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Williams v. Shah

United States District Court, E.D. New York

March 30, 2014

FANNIE MAE WILLIAMS by her guardian United Guardianship Services; MINDY BACKER by her guardian Gay Lee Freedman; and ANNIE L. KELLY by her guardian United Guardianship Services, on behalf of themselves and all others similarly situated, Plaintiffs,
NIRAV R. SHAH, M.D., M.P.H., in his capacity as the Commissioner of the New York State Department of Health, Defendant.


ROSLYNN R. MAUSKOPF, District Judge.

This is a putative class action arising from an alleged policy of the New York State Department of Health that does not allow for the deduction of certain expenses from the payment obligations of Medicaid recipients entitled to nursing home care. ( See Am. Compl. (Doc. No. 16).) In particular, plaintiffs, incapacitated persons under New York law for whom guardians were appointed by state court order, challenge the Department of Health's decision not to deduct from their required Medicaid contribution the expenses that plaintiffs may be required to pay to their guardians. ( Id. ) Plaintiffs seek declaratory and injunctive relief pursuant to 42 U.S.C. § 1983, claiming that this policy violates the Medicaid Act, 42 U.S.C. §§ 1396 et seq.. Before the Court is defendant's fully-briefed motion to dismiss. (Doc. No. 17.) Oral argument on the motion was held on March 27, 2014. For the reasons that follow, defendant's motion to dismiss is granted.


The crux of this case is an alleged conflict between plaintiffs' financial obligations to their guardians and plaintiffs' financial obligations under Medicaid. Plaintiffs reside in nursing homes and their Medicaid benefits are administered by the New York City Human Resources Administration ("HRA").[2] Each plaintiff is eligible to receive Medicaid benefits. Each plaintiff was also found, pursuant to Article 81 of the New York Mental Hygiene Law, to be an "incapacitated person" and was appointed a guardian to oversee the management of her property and personal needs. See N.Y. Mental Hyg. Law §§ 81.02, 81.03 (McKinney's 2014).

Plaintiffs are required to pay for the benefits they are eligible to receive under Medicaid, and, under some circumstances, can be required to pay for expenses related to their court-appointed guardians as well. "Medicaid recipients who are admitted to nursing homes and who have income exceeding a specified level must pay for a portion of their care." Florence Nightingale Nursing Home v. Perales, 782 F.2d 26, 27 (2d Cir. 1986); see also 42 U.S.C. § 1396a(q)(1)(A). The administering agency must deduct certain sums from the individual's income when determining that contribution, see 42 C.F.R. § 435.832, and "New York refers to a Medicaid recipient's monthly income minus the applicable deductions as the individual's net available monthly income' or NAMI.'" Sai Kwan Wong v. Doar, 571 F.3d 247, 251-52 (2d Cir. 2009) (quoting New York Ass'n of Homes & Servs. for the Aging, Inc. v. Novello, 786 N.Y.S.2d 827, 829 (N.Y.App.Div. 2004)). The "NAMI represents the amount that a patient is required to contribute toward his or her care." Florence Nightingale Nursing Home, 782 F.2d at 28-29.

The NAMI is calculated by the local agency tasked with determining recipients' eligibility in accordance with policies established by the state Department of Health. New York requires that plaintiffs contribute all of their income - less necessary expenses, a "personal needs allowance, " and other deductions not relevant here - toward their care. N.Y. Comp. Codes R. & Regs., tit. 18, § 360-4.9; see also Sai Kwan Wong, 571 F.3d at 251. At the same time, a state court that appoints a guardian "shall establish, and may from time to time modify, a plan for the reasonable compensation of the guardian" that "take[s] into account the specific authority of the guardian... to provide for the personal needs and/or property management for the incapacitated person, and the services provided to the incapacitated person by such guardian." N.Y. Mental Hyg. Law § 81.28(a).

According to plaintiffs, the Department of Health does not permit the deduction of guardianship-related fees and expenses, except in certain limited circumstances. (Am. Compl. ¶¶ 34, 52-53.) Moreover, in In re Deanna W., 908 N.Y.S.2d 692 (N.Y.App.Div. 2010), the New York Supreme Court, Appellate Division, Second Department, found that "New York's regulations regarding the calculation of an individual's NAMI... includes no provision for disregarding an individual's expenses, " even "non-discretionary expenses related to the condition contributing to the individual's need for Medicaid assistance." Id. at 693-94. Thus, the Appellate Division held that the lower court had erred in "directing the [administering agency] to disregard expenses associated with [the plaintiff]'s guardianship in calculating her NAMI."[3] Id.

Plaintiffs allege that the "practical import" for individuals who do not have sufficient funds to pay both their NAMI and their guardian raises two possible scenarios. (Compl. ¶ 55.) First, failing to deduct guardianship-related expenses may prevent or undermine the appointment of a qualified guardian, as the ward may be unable to pay the reasonable compensation to which that guardian is entitled. Alternatively, a Medicaid recipient may incur liability for nursing home or hospital charges if the recipient uses funds allocated to the NAMI to pay guardianship-related expenses instead of remitting the entire NAMI as required. Plaintiffs maintain that this "zerosum game" contravenes the Medicaid Act.[4] ( Id. ¶ 7.) The Court disagrees for the reasons that follow.


