United States District Court, Northern District of New York
May 29, 2002
JOAN GAGE AND KAREN JURUTKA, AS GUARDIANS OF THE PERSON AND PROPERTY OF WILLIAM J. OSIKA AND MADELINE OSIKA, PLAINTIFFS,
THE NEW YORK STATE DEPARTMENT OF HEALTH; AND ANTONIA C. NOVELLO, M.D., AS COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF HEALTH, DEFENDANTS.
The opinion of the court was delivered by: David N. Hurd, United States District Judge.
MEMORANDUM-DECISION AND ORDER
On March 23, 2001, plaintiffs Joan Gage and Karen Jurutka (collectively
commenced the instant action against defendants New York
State Department of Health (the "Department of Health") and Antonia C.
Novello, M.D. ("Novello"), in her official capacity as Commissioner of
the the New York State Department of Health, (collectively "defendants")
pursuant to 42 U.S.C. § 1983.
Defendants now move to dismiss the complaint pursuant to Federal Rule
of Civil Procedure 12(b)(6). Plaintiffs oppose. Oral argument was heard
on October 26, 2001, in Albany, New York. Decision was reserved.
The facts relevant to a determination of the instant motion are stated
Plaintiffs are the personal representatives of two nursing home
patients, William and Madeline Osika. On the advice of counsel, plaintiffs
transferred $22,000 out of the Osikas' assets. Based on this transfer,
the state defendants imposed a penalty period of 1.545 months against the
Osikas, during which they were ineligible to receive long-term health
benefits under Medicaid. Pursuant to New York State Administrative
Directive No. 96 ADM-8 ("ADM-8"), this penalty was assessed from the
first day of the month following the month of the transfer. Plaintiffs
contend that calculating the penalty period from the month following the
transfer, as required by ADM-8, violates federal law.*fn1
Title 42 U.S.C. § 1396p(c)(1)(D) provides that, "The date specified
in this subparagraph is the first day of the month during or after which
assets have been transferred for less than fair market value and which
does not occur in any periods of ineligibility under this subsection."
(Emphasis added.) This language was adopted as part of the Omnibus
Budget Reconciliation Act of 1993 ("OBRA `93"), 42 U.S.C. § 1396p.
Prior to 1993, the period of ineligibility commenced "with the month in
which such resources were transferred." Defendants contend that the
amendment granted states the option of selecting either month as the
beginning of the penalty period. Plaintiffs contend that the amendment
was intended only to clarify the date to be applied in the case of
multiple transfers of such resources.
As a result of defendants' adoption of the month following the transfer
as the start of the penalty period, plaintiffs contend that defendants
violated their rights to (1) due process because Congress' preempted the
field of Medicaid regulation and ADM-8 imposes a different penalty period
than that applicable under federal law; and (2) equal protection because
New York residents are treated differently than Medicaid recipients who
are residents of other states.
III. STANDARD OF REVIEW
A. 12(b)(6) Motion To Dismiss
In deciding a Rule 12(b)(6) motion, a court "must accept the
allegations contained in the complaint as true, and draw all reasonable
inferences in favor of the non-movant; it should not dismiss the
complaint `unless it appears beyond a reasonable doubt that the
plaintiff[s] can prove no set of facts in support of [their] claim which
would entitle [them] to relief.'" Sheppard v. Beerman, 18 F.3d 147, 150
(2d Cir. 1994) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)); see
also Kaluczky v. City of White Plains, 57 F.3d 202, 206 (2d Cir. 1995).
However, conclusory allegations
that merely state the general legal
conclusions necessary to prevail on the merits and are unsupported by
factual averments will not be accepted as true. See, e.g., Clapp v.
Greene, 743 F. Supp. 273, 276 (S.D.N.Y. 1990); Albert v. Carovano,
851 F.2d 561, 572 (2d Cir. 1988).
Defendants raise several arguments in support of their motion to
dismiss. Each of these is discussed below.
