J.G. v. Bimestefer

• Decision Date: 04 December 2020
• Docket Number: Civil Action No. 19-cv-2674-WJM-STV
• Parties: J.G., A MINOR, through her father and Conservator, MARK GRIMES, Plaintiff, v. KIM BIMESTEFER, in her official capacity as Executive Director of the Colorado Department of Health Care Policy and Financing; and CHRISTINE NIERENZ, in her official capacity as Administrative Law Judge II for the Colorado Office of Appeals of the Colorado Department of Health Care Policy and Financing, Defendants.
• Court: U.S. District Court — District of Colorado

J.G., A MINOR, through her father and Conservator, MARK GRIMES, Plaintiff, v. KIM BIMESTEFER, in her official capacity as Executive Director ofthe Colorado Department of Health Care Policy and Financing; and CHRISTINE NIERENZ,in her official capacity as Administrative Law Judge II for the Colorado Office ofAppeals of the Colorado Department of Health Care Policy and Financing, Defendants.

Civil Action No. 19-cv-2674-WJM-STV

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

December 4, 2020

Judge William J. Martínez

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

This action arises out of Colorado Department of Health Care Policy and Financing's ("Department") decision to terminate Plaintiff J.G.'s ("Plaintiff") Medicaid benefits, and follows two state administrative court decisions. Before the Court is Defendant's Motion to Dismiss Plaintiff's First Amended Complaint ("Motion to Dismiss") pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, the Motion to Dismiss is granted.

I. BACKGROUND

Plaintiff is a minor child bringing the present action through her father and conservator, Mark Grimes. (ECF No. 30 ¶ 3.) In January 2007, when she was one year old, Plaintiff tragically suffered an adverse reaction to a measles-mumps-rubella-varicella vaccination, which left her with severe cognitive and developmental disabilities. (Id. ¶¶ 16-17.) In 2009, she filed a claim in the Federal Court of Claims under the National Childhood Vaccine Injury Act of 1986, 42 U.S.C. §§ 300aa-15, et seq. ("Vaccine Act"), through her mother and then-conservator. (Id. ¶ 18.) While her Vaccine Act claim was pending, in 2009, Plaintiff applied for medical benefits through Medicaid, a joint federal-state program established by Title XIX of the Social Security Act, 42 U.S.C. §§ 1396, et seq. (Id. ¶ 20.) The Department is the state agency responsible for determining Medicaid eligibility and administering Medicaid benefits in Colorado. Colo. Rev. Stat. § 25.5 4-104(1). The Department approved Plaintiff's application for Medicaid benefits, and she began receiving long-term care services through Colorado's Children's Extensive Services program ("HCBS-CES"), a state program authorized under Medicaid. (ECF No. 30 ¶¶ 20-21.)

In January 2011, Plaintiff was awarded damages in her claim under the Vaccine Act. (Id. ¶ 27.) The award consisted of, in relevant part, a lump sum payment of $473,300 to form a reversionary trust for Plaintiff, which funds Plaintiff's therapy expenses and terminates in the year 2031, and an undisclosed lump sum payment for purchase of an annuity for Plaintiff during her life. (Id.) The periodic annuity payments are assigned to a disability trust, distinct from Plaintiff's reversionary trust. (Id. ¶ 33.)

In 2017, the Department notified Plaintiff that she was no longer eligible for Medicaid benefits. (Id. ¶ 37.) It stated that the proceeds of her trust and annuity placed her over the allowable income limit for Medicaid qualification. (ECF No. 30-3 at 1-2.) The Department further determined that Plaintiff owed it a sum of $72,235.66 to compensate it for services provided while she was ineligible. (Id. at 2.)

Plaintiff appealed the withdrawal of her Medicaid benefits to the State Office of Administrative Courts. (ECF No. 30 ¶ 38.) On December 14, 2018, the administrative law judge ("ALJ") determined that Plaintiff remained eligible for Medicaid benefits because her trust and annuity did not count as resources as against the income limit, and that Plaintiff did not owe the Department any further payment ("Initial Decision"). (Id.) The Department appealed to the Department's Office of Appeals ("Office of Appeals"). (Id. ¶ 39.)

On July 11, 2019, Administrative Law Judge Christine Nierenz of the Office of Appeals overturned the Initial Decision ("Final Agency Decision"). (Id.) She determined that the trust and annuity were countable resources which rendered Plaintiff ineligible for Medicaid benefits. (Id.) She further ordered Plaintiff to designate the Department as a remainder beneficiary of her annuity, and to pay the Department the $72,253.66, which she determined that the Department had overpaid. (Id.) Plaintiff was entitled to seek judicial review of the Final Agency Decision in state court, but opted to pursue this action instead. (Id. ¶ 40; see also Colo. Rev. Stat. § 24-4-106(4).)

