Bethesda Lutheran Homes v. Born et al

• Decision Date: 25 January 2001
• Docket Number: Nos. 99-4016,99-4135,s. 99-4016
• Citation: 238 F.3d 853
• Parties: (7th Cir. 2001) Bethesda Lutheran Homes and Services, Inc., et al., Plaintiffs-Appellants/Cross-Appellees, v. Gerald Born, et al., Defendants-Appellees, and Thomas Schleitwiler, et al., Cross-Appellants
• Court: U.S. Court of Appeals — Seventh Circuit

Page 853

238 F.3d 853 (7th Cir. 2001)

Bethesda Lutheran Homes and Services, Inc., et al., Plaintiffs-Appellants/Cross-Appellees, v. Gerald Born, et al., Defendants-Appellees, and Thomas Schleitwiler, et al., Cross-Appellants.

Nos. 99-4016, 99-4135

In the United States Court of Appeals For the Seventh Circuit

Argued September 7, 2000

Decided January 25, 2001

Appeals from the United States District Court for the Western District of Wisconsin. No. 99-C-427-S--John C. Shabaz, Chief Judge. [Copyrighted Material Omitted]

Before Bauer, Posner, and Evans, Circuit Judges.

Posner, Circuit Judge.

This dispute is before us for the third, and we trust last, time. See Bethesda Lutheran Homes & Services, Inc. v. Leean, 122 F.3d 443 (7th Cir. 1997), 154 F.3d 716 (7th Cir. 1998). In the first round, Bethesda, a private residential institution in Wisconsin for the mentally retarded, along with several current and would-be residents, brought suit under 42 U.S.C. sec. 1983 against a number of Wisconsin state and local officials, plus Jefferson County, where Bethesda's facility is located, challenging provisions of the federal Medicaid regulations, and state law governing the establishment of Wisconsin residency, as violations of the constitutional right to travel. The Medicaid provisions at issue (cited at 122 F.3d 447) authorized states that participate in the Medicaid program (half of the expense of which is defrayed by the federal government, the other half by the state) to decline to provide assistance to otherwise eligible persons who are not residents of the state, or even to residents who have gone out of state for care, unless the state of residency is unable to provide the services they need. These provisions discouraged certain nonresidents of Wisconsin from seeking medical care in Wisconsin. That state would have no obligation to enroll them in its Medicaid program, while the state of their residency, provided it was capable of treating them in- state, would have no obligation to reimburse their treatment costs in Wisconsin. They would be stuck in their home state.

All this would not have mattered had Wisconsin allowed these nonresidents to become residents. But the state law also challenged by the plaintiffs prevented this. And although this joint federal-state discouragement of medical- care shopping might well have powerful fiscal or other social merits to recommend it, we held that the one-two punch violated the Constitution and must be enjoined. We also held, however, that the plaintiffs could not obtain monetary relief from the defendant state officials insofar as they had been sued in their official capacity, since such suits are deemed to be suits against the state itself, thus bringing the Eleventh Amendment into play. We remanded for the entry of the injunction and for consideration of the other relief sought by the plaintiffs and not barred by the Eleventh Amendment.

The injunction was duly entered on remand. Bethesda thus became entitled to Medicaid reimbursement of future expenses incurred by it in serving these individuals, but not to reimbursement of expenses incurred before the legal bars were removed by our decision; that would have been monetary rather than injunctive relief. The only monetary relief sought on remand was against Jefferson County and was turned down by the district court on the ground that a municipal government cannot be held liable in damages under section 1983 if it committed the acts of which the plaintiff complains under the compulsion of federal and state law. In their second appeal the plaintiffs, while accepting the principle on which they had been denied damages, challenged its application to the facts, arguing that the officials of Jefferson County had wanted to deny these plaintiffs benefits regardless of federal or state law. Affirming the judgment for Jefferson County, we held that the county officials' state of mind was irrelevant in a case such as this where the officials were given no latitude by state or federal law to grant the benefits sought; their state of mind played no causal role in their actions.

