555 F.3d 882 (10th Cir. 2009), 06-3387, Brown ex rel. Brown v. Day

Docket Nº:06-3387.
Citation:555 F.3d 882
Party Name:Dena K. BROWN, by her brother and next friend, Donald C. BROWN, Plaintiff-Appellant, v. Robert M. DAY, in his official capacity as Director, Kansas Division of Health Policy and Finance, Defendant-Appellee.
Case Date:January 13, 2009
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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555 F.3d 882 (10th Cir. 2009)

Dena K. BROWN, by her brother and next friend, Donald C. BROWN, Plaintiff-Appellant,


Robert M. DAY, in his official capacity as Director, Kansas Division of Health Policy and Finance, Defendant-Appellee.

No. 06-3387.

United States Court of Appeals, Tenth Circuit.

January 13, 2009

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[Copyrighted Material Omitted]

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Molly M. Wood, Stevens & Brand, L.L.P., Lawrence, KS, for the Plaintiff-Appellant.

Reid Stacey, Kansas Health Policy Authority, Topeka, KS, for the Defendant-Appellee.

Before HENRY, Chief Judge, EBEL and TYMKOVICH, Circuit Judges.

EBEL, Circuit Judge.

Plaintiff-Appellant Dena Brown sued Defendant-Appellee Robert Day, the Director of Kansas's Division of Health Policy and Finance (" HPF" ),1 in federal court pursuant to 42 U.S.C. § 1983, after Day issued a Final Order terminating Brown's Medicaid benefits. Brown alleged that Day's decision, which purported to execute newly enacted Kansas law, violates federal Medicaid statutes and regulations. The federal district court initially granted Brown's motion for a preliminary injunction, holding that HPF had acted arbitrarily and capriciously in terminating Brown's benefits. Shortly thereafter, Day moved to dismiss, claiming Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and its progeny compelled the federal court to abstain from exercising jurisdiction over Brown's action. The district court agreed and dismissed the case. Brown appeals from this application of the Younger abstention doctrine.

There are two main issues presented. This court is asked to determine whether there is an ongoing proceeding in this case, and whether any ongoing proceeding in this case is the type entitled to Younger deference. Because we decide this case on the basis of the type of proceeding at issue, we do not reach the open question whether the Younger doctrine compels a federal court to decline jurisdiction over a federal cause of action initiated to challenge a state administrative agency's final decision when appeal to state court was possible.

The dispositive issue in this case is whether a federal plaintiff's challenge to a state administrative agency's decision to terminate her Medicaid benefits is the type of proceeding entitled to Younger deference. From the Younger acorn-a holding barring federal courts from enjoining ongoing state criminal prosecutions-a judicial oak has grown. Now, federal courts must also decline jurisdiction over cases brought to enjoin state civil or administrative enforcement proceedings. As discussed below, however, there appears to be a distinction between cases where the state proceeding involves the state coercively enforcing its laws and cases where state proceedings involve the federal plaintiff seeking a remedy for a past wrong. Those cases where the federal plaintiff has sought a state remedy are not the type of cases subject to Younger abstention. We must consider whether Brown's challenge to the HPF's decision to terminate her Medicaid benefits is such a coercive or remedial proceeding. Because we determine that the proceeding is remedial and not entitled to Younger abstention, we need not reach the ongoing proceeding issue.

In sum, we conclude that abstaining in this case would extend the Younger doctrine to remedial cases, in contravention of Congress's intent in enacting § 1983 and of Supreme Court precedent. We exercise

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jurisdiction pursuant to 28 U.S.C. § 1291 and reverse.


Plaintiff-Appellant Dena K. Brown is a developmentally disabled adult. Although she was forty-six years old at the time this suit was filed on her behalf, she functions roughly at the level of a three- or four-year-old child. As a result of her disabilities, Brown resides at a private, not-for-profit residential care facility run by Starkey, Inc. The services she receives at the facility cost approximately $5,000 per month. Brown's monthly income is $864, which she receives in Social Security benefits because of her disabilities. Until August 2005, Medicaid payments bridged the gap between Brown's income and the cost of her care facility.

Defendant-Appellee Robert M. Day is the Director of the HPF, a division of Kansas's Department of Administration. Day's duties include determining and implementing policies for medical assistance programs, including Medicaid.