Plaintiff filed her initial Complaint against Kim Bimestefer in her official capacity as Executive Director of the Department and Christine Nierenz in her official capacity as Administrative Law Judge II of the Department, on September 18, 2019. (ECF No. 1.) She filed her First Amended Complaint on March 20, 2020 ("Complaint"), bringing four claims pursuant to 42 U.S.C. § 1983, and one claim under state law. (ECF No. 30.) Claim I alleges that Defendants violated 42 U.S.C. §§ 1396a(a)(10)(A)(ii)(V) and (VI); Claim II alleges that Defendants violated 42 U.S.C. § 1396p(h)(1); Claim III alleges thatDefendants violated 42 U.S.C. § 1396p(e); and Claim V alleges that Defendants violated 42 U.S.C. § 1396a(r)(2)(A). (Id. ¶¶ 41-98.) Plaintiff seeks to enforce these provisions through Section 1983, contending that these violations infringed on her federally protected rights by resulting in the improper withdrawal of her Medicaid benefits. (Id. ¶ 98.) Claim IV is entitled "Equitable Estoppel and Waiver," and alleges that because the Department did not withdraw Plaintiff's Medicaid benefits until several years after learning of her Vaccine Act award, it should be barred from finding her ineligible for Medicaid benefits presently. (Id. ¶¶ 84-91.)

Defendants filed their Motion to Dismiss Plaintiff's First Amended Complaint ("Motion to Dismiss") on April 22, 2020. (ECF No. 36.) Plaintiff filed a Response to the Motion to Dismiss on May 13, 2020. (ECF No. 40.) Defendants filed a Reply to Plaintiff's Response on June 10, 2020. (ECF No. 44.)

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a cause of action for "failure to state a claim upon which relief can be granted." The Rule 12(b)(6) standard requires the Court to "assume the truth of the plaintiff's well-pleaded factual allegations and view them in the light most favorable to the plaintiff." Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007). In ruling on such a motion, the inquiry is "whether the complaint contains 'enough facts to state a claim to relief that is plausible on its face.'" Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Oxendine v. Kaplan, 241 F.3d 1272, 1275 (10th Cir. 2001) ("[I]n deciding a motion to dismisspursuant to Rule 12(b)(6), a court may look both to the complaint itself and to any documents attached as exhibits to the complaint.").

Granting a motion to dismiss "is a harsh remedy which must be cautiously studied, not only to effectuate the spirit of the liberal rules of pleading but also to protect the interests of justice." Dias v. City & Cnty. of Denver, 567 F.3d 1169, 1178 (10th Cir. 2009) (internal quotation marks omitted). "Thus, 'a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.'" Id. (quoting Twombly, 550 U.S. at 556).

III. ANALYSIS

Defendants argue that Plaintiff's four federal claims are untenable due to claim preclusion, issue preclusion, and the lack of any enforceable rights under Section 1983. (ECF No. 36 at 2.) They further posit that Plaintiff's fourth claim, "Equitable Estoppel and Waiver," is not a cause of action. (Id.) Because Plaintiff concedes in her Response that Claim IV is not viable, this claim is dismissed without prejudice, and the Court considers only Claims I, II, III and V. (ECF No. 40 at 5 n.4.)

A. Claim Preclusion Applicability to Administrative Proceedings

Federal courts must give full faith and credit to decisions of state courts, which may include state administrative court decisions. Terrones v. Allen, 680 F. Supp. 1483, 1486 (D. Colo. 1988). A court will grant preclusive effect to an agency decision where an agency (1) acts in a judicial capacity; (2) resolves factual disputes before it; and (3) the parties had "an adequate opportunity to litigate" the issues. Salguero v. City ofClovis, 366 F.3d 1168, 1173 (10th Cir. 2004). An agency acts in a judicial capacity when its decision "is likely to affect the rights and duties of specific individuals and is reached through the application of preexisting legal standards or policy considerations to present or past facts developed at a hearing . . . ." Chellsen v. Pena, 857 P.2d 472, 475 (Colo. App. 1992).

Here, Plaintiff's Complaint indicates that the ALJ and Office of Appeals applied federal law and state regulations to Plaintiff's case, and made determinations regarding her Medicaid eligibility. (ECF No. 30 ¶¶ 38-39.) Insofar as Plaintiff argues that the ALJ did not resolve factual disputes, this statement is misleading, because Plaintiff and the Department stipulated to the facts and filed cross-motions for summary judgment. (ECF No. 30-4 at 2.) Finally, Plaintiff had an adequate opportunity to litigate the present issues, namely, her eligibility for Medicaid based on the character of her trust and annuity. Not only did she have the opportunity, but several of her present arguments persuaded the ALJ to rule in her favor in the initial agency proceeding. (ECF No. 30 ¶ 38.) Accordingly, the Final Agency Decision is entitled to preclusive effect.

B. Preclusive Effect as to Plaintiff's Claims

Federal courts apply the preclusion doctrines of the state where the agency sits. Salguero, 366 F.3d 1173. Accordingly, Colorado law applies. Under Colorado law, the doctrine of res judicata, or claim preclusion, applies when four elements are met:

(1) the judgment in the prior proceeding was final; (2) the prior and current proceedings

...