In struggling against the proposition that Jefferson County was off the hook by virtue of having acted under the compulsion of state law, the plaintiffs had intimated that the county had not been compelled after all. We had said the opposite in our first opinion--specifically, that state law had forbade the county to certify the plaintiffs as county residents, a prerequisite to their being entitled under Wisconsin law to Medicaid benefits. In the second appeal the plaintiffs simply ignored that ruling. (They continue a pattern of selective forgetfulness in this round as well, failing even to cite our second opinion.) Yet that earlier ruling was the law of the case, and if the plaintiffs wanted us to depart from it they had to acknowledge the ruling and give reasons for our abandoning it. This they had failed to do, thus bringing into play the principle that "unchallenged determinations in a previous decision in the same case unquestionably bind the court in a subsequent appeal." 154 F.3d at 719.

Rather than accept the second decision, Bethesda brought a new case, the one before us today. Damages are sought in this case against the officials of the state and of Jefferson County who refused Medicaid benefits to the eight individuals who are coplaintiffs with Bethesda, several but not all of whom were plaintiffs in the previous suit, the one that was before us in the two previous appeals. The contention in the present suit is that the Medicaid regulations challenged in the previous suit, rather than unconstitutionally authorizing the defendants to deny benefits to nonresidents, as the plaintiffs had argued in that suit and we had agreed, had commanded them to pay those benefits, and it was in defying the command that the defendants had violated the plaintiffs' right to travel. The district court dismissed the new suit primarily on the ground that the defendants were entitled to a qualified (that is, good-faith) immunity from a suit for damages, as no rule of law that was clearly established when they acted forbade them to deny benefits to nonresident patients at Bethesda's facility. The judge found it unnecessary to reach most of the other grounds for dismissal urged by the defendants.

The plaintiffs have appealed; and the defendants cross-appeal from the district court's refusal to impose sanctions on the plaintiffs under Rule 11 of the Federal Rules of Civil Procedure. The judge thought the plaintiffs entitled to bring this suit for the purpose of urging us to overrule our previous decisions holding that state and federal law had unconstitutionally prevented the award of benefits. Unless we do so, the Eleventh Amendment, the principle that a county is not suable under 42 U.S.C. sec. 1983 in respect of acts done by it under compulsion of state or federal law, and the principle of qualified immunity combine to bar the plaintiffs from obtaining any monetary relief.

The appeal is frivolous on so many grounds that it is difficult to know where to begin. If the plaintiffs in this second suit were identical to the ones in the first, or in privity with those plaintiffs, then it would be obvious that the present suit was barred by the principle of res judicata, because the claim in the two suits is the same--that the state and county officials had denied the plaintiffs Medicaid benefits in violation of law. Not that all the arguments are the same, but for purposes of res judicata a claim is not an argument or a ground but the events claimed to give rise to a right to a legal remedy, e.g., United States v. County of Cook, 167 F.3d 381, 383 (7th Cir. 1999); Brzostowski v. Laidlaw Waste Systems, Inc., 49 F.3d 337, 339 (7th Cir. 1995); Prochotsky v. Baker & McKenzie, 966 F.2d 333, 335 (7th Cir. 1992); Wilkins v. Jakeway, 183 F.3d 528, 535 (6th Cir. 1999); Woods v. Dunlop Tire Corp., 972 F.2d 36, 39 (2d Cir. 1992), and they are the same in the two suits.

The plaintiffs are not identical, but this turns out to make no difference. First, insofar as Bethesda is concerned and those individual plaintiffs who were plaintiffs in the first suit as well, they cannot avoid the bar of res judicata by bringing in additional plaintiffs. Dreyfus v. First National Bank, 424 F.2d 1171, 1175 (7th Cir. 1970); United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 249 (9th Cir. 1992). The defense of res judicata is not avoided by joinder. Second, the newly added individuals (and this is doubtless true of the overlapping individual plaintiffs as well, though that is unnecessary to decide) are not proper parties, because they lack standing to sue, having no stake in the litigation. As the plaintiffs' lawyer acknowledged at argument, any recovery of benefits in this suit will go to Bethesda, which incurred the expenses of serving the individual plaintiffs until the injunction that was issued on remand from the first appeal gave them prospective relief. The plaintiffs are indigent, and Bethesda does not claim to be entitled to obtain any money from them, so it is not as if they were seeking monetary relief in order to satisfy a debt to Bethesda. They are seeking no relief.

So the suit is barred by res judicata, but it is also barred by the doctrine of judicial estoppel: a party that has won a suit on one ground may not turn around and in another case obtain another judgment on an inconsistent ground. E.g., Saecker v. Thorie, 234 F.3d 1010, 1014-15 (7th Cir.2000); Moriarty v....