Rodefer v. McCarthy

• Court: Ohio Court of Appeals
• Writing for the Court: FROELICH, P.J.
• Citation: Rodefer v. McCarthy, 36 N.E.3d 221 (Ohio App. 2015)
• Decision Date: 31 July 2015
• Docket Number: No. 2015–CA–1.,2015–CA–1.
• Parties: Velma RODEFER, Plaintiff–Appellant v. John B. McCARTHY, Director, et al., Defendants–Appellees.

36 N.E.3d 221

Velma RODEFER, Plaintiff–Appellant

v.John B. McCARTHY, Director, et al., Defendants–Appellees.

No. 2015–CA–1.

Court of Appeals of Ohio, Second District, Darke County.

July 31, 2015.

Jesse B. Beasley, Dayton, OH, for plaintiff-appellant.

Ara Mekhjian, Assistant Attorney General, Columbus, OH, for defendants-appellees.

OPINION

FROELICH, P.J.

{¶ 1} The estate of Velma Rodefer¹ appeals from a judgment of the Darke County Court of Common Pleas, which dismissed, pursuant to Civ.R. 12(B), her action under 42 U.S.C.1983 against the Ohio Department of Medicaid (“ODM”), and its director, John B. McCarthy, in his official capacity. Rodefer does not challenge the dismissal of ODM, but claims that the trial court erred in dismissing her claims against McCarthy. For the following reasons, the trial court's judgment will be affirmed.

{¶ 2} Rodefer's complaint alleged the following facts.

{¶ 3} When Rodefer was diagnosed with Alzheimer's disease, her only son, Kenneth, brought her into his home. Kenneth and his family cared for Rodefer for more than 3 1/2 years. As her physical and cognitive abilities decreased, she spent more and more time at The Brethren Retirement Community, where other relatives resided.

{¶ 4} With her liquid resources being exhausted, Rodefer looked to sell her life estate interest in farmland. Counsel was consulted, and calculations of the value of her life estate for Medicaid purposes were performed according to Ohio Adm.Code 5101:1–39–32, which was attached to the complaint as Exhibit A. According to the provision, the value of Rodefer's life estate was less than $22,000; Kenneth paid her that amount, and she transferred title to the life estate to him in return. The $22,000 was used to pay for Rodefer's care.

{¶ 5} As her condition continued to deteriorate, Rodefer moved into assisted living and then to the nursing facility of The Brethren Retirement Community. On November 29, 2012, after Rodefer's assets were exhausted, Kenneth applied for Medicaid assistance for his mother. The Darke County Department of Job and Family Services (“DJFS”) determined that the sale of the life estate involved an “improper transfer,” contending that Rodefer did not receive fair market value in the sale. DJFS concluded that the value of the life estate was $117,012, which was determined by multiplying $434,100 (the value of the farmland) by 0.26955. When this determination was questioned, the caseworker cited and sent a copy of Medicaid Eligibility Procedure Letter No. 68 (“MEPL 68”), issued by McCarthy on November 1, 2012. MEPL 68 provided the life estate multiplier of 0.26955 that was used by DJFS. A copy of MEPL 68 was attached to the complaint as Exhibit B.

{¶ 6} Rodefer was invited to respond to the DJFS determination, and she provided DJFS with reasons that its determination was incorrect. The administrator of DJFS “rebuffed” her response by letter on January 14, 2013.

{¶ 7} On January 23, 2013, she requested an in-person state hearing before the Ohio Department of Job and Family Services (“ODJFS”). See R.C. 5101.35. A request for hardship waiver was submitted to DJFS on February 19 and summarily denied; a state hearing request was submitted on this denial, as well. Counsel for Rodefer requested that the state hearings on the hardship waiver and the underlying decision be coordinated, but no response to this request was received.

{¶ 8} A state hearing was scheduled for March 18, 2013. When Kenneth and counsel arrived, they were informed that the hearing would be conducted by telephone. Counsel objected and asked for an in-person hearing. The hearing officer indicated that such may not be granted, but submitted the request. The state hearing was rescheduled for April 9.

{¶ 9} At the beginning of the April 9 hearing, which was held by video conference, the hearing officer ruled that the January 23 hearing had been dismissed and that only testimony regarding the hardship waiver would be accepted. As an attachment to ODJFS's appeal summary, Kenneth and counsel were presented with a notice stating that a state hearing request had been denied, since no written authorization had accompanied the request. Rodefer alleges that this action violated DJFS regulations, and that the notice was served only on DJFS, not Kenneth or counsel.

