United States District Court, S.D. Ohio, Western Division
MEMORANDUM OPINION AND ORDER
STEPHANIE K. BOWMAN UNITED STATES MAGISTRATE JUDGE.
civil matter is before the Court on the Motion to Dismiss of
Defendants Cynthia C. Dungey, Director of the Ohio Department
of Job and Family Services (“ODJFS”), and Barbara
Sears, Director of the Ohio Department of Medicaid
(“ODM”) (collectively, “Defendants”).
(Doc. 10). Plaintiff Hillspring Health Care Center, LLC
(“Plaintiff” or “Hillspring”) has
filed a response in opposition (Doc. 11), and Defendants have
filed a reply (Doc. 14). The parties also have submitted
supplemental authority in support of these briefings. (Docs.
17, 19, 21, 23, and 29). For the reasons that follow,
Defendant's Motion to Dismiss is GRANTED.
Background and Factual Allegations
case centers on the denial of Medicaid benefits to Barbara
Graham (“Graham”), now deceased, based upon a
finding that her life insurance policy was a countable
resource that placed her above the financial threshold for
was an elderly woman who suffered from numerous medical
conditions that required 24-hour care and assistance. (Doc.
3, Page Id. 23). She was admitted to Hillspring, an
Ohio skilled nursing facility, on October 5, 2013.
(Id., Page Id. 22-23). Upon her admission,
Graham executed an Admission Agreement and Assignment with
Hillspring that is alleged to make Hillspring an intended
third-party beneficiary of Graham's Medicaid benefits.
(Id., Page Id. 23). On February 3, 2014,
Graham submitted an application for a Medicaid Nursing Home
Vendor Payment. (Id.). Graham owned a $10, 000 life
insurance policy that is central to the issues raised herein.
(Id.). Graham is alleged to have lacked the mental
and physical capacity to act on her own behalf to convert
that life insurance policy to a cash value. (Id.).
time of Plaintiff's Medicaid application, Ohio applicants
with countable resources in excess of $1, 500 were ineligible
for benefits for nursing home services. Ohio Admin. Code
§ 5160:1-3-05(B)(11)(a), (C) (eff.
10-1-13). “Resources” included,
inter alia, life insurance policies that “an
individual . . . has an ownership interest in, has the legal
ability to access in order to convert to cash (if not already
cash), and is not legally prohibited from using for support
and maintenance.” Ohio Admin. Code §
5160:1-3-05(B)(8), (B)(10). Such policies could not be a
resource, however, “if the individual lack[ed] the
legal ability to access funds for spending or to convert
noncash property into cash.” Ohio Admin. Code §
5160:1-3-05(B)(10)(a). “Countable resources” meant
those resources remaining after all exemptions were applied.
Ohio Admin. Code § 5160:1-3-05. A life insurance policy
generally was not exempt if the total cash surrender value
for an individual exceeded $1, 500. Ohio Admin. Code §
5160:1-3-30. However, a life insurance policy could be
excluded if the Medicaid applicant or recipient would be
unable to surrender the policy for cash value due to a lack
of required consent from another person or if another person
would be entitled to receive all of the proceeds of the
policy. Ohio Admin. Code § 5160:1-3-05(E).
passed away on February 14, 2014. (Doc. 3, Page Id.
23). Defendants denied payment under Medicaid on April 22,
2014 upon a finding that Graham was over-resources.
denial of Graham's Medicaid application, Plaintiff
requested a state hearing by ODJFS to challenge the
determination that Graham's life insurance policy was a
countable resource. (Doc. 10, Page Id.
97-102). According to the state hearing decision,
Plaintiff's position was “that the policy had been
assigned to the funeral home and was therefore an exempt
resource.” (Id., Page Id. 99). The
hearing officer concluded that the evidence submitted did not
demonstrate that the life insurance policy was irrevocably
assigned to the funeral home. (Id., Page
Id. 99-100). The hearing officer therefore deemed
the life insurance policy a countable resource, and affirmed
the denial of Graham's Medicaid application.
