Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Richardson v. Hamilton

United States District Court, D. Maine

February 27, 2018

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,
v.
RICKER HAMILTON, in his official Capacity as Commissioner of the MAINE DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant.

          ORDER ON MOTION TO DISMISS

          JOHN A. WOODCOCK, JR. JUDGE

         A 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.

         The 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 sixty-four.

         I. BACKGROUND

         A. Procedural History

         On 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[1] 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.

         On May 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).

         The 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 No. 19).

         B. Statutory Background

         Medicaid 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).[2] 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 transferred.” Id.

         As a 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. § 1396p(c)(1)(A).

         C. The Alleged Facts [3]

         1. The Parties

         Yvonne 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.

         Ricker 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 law. Id.

         2. Yvonne Richardson's Experience

         Yvonne 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[4]; (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.

         Ms. 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.

         3. Treatment as Transfers of Assets for Less than Fair Market Value and Penalty Period of Medicaid Ineligibility

         The 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.

         II. LEGAL STANDARD

         Rule 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).

         The 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)).

         III. DISCUSSION

         A. Ripeness of Ms. Richardson's Claims

         MDHHS 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).[5] The Court does not consider the issue of exhaustion of administrative remedies because it is not relevant here.

         1. General Principles

         “If 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)).

         “To 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. 1990)).

         2. Fitness for Judicial Decision

         Finality, 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).

         Any 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.

         Therefore, 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.

         3. Hardship to Ms. Richardson

         Hardship, 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).

         As the 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.

         The 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.

         Ms. 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 prejudice.

         B. MPDT's Standing

         At oral 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.

         As 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.[6] Hence, if Ms. Richardson lacks standing to sue, MPDT also lacks standing.

         1. Associational Standing: Yvonne ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.