Geston v. Olson

• Decision Date: 01 August 2012
• Docket Number: Case No. 1:11–cv–044.
• Parties: John and Carolyn GESTON, Plaintiffs, v. Carol K. OLSON, in her official capacity as Executive Director of the North Dakota Department of Human Services, Defendant.
• Court: U.S. District Court — District of North Dakota

857 F.Supp.2d 863

John and Carolyn GESTON, Plaintiffs,

v.Carol K. OLSON, in her official capacity as Executive Director of the North Dakota Department of Human Services, Defendant.

Case No. 1:11–cv–044.

United States District Court,

D. North Dakota,

Southwestern Division.

April 24, 2012.

Order Denying Motion for Stay Pending Appeal Aug. 1, 2012.

Preempted

NDCC 50–24.1–02.8(7)(b).

Gregory C. Larson, Larson Latham Huettl, LLP, Bismarck, ND, Rene H. Reixach, Woods Oviatt Gilman LLP, Rochester, NY, for Plaintiffs.

Jeanne M. Steiner, Attorney General's Office, Bismarck, ND, for Defendant.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

DANIEL L. HOVLAND, District Judge.

This is a Medicaid eligibility case. Before the Court are cross-motions for summary judgment filed on August 22, 2011, and October 3, 2011, respectively. See Docket Nos. 10 and 13. A number of responsive pleadings were filed by both parties thereafter. See Docket No's. 16, 20, 27, 31, and 34. Oral argument was held in Bismarck, North Dakota, on April 12, 2012.

I. BACKGROUND.

Plaintiff John Geston is a 73–year–old resident of the Missouri Slope Lutheran Care Center (Missouri Slope), a skilled nursing home facility located in Bismarck, North Dakota. He is considered the “institutionalized spouse” for Medicaid purposes. John Geston resided at Edgewood Vista Memory Care facility (Edgewood Vista) prior to moving to Missouri Slope. The cost of his care is $219.25 per day. See Docket No. 21–1. Plaintiff Carolyn Geston is married to John Geston. She lives in her home in Bismarck and is considered the “community spouse” for Medicaid purposes.

The defendant, Carol K. Olson, is the Executive Director of the North Dakota Department of Human Services (DHS). North Dakota has elected to participate in the Medicaid program and has designated DHS to implement the program. N.D.C.C. § 50–24.1–01.1. As Executive Director of DHS, Olson is responsible for the administration of the Medicaid program for the State of North Dakota. The Burleigh County Social Services Board acts under the direction and supervision of the DHS to administer the Medicaid program in Burleigh County, North Dakota.

John Geston entered Missouri Slope on April 19, 2011. His application for Medicaid benefits was filed with the Burleigh County Social Service Board on April 29, 2011. See Docket No. 15–1. An asset assessment was included with the application. See Docket No. 15–6. Eligibility rules limit the amount of assets or resources ¹ a married couple may possess and still qualify for Medicaid. The asset limit for the “institutionalized spouse” is $3,000. The asset limit for the “community spouse” is $109,560. The asset assessment determined that the Geston's total countable assets were $699,144.80. as of July 21, 2010, the date John Geston entered Edgewood Vista. See Docket No. 15–6. Subtracting the Geston's combined asset allowance of $112,560 produced an excess asset calculation of $586,854.80.

Thus, it was necessary to spend down the assets if John Geston was to be eligible for Medicaid benefits. A new car and home were purchased along with prepaid burial services, all of which are considered to be exempt assets. Carolyn Geston also purchased an annuity. See Docket No. 11–1. The single premium annuity was purchased on November 24, 2010, from Employees Life Company (Mutual) for $400,000. The annuity had an effective date of December 6, 2010, and provides Carolyn Geston with monthly income of $2,734.65. The income of the “community spouse” is not taken into consideration in making a Medicaid eligibility determination for the “institutionalized spouse.” The annuity is irrevocable, unassignable, and nontransferable. The annuity has a benefit period of thirteen (13) years, which period is actuarially sound because it is less than Carolyn Geston's life expectancy which is slightly more than thirteen years. The North Dakota Department of Human Services is named as the primary beneficiary in the first position for at least the total amount of Medicaid benefits paid on behalf of the Gestons.

The record reveals that John Geston applied for Medicaid benefits on April 29, 2011. See Docket No. 21–1. The Medicaid application was denied on June 8, 2011. See Docket No. 11–2. The basis for denial was that the Gestons' countable assets, which were calculated at $454,691.33, exceeded the $112,560 maximum. The annuity was valued at $383,592.10 which represented the purchase price minus the annuity payments already made. Carolyn Geston's annuity failed to meet the criteria set forth in N.D.C.C. § 50–24.1–02.8(7)(b) and the annuity was determined to be a countable asset. If the corpus of Carolyn Geston's annuity was not treated as a countable asset, John Geston would be eligible for Medicaid benefits.