(Id., Page Id. 100).
appealed the state hearing officer's decision to the
ODJFS's Administrative Appeal Section. (Doc. 10, Page
Id. 103-05). In that appeal, Plaintiff argued
“that there was no evidence that [Graham's] son was
her power of attorney and could access the value of the life
insurance policy” and that “even if
[Graham's] son was her financial power of attorney, the
son could not immediately liquidate the insurance policy to
access the money.” (Doc. 10, Page Id. 104).
The appeal officer concluded that the “rule provides
that [a] life insurance policy is considered an available
resource and there is no provision for the amount of time it
takes to liquidate the policy.” (Id.). Given
that the value of the life insurance policy exceeded the
Medicaid resource limit and was not otherwise exempt, the
appeal officer affirmed the decision of the state hearing
then appealed the decision of the administrative tribunal to
the Court of Common Pleas for Warren County, Ohio. (Doc. 10,
Page Id. 106-15). In that appeal, Plaintiff argued
“there is insufficient evidence to conclude that Graham
had the ability to convert the life insurance policy to cash,
either by herself or through an attorney-in-fact; and Graham
was in no mental or physical state to complete such a
transaction.” (Id., Page Id. 108).
The Magistrate determined that “[n]othing in the record
indicates that Graham had an irrevocable preneed funeral
contract” or that “Graham was incompetent, or
otherwise unable to access the life insurance policy to
liquidate it.” (Doc. 10, Page Id. 109). The
Magistrate further noted that Plaintiff was not arguing that
Graham was incompetent when she signed the January 18, 2014
designation of authorized representation. (Id.). As
“[t]he only thing that is clearly established by the
record is that Graham, at her death, possessed a life
insurance policy with a cash surrender value of $6, 460.65, a
countable resource in excess of $1, 500[, ]” the
Magistrate affirmed the denial of Plaintiff's Medicaid
application because she was ineligible for the requested
benefits. (Id., Page Id. 109-10). That
decision was affirmed by the Common Pleas Court Judge over
the objections of Plaintiff on August 16, 2016.
(Id., Page Id. 111-15).
January 13, 2017, Plaintiff filed the original Complaint in
this Court. (Doc. 1). On January 26, 2017, Plaintiff filed
its Amended Complaint, asserting seven counts for relief.
(Doc. 3). In Count One, Plaintiff requests a declaratory
judgment on several grounds. (Id., Page Id.
27-30). In Count Two, Plaintiff alleges Defendants violated
the Federal Medicaid Act's medical assistance and nursing
facility services mandates, 42 U.S.C. §§
1396a(a)(10)(A) and 1396d(a)(4)(A), for which it seeks relief
under 42 U.S.C. § 1983. (Id., Page Id.
30-31). In Count Three, Plaintiff alleges Defendants violated
the Federal Medicaid Act's “reasonable
promptness” requirement under 42 U.S.C. §
1396a(a)(8) and 42 C.F.R. § 435.930, for which it seeks
relief under 42 U.S.C. § 1983. (Id., Page
Id. 31). In Count Four, Plaintiff alleges Defendants
violated the Americans with Disabilities Act
(“ADA”), 42 U.S.C. § 12132, et
seq., by failing to afford Graham public benefits to
which she is entitled and by failing to grant her Medicaid
benefits as a reasonable accommodation. (Id., Page
Id. 32). In Count Five, Plaintiff alleges Defendants
violated the Rehabilitation Act of 1973, 29 U.S.C. §
794, by denying Medicaid benefits to Graham. (Id.,
Page Id. 32-33). In Count Six, Plaintiff alleges
Defendants violated Graham's due process and equal
protection rights for which it seeks relief under 42 U.S.C.
§ 1983. (Id., Page Id. 33-34).
Finally, in Count Seven, Plaintiff requests injunctive relief
that requires Defendants to issue payment of Graham's
approved Medicaid benefits. (Id., Page Id.
Standards of Review
have moved to dismiss Plaintiff's Amended Complaint
pursuant to Fed.R.Civ.P. 12(b)(1), or, alternatively,
pursuant to Fed.R.Civ.P. 12(b)(6).
