United States District Court, W.D. New York
DECISION AND ORDER
FRANK P. GERACI, Jr., District Judge.
These two cases are before the Court for resolution of a common legal issue raised by both Plaintiffs, nursing home residents who essentially contend that the local County Departments of Social Services miscalculated their eligibility dates for Medicaid coverage of their nursing home care following the return of some of the assets which were transferred for less than market value during the statutorily prescribed 60-month look-back period. Both Plaintiffs assert that in contravention of federal Medicaid law, to arrive at these eligibility decisions, the County Defendants applied New York State Department of Health ("DOH") Administrative Directive 06 OMM/ADM-5, pp.18-19 ("AD 06 OMM/ADM-5, pp.18-19"), a policy which the County and State Defendants contend was put in place to implement changes in federal Medicaid law. Plaintiffs further contend that relief for these violations may be had under 42 U.S.C. § 1983 and the Supremacy Clause. For the reasons set forth herein below, I find the Defendants' interpretation and application of A.D. 06 OMM/ADM-5, pp.18-19 to be consistent with the federal Medicaid statutes, and the injunctive and declaratory relief requested by these Plaintiffs, respectively, should be denied and Defendants' motions for summary judgment dismissing the Complaints should be granted.
II. FACTUAL BACKGROUND
Although the legal posture and procedural history of each of these cases differs, all parties agree that no factual disputes exist for trial, and they are seeking a determination of the following purely legal question: When an uncompensated transfer of assets has been made and a penalty period imposed, how does a partial return of the transferred funds affect the beginning of the penalty period? Before turning to this question, a review of the agreed-upon undisputed facts as they relate to the individual circumstances of each Plaintiff, and the procedural history of each case, as set forth in the parties' filed pleadings, motion papers and supporting documentation, motion responses and replies thereto, and statements of undisputed facts, proves helpful.
A. Undisputed Facts of Plaintiff Aplin's Case
On December 27, 2007, an application for medical assistance ("Medicaid") was submitted on behalf of then-80-year-old Florence Aplin ("Plaintiff Aplin") who had been admitted on June 28, 2007 to a Residential Health Care Facility ("nursing home") located within the Western District of New York. Upon review, the Medicaid application revealed that Plaintiff Aplin had uncompensated transfers of assets totaling $379, 957.90 for the period August 2006 through November 2007. On February 28, 2008, the Wayne County Department of Social Services ("WCDSS") determined that based upon these uncompensated transfers, Plaintiff Aplin was ineligible for Medicaid assistance for nursing home care for 47.48 months, i.e., November 1, 2007 through September 2011, with a remainder contribution due for the penalty fractional month of October 2011. No Fair Hearing was requested on Plaintiff Aplin's behalf to contest the determination made by WCDSS on February 28, 2008.
Thereafter, by letter dated November 19, 2009, Plaintiff Aplin's attorney notified WCDSS of additional post-eligibility transactions affecting the transfer penalty period determination of February 28, 2008, specifically stating that Plaintiff Aplin had additional uncompensated transfers totaling $70, 004.30 during the period October 2008 through September 2009, which were not reflected in the original transfer penalty calculation. Plaintiff Aplin's attorney further indicated that $124, 500.00 of the originally transferred assets had been returned post-eligibility during March 2008 through November 2009, with an additional anticipated return of $56, 000.00 in assets by June 30, 2010. Per her attorney's representations, the total anticipated return of assets amounted to $176, 771.00.
On December 22, 2009, Plaintiff Aplin re-applied for Medicaid. Based upon the revised documentation submitted on Plaintiff's behalf, WCDSS recalculated the original transferred assets, increasing the original penalty transfer of $379, 957.90 by $70, 082.41 to $450, 039.31. WCDSS further determined that after the initial eligibility period, specifically during the period of October 2008 through June 2009, additional assets totaling $76, 872.44 had been transferred for no compensation, bringing the total amount of the uncompensated transfers to $526, 911.75, and that after the initial eligibility determination, $153, 811.40 in assets had been returned during the period of April 2008 through June 2009. Offsetting the additional transfers against the returned assets, WCDSS lowered the recalculated transfer amount from $450, 039.31 by $76, 938.96 to arrive at a reduced transfer amount of $373, 100.35.
Utilizing the policy articulated in A.D. 06 OMM/ADM-5, pp. 18-19, WCDSS added the returned assets of $153, 811.40 to Plaintiff Aplin's resources as of the original eligibility date of November 1, 2007, and determined that Plaintiff's actual nursing home costs for the period November 1, 2007 through June 2009 totaled $153, 149.73, thereby delaying the recalculated transfer penalty period until July 2009. On June 16, 2011, WCDSS advised Plaintiff Aplin that she was ineligible for nursing home care and services for a period of 46.63 months, commencing July 2009 and running through April 2013, with a remainder contribution in May 2013. WCDSS arrived at the ineligibility determination of 46.63 months by dividing $373, 100.35, the recalculated uncompensated value of transferred assets, by $8002.00, the monthly regional rate for nursing home care services, with a remainder contribution of $5008.30 in May 2013. The net reduction in the amount of uncompensated transfers due to the return of $153, 811.40 in assets resulted in the penalty period being reduced from 47.48 to 46.63 months.
