;
Def.'s Supp. Mem. at 2 n.1.
Richardson desires to make purchases that would increase her
quality of life, such as large-print word search and
crossword puzzle books, new clothing, sweets, manicures,
magazines, and a radio. Id. ¶ 19. She cannot
currently afford such items, but funds from the MPDT could
put them within reach. Id. Using funds from her MPDT
sub-account, Ms. Richardson is also interested in obtaining
the services of a private caregiver who could bring her on
outings and get her out of her room where she spends most of
her days. Id.
Treatment as Transfers of Assets for Less than Fair
Market Value and Penalty Period of Medicaid
MDHHS treats the funding of pooled special needs trusts by
individuals over age sixty-four as a transfer of assets for
less than fair market value. Id. ¶ 3. As a
result of such treatment, MDHHS imposes a penalty period of
Medicaid ineligibility on those individuals for nursing
facility, assisted living, or home- and community- based
services pursuant to 42 U.S.C. § 1396p(c). Id.
12(b)(6) requires dismissal of a complaint that
“fail[s] to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). To state a claim, a
complaint must contain, among other things, “a short
and plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). “[T]he
pleading standard Rule 8 announces does not require
‘detailed factual allegations[.]'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). Rather, to survive a motion to dismiss, a complaint
must contain “sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Id. (quoting Twombly,
550 U.S. at 570). A claim is facially plausible when
“the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id.
(citing Twombly, 550 U.S. at 556).
First Circuit explained that “[t]he plausibility
inquiry necessitates a two-step pavane.”
García-Catalán v. United States, 734
F.3d 100, 103 (1st Cir. 2013) (citing
Rodríguez-Reyes v. Molina-Rodríguez,
711 F.3d 49, 53 (1st Cir. 2013)). “First, the court
must distinguish ‘the complaint's factual
allegations (which must be accepted as true) from its
conclusory legal allegations (which need not be
credited).'” Id. (quoting Morales-Cruz
v. Univ. of P.R., 676 F.3d 220, 224 (1st Cir. 2012)).
“Second, the court must determine whether the factual
allegations are sufficient to support ‘the reasonable
inference that the defendant is liable for the misconduct
alleged.'” Id. (quoting Haley v. City
of Boston, 657 F.3d 39, 46 (1st Cir. 2011) (quoting
Iqbal, 556 U.S. at 678)).
Ripeness of Ms. Richardson's Claims
argues that Ms. Richardson has not suffered injury
“given the pending administrative action (which could
result in reversal of the penalty)”, Def.'s
Mot. at 6, n.6, and that, as a result, her claims are
unripe. Def.'s Supp. Mem. at 3. Plaintiffs
assert “that the class nature of the claim likely
overcomes any challenge to ripeness or justiciability,
” and they argue that judicial economy considerations
cut against dismissal on unripeness grounds. Pls.'
Opp'n at 1, n.1. They further argue that the
administrative hearing officer is “precluded from
entertaining issues of federal law” in his
consideration of Ms. Richardson's appeal and suggest
that, as such, the administrative process could not resolve
Ms. Richardson's claim. Pls.' Supp. Mem. at
2-3. Plaintiffs also argue that the doctrine of exhaustion of
administrative remedies does not apply to § 1983 actions
pursuant to Patsy v. Board of Regents of State of
Florida, 457 U.S. 496 (1982). The Court does not consider
the issue of exhaustion of administrative remedies because it
is not relevant here.
standing is a question of who, then ripeness-which shares
standing's constitutional and prudential pedigree-is a
question of when.” R.I. Ass'n of Realtors, Inc.
v. Whitehouse, 199 F.3d 26, 33 (1st Cir. 1999)
(citations omitted). “A claim is not ripe for
adjudication if it rests upon ‘contingent future events
that may not occur as anticipated, or indeed may not occur at
all.'” Texas v. United States, 523 U.S.
296, 300 (1998) (quoting Thomas v. Union Carbide Agric.
Prods. Co., 473 U.S. 568, 580- 581 (1985)). The United
States Supreme Court has explained that, with respect to
administrative decisions, the ripeness doctrine seeks
“to prevent the courts, through avoidance of premature
adjudication, from entangling themselves in abstract
disagreements over administrative policies, and also to
protect the agencies from judicial interference until an
administrative decision has been formalized and its effects
felt in a concrete way by the challenging parties.”