Subject matter jurisdiction under Rule 12(b)(1)
to dismiss under Rule 12(b)(1) can assert either facial
attacks or factual attacks on a court's subject matter
jurisdiction. Ohio Nat'l Life Ins. Co. v. United
States, 922 F.2d 320, 325 (6th Cir. 1990). Where a
facial attack on the subject matter jurisdiction alleged by
the complaint is made, the moving party merely questions the
sufficiency of the pleading. Id. In reviewing such a
facial attack, a trial court takes the allegations in the
complaint as true. Id. On the other hand, when a
court reviews a complaint under a factual attack, no
presumptive truthfulness applies to the factual allegations.
Id. The court must “weigh the conflicting
evidence to arrive at the factual predicate that subject
matter jurisdiction exists or does not exist.”
motion to dismiss based on subject matter jurisdiction
generally must be considered before a motion brought under
Rule 12(b)(6) for failure to state a claim upon which relief
can be granted. Pritchard v. Dent Wizard Int'l
Corp., 210 F.R.D. 591, 592 (S.D. Ohio 2002) (citing
Moir v. Greater Cleveland Reg'l Transit Auth.,
895 F.2d 266, 269 (6th Cir. 1990)) (explaining that a Rule
12(b)(6) challenge becomes moot if the court lacks subject
Failure to state a claim under Rule 12(b)(6)
motion to dismiss pursuant to Rule 12(b)(6) operates to test
the sufficiency of the claims. The Court is required to
construe the complaint in the light most favorable to the
plaintiff and accept all well-pleaded factual allegations in
the complaint as true. Lewis v. ACB Business Servs.,
135 F.3d 389, 405 (6th Cir. 1998). A court, however, will not
accept conclusions of law or unwarranted inferences that are
presented as factual allegations. Id. A complaint
must contain either direct or reasonable inferential
allegations that support all material elements necessary to
sustain a recovery under some viable legal theory.
Id. at 406. “While a complaint attacked by a
Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations, a plaintiff's obligation to provide
the ‘grounds' of his ‘entitlement to
relief' requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action
will not do.” Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 555 (2007) (internal citations and alterations
omitted). Factual allegations therefore “must be enough
to raise a right to relief above the speculative level on the
assumption that all of the allegations in the complaint are
true (even if doubtful in fact).” Id.
contend that dismissal of Plaintiff's Amended Complaint
is appropriate on multiple grounds under both Rule 12(b)(1)
and Rule 12(b)(6). In the interests of judicial economy, the
Court will not reach the arguments on the merits because
dismissal of Plaintiff's Amended Complaint is appropriate
on multiple procedural grounds.
Plaintiff's claims are moot.
is a threshold issue because the existence of a live case or
controversy is a constitutional prerequisite to federal court
jurisdiction. Kentucky v. United States, 759 F.3d
588, 595 (6th Cir. 2014). “When-for whatever reason-the
dispute discontinues or we are no longer able to grant
meaningful relief to the prevailing party, the action is
moot, and we must dismiss for lack of jurisdiction.”
Id. (quoting United States v. Blewett, 746
F.3d 647, 661 (6th Cir. 2013)) (internal quotations omitted).
“Ordinarily, one would expect that the death of a
plaintiff requires dismissal of a case for mootness, since
that plaintiff is no longer in a position to have [her]
injury redressed by the courts.” Allen v.
Mansour, 928 F.2d 404, 1991 WL 37832, at *1 (6th Cir.
1991) (unpublished table decision). “Mootness applies
also to situations where, as here, the plaintiff seeks a
declaratory judgment invalidating or modifying a state
policy, since death prevents the plaintiff from benefitting
in any way from the requested relief.” Allen,
1991 WL 37832, at *1 (citing Rhodes v. Stewart, 488
U.S. 1 (1988)). It further applies to declaratory and
injunctive relief regarding an individual's eligibility
for Medicaid. Immel v. Lumpkin, 408 Fed.Appx. 920,
921 (6th Cir. 2010) (holding that the plaintiff “sought
only declaratory and injunctive relief regarding her
eligibility for Medicaid, and therefore, upon her death, she
no longer has a ‘legally cognizable interest in the
outcome.'”) (quoting United States v. City of
Detroit, 401 F.3d 448, 450 (6th Cir. 2005)); see
also Pecha-Weber v. Lake, 700 Fed.Appx. 840, 842 (10th
Cir. July 25, 2017) (“This case presents the question
of whether a plaintiff's death moots his request for an
injunction ordering certain officials of the State of
Oklahoma to determine him eligible for Medicaid benefits. We
answer yes. The claim for injunctive-that is,
prospective-relief is moot because there is no concrete
threat of a continuing or repeated injury to the
plaintiff-appellant . . . because he is dead. Any harm to
[the plaintiff-appellant] lies squarely in the past.”).