A. Eleventh Amendment Immunity
Defendants' first argument is that the plaintiffs' claims against the
Department of Health must be dismissed on the grounds that the Department
of Health, as an arm of the State of New York, is immune from this
Section 1983 action under the Eleventh Amendment. Defendants are
Absent a waiver of immunity by the state, or an abrogation of immunity
by Congress, "The Judicial power of the United States shall not be
construed to extend to any suit in law or equity, commenced or prosecuted
against one of the United States by Citizens of another State, or by
Citizens or Subjects of any Foreign State." U.S. Const. Amend. XI. The
Supreme Court has extended this immunity to bar a citizen from suing his
or her own state in federal court. See Barrett v. United States,
853 F.2d 124, 128 (2d Cir. 1988) (citing Hans v. Louisiana, 134 U.S. 1,
10-11 (1890)). The nature of the "relief sought by a plaintiff suing a
State is irrelevant to the question whether the suit is barred by the
Eleventh Amendment." Seminole Tribe of Florida v. Florida, 517 U.S. 44,
58 (1996) (citing Cory v. White, 457 U.S. 85, 90 (1982) ("It would be a
novel proposition indeed that the Eleventh Amendment does not bar a suit
to enjoin the State itself simply because no money judgment is
sought.")). Eleventh Amendment immunity applies to state agencies and
departments as well as to the state itself. See Pennhurst State School &
Hospital v. Halderman, 465 U.S. 89, 100 (1984). As such, it is held that
there is no jurisdiction over plaintiffs' claims against the Department
of Health in this action, and the Department of Health must be dismissed
as a party pursuant to Fed.R.Civ.P. 12(b)(6).
Next, defendants contend that the Eleventh Amendment bars plaintiffs'
claims against Novello to the extent such claims seek to require Novello
to recalculate the commencement of the penalty period imposed against the
Osikas. Defendants contend that the doctrine of Ex Parte Young,
209 U.S. 123 (1908), pursuant to which state officials may be sued in
their official capacities for injunctive relief, applies only to enjoin
such officials from future violations of federal law.
Where, as here, the imposition of retroactive equitable relief will
require the expenditure of funds from the public treasury, the action is
properly viewed as a "suit" from which the state is immune under the
Eleventh Amendment. This is so because such an award is "in practical
effect indistinguishable in many aspects from an award of damages against
the State." Edelman v. Jordan, 415 U.S. 651, 668 (1974). Accordingly,
because the requested equitable relief (requiring the recalculation of
the Osikas' penalty period) will result in the expenditure of public
funds, it is held that this cause of action is barred by the Eleventh
B. Qualified Immunity
Defendants also argue that Novello is entitled to qualified immunity
from plaintiffs' remaining causes of action because
her actions in
interpreting and applying ADM-8 were reasonable, in that she relied on
the decision of the New York Court of Appeals in Brown v. Wing,
93 N.Y.2d 517 (1999). Defendants are incorrect. Qualified immunity is not
a defense to a cause of action seeking prospective equitable relief. See
Nicholas v. Miller, 189 F.3d 191, 195 (2d Cir. 1999) (citing Rodriguez
v. City of New York, 72 F.3d 1051, 1065-66 (2d Cir. 1995)). Accordingly,
plaintiffs' claims against Novello for prospective injunctive relief will
not be dismissed on this basis.
C. Viability of Plaintiffs' Federal Causes of Action
As noted above, plaintiffs plead causes of action under the due process
clause and equal protection clause*fn2 of the United States
Constitution. Each of these causes of action is predicated upon the
theory that ADM-8, as applied by the defendants, conflicts with
42 U.S.C. § 1396p(c)(1)(D) and is, therefore, preempted under
42 U.S.C. § 1396p(c)(4).*fn3 Because ADM-8 does not conflict with
the terms of Section 1396(c)(1)(D), plaintiffs have failed to state any
federal causes of action upon which relief can be granted, and their
complaint must be dismissed in its entirety pursuant to Fed.R.Civ.P.