I. Standing

As an initial matter, the Court must determine whether plaintiffs have standing to bring this suit, and concludes they do not. See Alliance For Envtl. Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 85 (2d Cir. 2006) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101 (1998)). "Article III standing is a fundamental constitutional requirement that prevents courts from unnecessarily reaching legal issues in situations where the party to the litigation has failed to allege an injury which triggers an actual case or controversy that needs resolution by the courts." Butler v. Obama, 814 F.Supp.2d 230, 235 (E.D.N.Y. 2011); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 559 (1992). Whether plaintiffs have standing is determined on the basis of the facts existing at the time the action was filed, see United States Parole Comm'n v. Geraghty, 445 U.S. 388, 397 (1980), and the Court "accept[s] as true all material allegations of the complaint" with respect to standing, "constru[ing] the complaint in favor of the complaining party." Warth v. Seldin, 422 U.S. 490, 501 (1975). To have standing, plaintiffs must show that (1) they have suffered an "injury in fact" that is both "concrete and particularized" and "actual and imminent, not conjectural or hypothetical"; (2) their injury is "fairly traceable" to defendant's actions; and (3) their injury would likely be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180 (2000) (citing Lujan, 504 U.S. at 560); Bryant v. New York State Educ. Dep't, 692 F.3d 202, 211 (2d Cir. 2012), cert. denied, 133 S.Ct. 2022 (2013).

The Court notes that the amended complaint does not allege several key facts that are arguably relevant in determining whether these particular plaintiffs suffered an injury in fact. For example, plaintiffs do not allege what, if anything, plaintiffs are required to pay their guardians, and whether plaintiffs' guardians have, in fact, paid themselves and not the NAMI; whether the HRA actually considered and declined to exclude plaintiffs' guardianship-related expenses from their NAMI calculation, and whether plaintiffs challenged their NAMI determination through any state administrative or judicial processes.[5] Indeed, at oral argument on the motion held on March 27, 2014, plaintiffs' counsel conceded that he did not know whether there was a fee fixed for any of the, or whether the guardians had even been appointed prior to the calculation of their NAMIs.[6] As such, it is unclear - both from the amended complaint and from oral argument - that the HRA policy challenged in this action has actually been applied to plaintiffs. But even assuming, arguendo, that plaintiffs have sufficiently alleged an injury-in-fact, they lack standing nonetheless, as any such injury cannot "reasonably... be said to have resulted, in any concretely demonstrable way, " from defendant's alleged violation of the Medicaid Act.[7] Warth, 422 U.S. at 504.

Plaintiffs allege that defendant's decision not to exclude guardianship-related expenses from their NAMI calculation injures them because the funds used to pay those expenses must then be drawn from assets allocated to the NAMI, rendering plaintiffs unable to contribute the full amount required toward their care and causing them to incur potential liability for nursing home charges. Defendants urge that by choosing to pay their guardians and forgo their required contribution under Medicaid, plaintiffs are the sole cause of their own injury.[8] Defendants are correct. "The traceability requirement for Article III standing means that the plaintiff must demonstrate a causal nexus between the defendant's conduct and the injury.'" Rothstein v. UBS AG, 708 F.3d 82, 91 (2d Cir. 2013) (quoting Heldman v. Sobol, 962 F.2d 148, 156 (2d Cir. 1992)). While "the fairly traceable' element... imposes a standard lower than proximate cause, " plaintiffs must still sufficiently allege that "in fact, the asserted injury was the consequence of the defendant['s] actions." Rothstein, 708 F.3d at 91-92 (quoting Simon v. E. Kentucky Welfare Rights Org., 426 U.S. 26, 45 (1976)). And although a party "does not lack standing merely because [his or] her injury is an indirect product of the defendant's conduct, " there is no standing if the party cannot "proffer facts establishing that all links in the causal chain are satisfied." Garelick v. Sullivan, 987 F.2d 913, 919 (2d Cir. 1993) (citing Allen v. Wright, 468 U.S. 737, 757-58 (1984)).

It bears repeating here that plaintiffs are in no danger of losing any benefits afforded them under the Medicaid Act. Plaintiffs nonetheless complain that not deducting guardian expenses causes an "incapacitated person" under state law to incur debts to their medical providers when he or she uses funds designated as part of the NAMI to instead pay his or her guardian. Assuming the truth of that assertion, any injury is born not of state action but of plaintiffs' own conduct, exercised through their guardians and for which they are responsible. While "[s]tanding is not defeated merely because [a] plaintiff in some sense contributed to his [or her] own injury, " it "has been denied where the injury appears solely attributable to the plaintiff." Engwiller v. Pine Plains Cent. Sch. ...

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