Abbott Labs. v. Gardner, 387 U.S. 136, 148-49 (1967)
overruled on other grounds by Califano v. Sanders,
430 U.S. 99 (1977). “While the doctrine has a
prudential flavor, a test for ripeness is also mandated by
the constitutional requirement that federal jurisdiction
extends only to actual cases or controversies.”
Ernst & Young v. Depositors Econ. Prot. Corp.,
45 F.3d 530, 535 (1st Cir. 1995) (citing U.S. Const. art.
III, § 2; Pub. Serv. Comm'n of Utah v. Wycoff
Co., 344 U.S. 237, 242-45 (1952)).
determine whether a case is ripe for review, a federal court
must evaluate the fitness of the issue presented and the
hardship that withholding immediate judicial consideration
will work.” Whitehouse, 199 F.3d at 33 (citing
Abbott Labs., 387 U.S. at 149). The First Circuit
observes that fitness and hardship “are related but
distinct.” Id. (citing Ernst &
Young, 45 F.3d at 535). Fitness “typically
involves subsidiary queries concerning finality,
definiteness, and the extent to which resolution of the
challenge depends upon facts that may not yet be sufficiently
developed.” Ernst & Young, 45 F.3d at 535
(citing W.R. Grace & Co. v. EPA, 959 F.2d 360,
364 (1st Cir. 1992)). Hardship “typically turns on
whether the challenged action creates a direct and immediate
dilemma for the parties.” Id. (quoting
W.R. Grace, 959 F.2d at 360). “Perhaps the
most important consideration in determining whether a claim
is ripe for adjudication is the extent to which the claim
involves uncertain and contingent events that may not occur
as anticipated, or indeed may not occur at all.”
W.R. Grace, 959 F.2d at 364-65 (quoting Lincoln
House, Inc. v. Dupre, 903 F.2d 845, 847 (1st Cir.
Fitness for Judicial Decision
definiteness, and the need for further factual development
are the factors courts examine in determining whether a
controversy meets the fitness prong of the ripeness inquiry.
“[I]f a claim challenging final agency action is not
concrete, it may be unfit for judicial review without regard
to whether the complaining party has standing to pursue the
claim.” Marcum v. Salazar, 694 F.3d 123, 129
(D.C. Cir. 2012). If the agency action is not final, a claim
may be unripe. Id.; Kushi v. Romberger, 543
Fed. App'x 197, 200-01 (3d Cir. 2013).
penalty (and related adverse impact on Ms. Richardson's
benefits) has been stayed pending her administrative appeal.
Compl. ¶ 16. As MDHHS points out, that appeal
could result in reversal of the penalty. Def.'s
Mot. at 6, n.6. In its notice to Ms. Richardson, MDHHS
specifies four showings she may make to convince MDHHS not to
impose the threatened penalty: (1) information to prove that
the transfer was made for a reason other than to get
MaineCare; (2) information to prove that she got something of
equal value in return from MPDT; (3) information to prove
that the asset or a part of it was returned to her; and (4)
information to prove that the penalty would impose a
hardship, defined as her health or life being threatened or
as her being deprived of food, clothing, shelter or other
needs of life. Compl. Attach. 1 (Notice from
DHHS, Office for Family Independence at 1 (Feb. 28,
2017). Ms. Richardson's argument about the inability of
the administrative hearing officer to consider questions of
federal law-even if its premise is correct-is unpersuasive.
The hearing could result in a decision favorable to Ms.
Richardson on a number of grounds not involving
interpretation of federal law, and the Court declines to
speculate as to administrative hearing officer's decision
and/or its rationale.
Ms. Richardson's claims lack sufficient finality and
definiteness. This is true despite the fact that a key issue
in this case is the contours of MDHHS' obligations under
the Medicaid Act. Her harm is contingent and may never
materialize if in fact the penalty period threatened by MDHHS
never commences and her benefits remain unchanged. See
W.R. Grace, 959 F.2d at 364-65 (internal quotation
omitted) (this claim “depends entirely upon uncertain
and contingent events that may not occur as anticipated, or
indeed may not occur at all”). As Ms. Richardson has
not yet and may never feel the effects of MDHHS' decision
“in a concrete way”, see Abbott Labs.,
387 U.S. at 148-49, the Court concludes that her challenge to
MDHHS' action is not currently fit for judicial review.