Nonetheless, a case will not be considered moot if the
challenged activity is capable of repetition, yet evading
review. Kentucky, 759 F.3d at 595. This exception
applies only where the challenged action is in its duration
too short to be fully litigated prior to expiration or
cessation, and there is a reasonable expectation that the
same complaining party will be subject to the same action
the Court agrees with Defendants that the claims asserted by
Plaintiff are moot. Graham died on February 14, 2014. She
therefore is unable to proceed in this Court on her own
behalf to assert her claims either for past or future
injuries. Further, the requests for declaratory and
injunctive relief seek to invalidate or modify a state policy
on Medicaid eligibility determinations relating to a life
insurance policy and seek a determination that Graham is
eligible for Medicaid benefits. Given that she is deceased,
Graham cannot benefit from the requested declaratory or
injunctive relief and there is no threat of a continuing or
repeated injury to Graham. Graham therefore lacks a legally
cognizable interest in the outcome.
claims, however, that it continues to have a legally
cognizable interest in the outcome as the authorized
representative of Graham, even though Graham is deceased. As
an authorized representative, the permissible scope of
Plaintiff's representation of Graham is governed by
federal and state regulations. For the reasons discussed
below, the Court finds that those regulations do not extend
to Plaintiff the authority to maintain a federal lawsuit on
Graham's behalf after her death and after a final
decision on Graham's Medicaid eligibility has been made.
relies on the definition of “applicant” in the
federal regulations to suggest it may proceed in this federal
lawsuit on behalf of Graham after her death. Under 42 C.F.R.
§ 400.203, “applicant” means:
an individual whose written application for Medicaid has been
submitted to the agency determining Medicaid eligibility, but
has not received final action. This includes an individual
(who need not be alive at the time of application) whose
application is submitted through a representative or a person
acting responsibly for the individual.
definition reflects only that a representative may submit an
application for benefits to the agency on behalf of an
individual after her death. The individual remains the
“applicant.” Further, it does not provide that an
entity appointed as an authorized representative is legally
entitled to serve as the representative of the individual in
any and all matters, including federal court proceedings,
after the individual's death or in contravention to
threshold constitutional requirements. In fact, the
definition places limits on any purported authority of an
authorized representative by indicating that an individual
remains an “applicant” only until her application
has received “final action.” Under Ohio law, the
administrative appeal decision is the “final
decision” that is binding on the agency unless it is
reversed or modified by the state court on appeal. Ohio Rev.
Code § 5101.35 (“An administrative appeal decision
is the final decision of the department and . . . is binding
upon the department and agency, unless it is reversed or
modified on appeal to the court of common pleas.”). As
Graham's application proceeded through both the
administrative and state court of common pleas appeal
process, she received a final action on her application as
contemplated by the regulation. Therefore, Graham is no
longer an applicant under that definition, which terminates
any authority the authorized representative arguably may have
under that definition to proceed on Graham's behalf
following her death.
Plaintiff's reliance on provisions relating to
“authorized representatives” under federal and
Ohio law does not persuade the Court that Plaintiff has the
authority to proceed on Graham's behalf in this lawsuit
after Graham's death. Under 42 C.F.R. § 435.923, the
following applies to authorized representatives:
(a) The agency must permit applicants and beneficiaries to
designate an individual or organization to act responsibly on
their behalf in assisting with the individual's
application and renewal of eligibility and other ongoing
communications with the agency. Such a designation must be in
accordance with paragraph (f) of this section, including the
applicant's signature, and must be permitted at the time
of application and at other times.
(2) Authority for an individual or entity to act on behalf of
an applicant or beneficiary accorded under state law,
including but not limited to, a court order establishing
legal guardianship or a power of attorney, must be treated as
a written designation by the applicant or beneficiary of
(b) Applicants and beneficiaries may authorize their
(1) Sign an application on the applicant's behalf;
(2) Complete and submit a renewal ...