Beginning with the text of the statute, by permitting the calculation
of the penalty period from the "first day of the month during or after
which assets have been transferred for less than fair market value," it
appears that, as a matter of statutory construction, Congress has provided
states participating in the Medicaid program the option of calculating
the penalty provision from either the first day of the month in which the
transfer occurred or the first day of the month following the transfer.
As such, the adoption of the latter as the date for calculation of the
penalty period (as New York so elected in ADM-8), is consistent with the
text of Section 1396p(c)(1)(D).
Plaintiffs argue that Section 1396p(c)(1)(D) was not intended to confer
any such discretion upon the states, but instead was an attempt by
Congress to address the "plethora of litigation" arising from multiple
transfers that occurred under the statute as it existed prior to
amendment by the OBRA `93. Their argument on this point is that
"[p]laintiffs opine that Congress believed the new language would
alleviate the confusion by specifying that the ineligibility period would
begin on the first day of the first month for all assets transferred
`during or after' that month." (Pl. Mem. at 7.) Unfortunately for
plaintiffs, they can find no support for their argument in either the text
of the statute or its legislative history. Instead, they rely upon
general statements regarding the comprehensive scope of Medicaid
regulation made by state governors and legislators at a conference
addressing Medicaid issues as evidence that
Congress did not intend to
loosen its preemption of the field of Medicaid regulation through the
Such statements are wholly insufficient to overcome the effect of the
plain language of the statute. See Auburn Housing Authority v. Martinez,
277 F.3d 138
, 149 n. 5 (2d Cir. 2002). Accordingly, it is held that ADM-8
does not conflict with the requirements of Section 1396p(c)(1)(D), and
therefore it is not preempted by Section 1396p(c)(4). Plaintiffs have
failed to state a claim for relief and their complaint must be
As an alternative argument, plaintiffs assert that Section 1396p, as
well as state law enacted pursuant to it, is unconstitutionally vague,
and therefore any state action taken pursuant to it violates the notice
requirement of due process. (Pl. Mem. at 8.) Plaintiffs assert that
Section 1396p is unconstitutionally vague because "[m]any people, of
arguably above-average intelligence," have disagreed about its meaning.
Where a statute does not impose criminal liability or affect fundamental
rights, such as the right to free speech, courts merely inquire whether
the statute is "clear enough to afford one a reasonable opportunity to
know what is permitted and what is proscribed." Textile Workers Pension
Fund v. Standard Dye & Finishing Co., 725 F.2d 843, 855-56 (2d Cir. 1984)
("The degree of vagueness tolerated under the constitution varies, in
part, according to the nature of the enactment. Statutes governing
economic regulation are subject to a less stringent vagueness test than
those governing constitutionally protected rights.") (citing Village of
Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498-99
In the instant case, plaintiffs had ample opportunity to know that a
penalty provision would be imposed from the month following the transfer
of the Osikas' funds. As noted above, the language of Section
1396p(c)(1)(D) clearly provides that the penalty provision could be
calculated from the month either during or following the occurrence of a
prohibited transfer. The express language of ADM-8 gave reasonable notice
that New York would apply the latter month in calculating any penalty
period. In addition, plaintiffs' transfer occurred more than six months
after the New York Court of Appeals affirmed the ADM-8 penalty period
calculation in its decision in Brown v. Wing, supra, 93 N.Y.2d 517
such, plaintiffs were afforded a "reasonable opportunity" to know what
was required under the law, and their vagueness challenge must be
Upon consideration of the submissions and arguments of the parties, it
is hereby ORDERED that
1. Defendants' motion to dismiss the complaint pursuant to Fed.R.Civ.P.
12(b)(6), is GRANTED; and
2. The complaint is DISMISSED.
The Clerk is directed to enter judgment accordingly.
IT IS SO ORDERED.