Hardship to Ms. Richardson
the First Circuit has written, “turns on ‘whether
granting relief would serve a useful purpose, or, put another
way, whether the sought-after declaration would be of
practical assistance in setting the underlying controversy to
rest.'” Barnstable, 786 F.3d at 143
(quoting Verizon New England, Inc. v. Int'l Bhd. of
Elec. Workers, Local No. 2322, 651 F.3d
176, 188 (1st Cir. 2011)). The hardship prong requires a
“direct and immediate dilemma.” Ernst &
Young, 45 F.3d at 535 (quoting W.R. Grace, 959
F.2d at 365).
Court has previously discussed, MDHHS has stayed any penalty
(and related adverse impact on Ms. Richardson's benefits)
pending her administrative appeal. Compl. ¶ 16.
As MDHHS points out, that appeal could result in reversal of
the penalty. Def.'s Mot. at 6, n.6. Thus, it is
unclear whether a decision by this Court would necessarily
resolve the underlying controversy between Ms. Richardson and
MDHHS. Furthermore, Ms. Richardson and MPDT bring identical
claims. Hence, the Court's resolution of the MPDT claims
may likely be instructive to Ms. Richardson's situation
even if her pending administrative appeal makes her claims in
this Court currently unripe.
parties agreed at oral argument that dismissal of Ms.
Richardson's claim would not present statute of
limitations issues. Generally, “[a] time limitation on
petitions for review . . . can run only against challenges
ripe for review.” City of Fall River, Mass. v.
F.E.R.C., 507 F.3d 1, 7 (1st Cir. 2007) (quoting
Baltimore Gas & Elec. Co. v. Interstate Commerce
Comm'n, 672 F.2d 146, 149 (D.C. Cir. 1982)). MDHHS
represented that the statute of limitations would run from
the time of the imposition of any penalty on Ms. Richardson.
Hence, Ms. Richardson could reinstate a lawsuit such as this
one after the imposition of any penalty without running afoul
of the statute of limitations.
Richardson has not argued hardship. Because the Court
concludes that Ms. Richardson's claims are unfit for
judicial review and that an inability to obtain judicial
review would not cause her hardship, the Court concludes that
Ms. Richardson's individual claims against MDHHS are not
ripe for adjudication. The Court dismisses her claims without
argument, the parties agreed that MPDT has standing in its
own right to bring its claims. The injury MPDT sustained
involves a decrease in new enrollees and funds coming into
the Trust. Pls.' Supp. Mem. at 4-6. In addition,
MPDT may have associational standing to bring suit on behalf
of its members. See Hunt v. Wash. State Apple Advert.
Comm'n, 432 U.S. 333, 343 (1977). The parties also
agreed at oral argument that MPDT has associational standing.
Justice Souter recently explained while sitting by
designation on the First Circuit, for a group “to
assert associational standing on behalf of its members 
requires, among other things, that at least one of the
group's members have standing as an individual.”
Draper v. Healey, 827 F.3d 1, 3 (1st Cir. 2016)
(citing Town of Norwood v. F.E.R.C., 202 F.3d 392,
405-06 (1st Cir. 2000)). “To satisfy this requirement,
the association must, at the very least, ‘identify [a]
member[ ] who ha[s] suffered the requisite harm.'”
Id. (quoting Summers v. Earth Island Inst.,
555 U.S. 488, 499 (2009)). MPDT brings this suit “on
its own behalf and on behalf of its current and future
participating beneficiaries over age [sixty-four], and on
behalf of all other similarly situated individuals.”
Compl. at 1. While MPDT states that “since its
inception in 2002 and through 2016 [it] has enrolled 171
disabled individuals as participants, including forty-three
(43) who were over age 64 at the time of their enrollment,
” Compl. ¶ 9, the only participating
beneficiary that MPDT identifies specifically in its
Complaint is Ms. Richardson. Hence, if Ms. Richardson lacks
standing to sue, MPDT also lacks standing.
Associational Standing: Yvonne ...