This action was commenced in federal court on May 13, 2011. See Docket No. 1. The action is brought pursuant to 42 U.S.C. § 1983 and the Supremacy Clause. U.S. Const. art. VI. para. 2. The Gestons seek injunctive and declaratory relief declaring N.D.C.C. § 50–24.1–02.8(7) invalid and preempted by federal law because it is more restrictive than federal law and impermissibly allows DHS to consider a community spouse's income in determining an institutionalized spouse's Medicaid eligibility. The Court has federal question jurisdiction as the primary issue is whether the federal Medicaid Act has been violated. See28 U.S.C. § 1331.

II. STANDARD OF REVIEW.

Summary judgment is appropriate when the evidence, viewed in a light most favorable to the non-moving party, indicates that no genuine issues of material fact exist and that the moving party is entitled to judgment as a matter of law. Davison v. City of Minneapolis, Minn., 490 F.3d 648, 654 (8th Cir.2007); seeFed.R.Civ.P. 56(c). Summary judgment is not appropriate if there are factual disputes that may affect the outcome of the case under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue of material fact is genuine if the evidence would allow a reasonable jury to return a verdict for the non-moving party. Id.

The Court must inquire whether the evidence presents a sufficient disagreement to require the submission of the case to a jury or whether the evidence is so one-sided that one party must prevail as a matter of law. Diesel Mach., Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 832 (8th Cir.2005). The moving party bears the burden of demonstrating an absence of a genuine issue of material fact. Simpson v. Des Moines Water Works, 425 F.3d 538, 541 (8th Cir.2005). The non-moving party “may not rely merely on allegations or denials in its own pleading; rather, its response must ... set out specific facts showing a genuine issue for trial.” Fed.R.Civ.P. 56(e)(2). The court must consider the substantive standard of proof when ruling on a motion for summary judgment. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

There are no material facts in dispute in this case and only questions of law remain. The parties agree summary judgment is appropriate.

III. LEGAL DISCUSSION.A. PRIVATE CAUSE OF ACTION UNDER 42 U.S.C. § 1983.

Before proceeding to the merits of the action it is necessary to determine whether the statutory provisions at issue provide the Gestons a private cause of action under 42 U.S.C. § 1983. The Gestons contend the North Dakota rules and regulations for Medicaid eligibility are in direct conflict with federal Medicaid law. Specifically, they argue that N.D.C.C. § 50–24.1–02.8(7)(b) adds requirements not authorized by Congress which conflict with 42 U.S.C. §§ 1396a(a)(10)(C)(i), 1396a(a)(17), 1396a(r)(2)(B) and 1396r–5(b)(1). Section 50–24.1–02.8(7)(b) of the North Dakota Century Code uses a formula which treats some annuities as an asset which results in John Geston being ineligible for Medicaid benefits. DHS contends the Medicaid provisions cited by the Gestons do not provide a private cause of action under 42 U.S.C. § 1983.

42 U.S.C. § 1983 provides a private cause of action for the “deprivation of any rights, privileges, or immunities secured by the Constitution and laws” of the United States. 42 U.S.C. § 1983. Section 1983 actions may be brought against state actors to enforce rights created by federal statutes or the Constitution. Gonzaga Univ. v. Doe, 536 U.S. 273, 279, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002). A plaintiff seeking 42 U.S.C. § 1983 redress “must assert the violation of a federal right, not merely a violation of federal law.” Blessing v. Freestone, 520 U.S. 329, 340, 117 S.Ct. 1353, 137 L.Ed.2d 569 (1997) (citing Golden State Transit Corp. v. City of Los Angeles, 493 U.S. 103, 106, 110 S.Ct. 444, 107 L.Ed.2d 420 (1989)) (emphases in original). The United States Supreme Court looks at three factors in deciding whether a particular statutory provision, enacted pursuant to Congress's spending power, creates a private right of action under 42 U.S.C. § 1983; (1) Congress intended the provision to benefit the plaintiff; (2) the right asserted is not so “vague and amorphous” that its enforcement would strain judicial competence; and (3) the provision clearly imposes a binding obligation on the States. Center for Special Needs Trust Admin., Inc. v. Olson, 676 F.3d 688, 698–99 (8th Cir.2012); Lankford v. Sherman, 451 F.3d 496, 508 (8th Cir.2006). “If the legislation meets this test, there is a presumption it is enforceable under section 1983.” Lankford, 451 F.3d at 508 (citing Blessing, 520 U.S. at 341, 117 S.Ct. 1353). If the legislation meets the three Blessing prongs, it is presumed enforceable under Section 1983. The presumption is rebutted if Congress explicitly or implicitly forecloses enforcement under Section 1983. However, the availability of administrative remedies alone cannot defeat the plaintiff's ability to invoke Section 1983. Lankford, 451 F.3d at 508. Congress has created no such enforcement...