A. The Medicaid Program

Congress established the Medicaid program pursuant to Title XIX of the Social Security Act of 1965, 42 U.S.C. § 1396-1396v. See Houghton ex rel. Houghton v. Reinertson, 382 F.3d 1162, 1164 (10th Cir.2004). By means of the program, Congress invited the states to cooperate with the federal government in providing health care to persons who cannot afford such care. See Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 65 L.Ed.2d 784 (1980). If a state opts to participate, it receives financial assistance from the federal government, on the condition that the state operates its Medicaid program in compliance with federal statutory and regulatory requirements. Kansas has opted to participate in the Medicaid program.

The statutory framework requires all participating states to cover the " categorically needy" ; this class consists primarily of persons who receive cash assistance from the Social Security Administration. See 42 U.S.C. § 1396a(a)(10)(A)(i). In addition, " at the option of the State," medically needy persons may also be covered. Id. § 1396a(a)(10)(A)(ii). This class includes those persons who are " 18 years of age or older and [are] permanently and totally disabled." 42 U.S.C. § 1396d(a)(v). Kansas has opted to cover this class. See Kan. Admin. Reg. 30-6-85(c).

To ensure the Medicaid program serves needy persons, the program includes income and resource eligibility thresholds. Congress has nevertheless forbidden the states from employing methodologies for determining an applicant's income or resources that would render an individual ineligible for Medicaid where that individual is eligible for Supplemental Security Income (" SSI" ) from the Social Security Administration. See 42 U.S.C. § 1396a(r)(2)(A)(i). In determining a person's eligibility for Medicaid, states must use reasonable standards that only factor in income and resources which are available to the recipient and which would affect the person's eligibility for SSI. Id. § 1396a(a)(17).

The applicable regulations state that a resource is not available if the person has no authority to liquidate it as a property right. 20 C.F.R. § 416.1201(a)(1). The Social Security Administration explained that assets in a trust are available resources only " [i]f [the beneficiary has] the legal authority to revoke the trust or direct the use of the trust assets for his/her own support and maintenance...." Social Security Administration, Program Operating Manual System (" POMS" ) § SI 01120.200(D)(2). The trust's terms

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" and/or ... State law" determine this issue. Id.

B. Brown's Eligibility for Medicaid

When Brown's mother passed away in 2003, Brown became the beneficiary of a residuary trust. The trust corpus includes approximately $15,000 in cash, two annuities totaling about $23,000, and the rights to 160 acres of agricultural land in Kingman County, Kansas (valued at approximately $30,000). Brown's brother, Donald, is the trustee. Given Brown's disabilities, the trust provides the Trustee with the discretion to make a distribution of trust income or principal for Brown's benefit. Brown herself, however, has no legal authority to compel distribution under the trust. As a result, Kansas did not deem Brown's trust assets " available resources" before 2004. Other than the trust, Brown apparently possesses no other assets that would allow her to pay the difference between her Social Security benefits and the costs of her residential care facility.

C. HPF Proceedings Regarding Brown's Medicaid Benefits

Kansas amended its applicable law, effective July 1, 2004. After that date, Kansas deemed trust resources available " to the extent, using the full extent of discretion, the trustee may make any of the income or principal available to the applicant or recipient of medical assistance." Kan. Stat. § 39-709(e)(3). In accordance with this amendment, HPF notified Brown that after August 31, 2005, she would no longer receive medical assistance because she was not medically needy.

Brown challenged this decision by requesting a hearing before HPF. She sought a hearing because it was not clear at that time whether Kansas's new law could be applied retroactively to her. Moreover, during the pendency of her appeal, she continued to receive benefits. The hearing officer overturned the decision to terminate Brown's Medicaid benefits on January 15, 2006, apparently reasoning that the new Kansas law did not apply to trusts set up prior to its enactment.2

However, in a Final Order dated April 26, 2006, Day reinstated HPF's original decision to terminate Brown's benefits. In the order, Day informed Brown that she had a right to file a petition for state judicial review of the order and that such a petition must be filed within thirty days.3 Following up on this final decision, on April 30, 2006, HPF wrote Brown to inform her that " [w]e are closing your medical assistance and food stamp case effective May 31, 2006 because your resources exceed the maximum allowable amount for your household size."

D. Brown's Federal Lawsuit

Just a few days before her benefits were due to terminate, Brown filed suit in the

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U.S. District Court for the District of Kansas against Day in his official capacity as director of HPF. She thus declined to petition the...

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