{¶ 10} The adverse decisions were appealed administratively. The ODJFS hearing authority, A. Ruben Lopez, contacted Rodefer's counsel and stated that, due to ODJFS's “numerous mistakes,” a state hearing based on the original January 23, 2013 hearing request would be held. That hearing was held on May 21, 2013. Kenneth and counsel raised various grounds for reversing the DJFS's actions. On June 24, 2013, the ODJFS hearing officer upheld DJFS's prior decision, based on MEPL 68, that the life estate was properly valued at $117,012. Rodefer states that the decision did not address any of her arguments to the contrary. Rodefer attached the decision to the complaint as Exhibit C.

{¶ 11} The June 24 state hearing decision was appealed to ODJFS, Administrative Appeal Section. The appeal was denied on July 18, 2013. The July 18 decision was attached to the complaint as Exhibit D.

{¶ 12} With respect to McCarthy specifically, Rodefer alleged that McCarthy “is responsible for the actions taken by the Ohio Department of Job and Family Services, to whom Medicaid decision-making authority has been delegated, and the County Departments of Job and Family Services (‘CDJFS'), to whom day-to-day operations have been delegated.” Rodefer further alleges that, “[a]s the chief executive of ODM, Defendant McCarthy is responsible for the supervision and operation of the Medicaid Program in Ohio in accordance with federal and state statutes and rules.” The only additional specific reference to McCarthy in the complaint appears in paragraph 11, in which Rodefer alleges that when the DJFS determination was questioned, “the caseworker cited and sent a copy of Medicaid Eligibility Procedure Letter No. 68 (‘MEPL 68’), issued by Defendant McCarthy on November 1, 2012. See Exhibit B.”

{¶ 13} On August 8, 2014, Rodefer brought suit under 42 U.S.C.1983 against the Ohio Department of Medicaid and its director, McCarthy, in his official capacity. Rodefer stated in the introduction portion of her complaint that the action was brought “to address past denials, declare Defendants' actions void, and enjoin the continuing denial of Medicaid benefits to Velma Rodefer. Defendants refuse to pay for her assisted living/nursing home care, contending she sold her life estate in real estate to her son for less than fair market value. * * *.”

{¶ 14} In Count One, Rodefer claims that defendants' actions “in seeking to rescind and replace an enacted rule by a letter, and apply such retroactively, violated the Ohio Administrative Procedure Act, and Plaintiff's rights under the Ohio and United States Constitutions.” Count Two claims that the denial of Medicaid benefits and ability to obtain Medicaid benefits violate her rights under Title XIX of the Social Security Act and her rights to medical assistance under Ohio law. Count Three alleges that the denial of Medicaid benefits violates her rights under the Ohio and United States Constitutions. Count Four alleges that defendants violated state and federal law by refusing to follow its own rules and seeking to replace such rules by “administrative fiat.” Finally, Rodefer alleged in Count Five that she was denied her right to substantive and procedural due process by defendants' attempts to avoid and deny her meaningful hearings and to address grounds raised by her.

{¶ 15} Rodefer requested as relief that defendants' prior decision on her eligibility for benefits be reversed, that the court issue a judgment declaring that MEPL 68 has no force and effect and that Ohio Admin Code 5101:1–39–32 applies, that defendants be “permanently enjoined from denying Plaintiff's benefits,” and that she (Rodefer) be awarded attorney fees and costs.

{¶ 16} On September 5, 2014, ODM and McCarthy moved to dismiss the action, pursuant to Civ.R. 12(B)(1) and 12(B)(6), raising several grounds. First, they claimed that Rodefer's action was barred by res judicata, because she had previously challenged the administrative decision approving her application for Medicaid benefits but imposing a period of “restricted coverage.” They noted that the Darke County Court of Common Pleas had already determined that DJFS properly valued Rodefer's life estate and that DJFS's decision regarding Rodefer's Medicaid application was “in accordance with law.”² Second, ODM and McCarthy argued that, even if Rodefer's claims were not barred by res judicata, the trial court lacked jurisdiction to hear her challenge to the agency action, except as provided by statute; they stated that the only statutes authorizing review of DJFS's Medicaid-eligibility decisions are R.C. 119.12 and R.C 5160.31. Third, ODM and McCarthy asserted that Rodefer's claims for declaratory relief were improper, because another remedy was available to her. Finally, they claimed that Rodefer failed to state a claim upon which relief could be granted and requested impermissible relief to the extent that she sought a permanent injunction prohibiting a future denial of benefits.

{¶ 17} ODM and McCarthy attached 13 exhibits to their motion, including Medicaid regulations and a copy of Rodefer's complaint against DJFS and its director in her administrative appeal of that agency's decision to the Darke County Court of Common Pleas.

{¶ 18} On December 30, 2014, the trial court granted the motion to dismiss. The court found that the action was barred by res judicata, that the exclusive method of challenging the decision denying her Medicaid benefits was through the statutory framework for administrative appeals, that the procedural due process claims must fail because “the county decision and the state appeal decision satisfied due process requirements and were not arbitrary denials of...