Jackson v. Selig

• Decision Date: 13 March 2013
• Docket Number: 3:10-CV-00276-BRW
• Parties: RICHARD F. JACKSON PLAINTIFF v. JOHN M. SELIG, in his Official Capacity DEFENDANT as Director of Arkansas Department of Human Services
• Court: U.S. District Court — Eastern District of Arkansas

RICHARD F. JACKSON PLAINTIFF

v. JOHN M. SELIG, in his Official Capacity DEFENDANTas Director of Arkansas Department of Human Services

3:10-CV-00276-BRW

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF ARKANSAS JONESBORO DIVISION

Dated: March 13, 2013

ORDER

Pending are cross-motions for summary judgment (Doc. Nos. 37, 40). Each party has responded and replied accordingly.¹ For reasons set forth below, Defendant's Motion for Summary Judgment (Doc. No. 40) is DENIED, and Plaintiff's Motion for Summary Judgment (Doc. No. 37) is GRANTED.

I. BACKGROUND

On May 22, 2008, eighty-year-old Richard Jackson was admitted to a long-term nursing facility in Wynne, Arkansas, and resided there until his death on December 17, 2011.² His wife, Alva Jackson, continued to live in the community. Following his admission to the nursing facility, Mr. Jackson applied to the Arkansas Department of Human Services ("ADHS") for Long Term Care ("LTC") Medicaid benefits. ADHS completed a LTC Spousal Resource Assessment showing that the Jacksons had available resources totaling $499,820.40, with each spouse's share equaling $249,910.20.³ At the same time, ADHS completed a Resource Eligibility Worksheet showing that, without regard to Alva Jackson's Community Spouse Resource Allowance or Mr.Jackson's allowance as the institutionalized spouse, Mr. Jackson had available resources totaling $395,420.40.⁴ ADHS denied Mr. Jackson's LTC Medicaid benefits application because his available resources exceeded the applicable limit.⁵

Mr. Jackson, through his attorney-in-fact (Alva Jackson), then purchased two annuities from OM Financial Life Insurance Company with the resources determined by ADHS to be available to Mr. Jackson.⁶ Mr. Jackson again applied to ADHS for LTC Medicaid benefits.⁷ He listed the two annuities in his application, but listed Alva Jackson as the recipient of their monthly payments.

ADHS completed an Asset Transfer Worksheet and charged Mr. Jackson with transferring $302,796.72 in resources for purchasing the annuities. Based on this charge, ADHS penalized Mr. Jackson with a with a period of ineligibility.⁸ ADHS then informed Mr. Jackson that his application was denied because: (1) the period of ineligibility imposed for transferring assets for less than their fair market value; or alternatively, (2) the period of ineligibility imposed for the diversion of annuity income.⁹

Mr. Jackson requested a hearing with ADHS's Office of Appeals and Hearings to dispute ADHS's determination.¹⁰ A hearing was held before an administrative law judge ("ALJ").¹¹ Following the hearing, the ALJ issued his decision, stating that ADHS had erred in penalizing Mr. Jackson, but that he still was ineligible for benefits because his resources exceeded the applicable limit. Mr. Jackson filed an appeal of the ALJ's decision in the Circuit Court of Cross County, Arkansas.¹² While the appeal in state circuit court was pending, Mr. Jackson filed this suit against ADHS.

II. PROCEDURAL HISTORY

Mr. Jackson's Complaint alleges that ADHS¹³ violated 42 U.S.C. §§ 1396(c)(1)(A), 1396p(c)(2)(B)(i), 1396(d)(2)(A)(ii)&(B), 1396p(c)(1)(F)(i) and (ii), 1396p(c)(1)(G), and the policies and regulations pertaining to annuities established by the Secretary of the U.S. Department of Health and Human Services pursuant to 42 U.S.C. § 1396p(d)(6), by determining that he is ineligible to receive Medicaid benefits because of his purchase of annuities.¹⁴ Relief for these alleged violations is under 42 U.S.C. § 1983. Mr. Jackson also contends that ADHS violated the Supremacy Clause of the federal Constitution by determining he was ineligible for Medicaid benefits under Arkansas laws pertaining to annuities under MS Policy Directive 6-09. Mr. Jackson requested a declaratory judgment that ADHS erred in determining that he wasineligible for Medicaid benefits and that provisions of Arkansas law conflicting with federal law are preempted. He also requested a temporary restraining order, preliminary injunction and permanent injunction ordering ADHS to cease denying Medicaid coverage to Mr. Jackson, and that I order ADHS to issue him Medicaid coverage from the requested date of eligibility. Finally, Mr. Jackson requested attorney's fees under 42 U.S.C. § 1988.

ADHS moved to dismiss the suit under Federal Rule of Civil Procedure 12(b)(6), arguing that Mr. Jackson failed to state a claim on which relief could be granted.¹⁵ After careful review, I found that the Complaint alleged sufficient facts to state a claim for relief and denied ADHS's Motion.¹⁶

Mr. Jackson then filed a Motion for a Temporary Restraining Order and Preliminary Injunction.¹⁷ ADHS responded with a Motion to Dismiss the Motion for Preliminary Injunction, arguing that I should abstain from exercising jurisdiction under the Younger¹⁸ abstention doctrine.¹⁹ I denied ADHS's Motion, and preliminarily enjoined ADHS from considering the income streams from the annuities in determining Mr. Jackson's Medicaid eligibility, and from denying Medicaid coverage to him until this case has been fully and finally adjudicated on the merits.²⁰ ADHS requested that the proceedings be stayed in order to appeal my decision. I granted its request and ADHS appealed the portion of my Order pertaining to the preliminaryinjunction. However, due to Mr. Jackson's death, the Eighth Circuit dismissed the appeal as moot.²¹

The stay was then lifted, and Alva Jackson was substituted as Plaintiff.²² Both parties have now moved for summary judgment.²³ Accordingly, their claims will be addressed below.

III. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate only when there is no genuine issue of material fact, so that the dispute may be decided on purely legal grounds.²⁴ The Supreme Court has established guidelines to assist trial courts in determining whether this standard has been met:

The inquiry performed is the threshold inquiry of determining whether there is the need for a trial -- whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.²⁵

The Court of Appeals for the Eighth Circuit has cautioned that summary judgment is an extreme remedy that should be granted only when the movant has established a right to the judgment beyond controversy.²⁶ Nevertheless, summary judgment promotes judicial economy by preventing trial when no genuine issue of fact remains.²⁷ I must view the facts in the light mostfavorable to the party opposing the motion.²⁸ The Eighth Circuit has also set out the burden of the parties in connection with a summary judgment motion:

[T]he burden on the party moving for summary judgment is only to demonstrate, i.e.,"[to point] out to the District Court," that the record does not disclose a genuine dispute on a material fact. It is enough for the movant to bring up the fact that the record does not contain such an issue and to identify that part of the record which bears out his assertion. Once this is done, his burden is discharged, and, if the record in fact bears out the claim that no genuine dispute exists on any material fact, it is then the respondent's burden to set forth affirmative evidence, specific facts, showing that there is a genuine dispute on that issue. If the respondent fails to carry that burden, summary judgment should be granted.²⁹

Only disputes over facts that may affect the outcome of the suit under governing law will properly preclude the entry of summary judgment.³⁰

IV. DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

ADHS claims that it is entitled to summary judgment as a matter of law because the ALJ's factual findings are entitled to preclusive effect in this action, and those findings resolve any disputes on which Plaintiff's claims in this case can prevail.³¹ Plaintiff disagrees, and argues that the ALJ's decision is not entitled to preclusive effect because it is currently pending review in state circuit court.³²

The preclusive effect given to an unreviewed state administrative decision in a subsequent federal action varies depending on the laws of the state and the claims asserted in the federal action. In University of Tennessee v. Elliott, the Supreme Court held that unreviewedstate administrative findings do not preclude subsequent actions under Title VII; however, the Court also held that civil rights claims may be precluded by the earlier state agency's decision.³³ Specifically addressing a claim in federal court under § 1983, the Court stated "that when a state agency 'acting in a judicial capacity . . . resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate . . . federal courts must give the agency's fact-finding the same preclusive effect to which it would be entitled in the State's courts.'"³⁴ I note, however, that the Court's holding only applies to factual findings, not conclusions of law. Accordingly, I am not required to defer to a state administrative agency's legal conclusions.³⁵

Here, Plaintiff's claim is brought under § 1983. Thus, the ALJ's factual findings are entitled to preclusive effect in this federal action if: (1) the ALJ was acting in a judicial capacity in making the factual findings; (2) the issues of fact resolved were properly before the ALJ; (3) the parties had an adequate opportunity to litigate the disputed issues of fact; and (4) the courts in Arkansas would give preclusive effects to the ALJ's factual findings.

Neither party disputes whether the ALJ's capacity was judicial, claims the issues resolved were not properly before the ALJ, nor argues that an adequate opportunity to litigate the factual issues was absent -- thus, the effect given his findings in this action, turns on whether these findings would be given preclusive effect by Arkansas's state courts.

It is questionable whether the ALJ's opinion would be given any preclusive effect by courts in Arkansas. It is well...