Plaintiff Aplin requested a Fair Hearing pursuant to Section 22 of the New York Social Services Law ("N.Y. Soc. Serv. Law") and Title 18, Part 358 of the New York Codes, Rules and Regulations ("N.Y.C.R.R."), which hearing commenced before a New York State Office of Temporary and Disability Assistance ("OTDA") Administrative Law Judge in Wayne County on September 8, 2011 and concluded on November 14, 2011. The sole issue to be decided at the Fair Hearing was the correctness of the June 16, 2011 determination by WCDSS that Plaintiff Aplin was ineligible for Medicaid for nursing facility services for a period of 46.63 months commencing July 1, 2009 and ending April 2013, with a remainder contribution in May 2013 because of transferred assets for less than fair market value.
Thereafter, on January 23, 2012, after conducting a full review of the record and evidence presented and citing the applicability of A.D. 06 OMM/ADM-5, pp. 18-19 and the pertinent law, the OTDA Administrative Law Judge issued its Decision after Fair Hearing No. 5862379N, affirming the WCDSS determination that Plaintiff-Appellant Aplin was not eligible for Medicaid for nursing facility services for a period of 46.63 months, commencing on July 1, 2009 and ending April 2013, with a remainder in May 2013, because of assets transferred for less than fair market value.
B. Procedural History of Plaintiff Aplin's Case
Subsequently, following issuance of the Decision after Fair Hearing, Plaintiff Aplin, now 84 years old, by her agent, Judy Robinson ("Agent Robinson"), brought this action against M. Josh McCrossen, Commissioner, WCDSS ("Defendant McCrossen"); Howard Zucker, Acting Commissioner DOH ("DOH Defendant"); and Kristin M. Proud, Commissioner, OTDA ("OTDA Defendant"), alleging the above-referenced facts and seeking "injunctive and declaratory relief to require the Defendants to recompute her penalty period' of ineligibility for medical assistance (Medicaid')" for nursing home care. ECF No. 2. By her Amended Complaint, Plaintiff Aplin alleged that after an initial determination of ineligibility had been made by WCDSS, due to an uncompensated transfer of assets, some of the transferred assets were returned, but WCDSS erroneously recomputed the penalty period of ineligibility as having commenced on a later date, July 1, 2009, rather than starting on November 1, 2007, the date of the original penalty period. Id.
The Amended Complaint set forth two statements of claim alleging, respectively, separate violations of (1) 42 U.S.C. §§ 1396a(a)(18) and 1396p(c)(1)(A) and (D)(ii); and (2) 42 U.S.C. § 1396a(a)(17)(B), and alleging as to each statement of claim that relief is appropriately available pursuant to 42 U.S.C. § 1983 and the Supremacy Clause. Id. As relief, Plaintiff Aplin sought a judgment (1) declaring the WCDSS decision null and void, enjoining Defendant McCrossen to require WCDSS to recompute her Medicaid eligibility using the correct penalty period start date of November 1, 2007; and ordering Defendant McCrossen to require WCDSS to provide Medicaid coverage for her nursing home care at the expiration of the correct penalty period start date of November 1, 2007, (2) declaring the provisions of A.D. 06 OMM/ADM-5, pp.18-19, requiring recalculation of the penalty period based on a partial return of transferred assets, to be null and void, and enjoining the DOH and OTDA Defendants from applying them to her by DOH and the OTDA; and (3) declaring the Decision after Fair Hearing No. 5862379N to be illegal, null and void, enjoining all Defendants from following or implementing it and enjoining the DOH and OTDA Defendants to cause DOH and OTDA to correct the Decision after Fair Hearing to reflect November 1, 2007 as the lawful penalty period start date. Id.
At this juncture, pending before the Court for determination are Plaintiff Aplin's and the DOH and OTDA Defendants' cross motions seeking summary judgment. Defendant McCrossen has joined in the DOH and OTDA Defendants' summary judgment motion and opposes Plaintiff Aplin's request for motion relief ("McCrossen Motion") (ECF No. 24). All motions have been fully briefed and the parties' responses and replies, if any, have been considered in determining these cross motions.
C. Undisputed Facts of Plaintiff Ciardi's Case
Sergio Ciardi ("Plaintiff Ciardi"), an 85-year-old resident of a skilled nursing facility in Geneva, New York, within the Western District of New York, first applied for Medicaid coverage of his nursing home care on February 26, 2010. However, after an investigation of the application, Ontario County Department of Social Services ("OCDSS") determined that in 2007 and 2008, during the 60-month look-back period, Plaintiff Ciardi had made less than market value money transfers totaling over $470, 000, which rendered him ineligible to receive Medicaid benefits. A Fair Hearing date was scheduled, but following Plaintiff Ciardi's withdrawal of his request for a Fair Hearing, a Notice of Decision was sent in early December 2010, informing him that based upon these transfers, a penalty period of 51.9 months from the eligibility date of January 1, 2010, until March 1, 2014, was imposed with a remainder contribution due in April 2014. OCDSS closed the case almost a year later because Plaintiff Ciardi failed to provide necessary supportive documentation for receipt of benefits.
On March 29, 2012, Plaintiff Ciardi re-applied for Medicaid benefits, asserting that because $293, 167 of the more than $470, 000 in transferred assets had been repaid to him, the transfer total was reduced to $176, 865, and the penalty period should be retroactively reduced to 19.53 months, thereby ending on February 24, 2012. Plaintiff Ciardi subsequently supplied documentation to OCDSS which reflected that only $36, 857.16 had been repaid to him, and on this basis, OCDSS recalculated the penalty period to be 47.83 months, until November 1, 2013, with a remainder contribution due in December 2013.
Thereafter, in April 2013, Plaintiff Ciardi provided to OCDSS appropriate documentation demonstrating that a total of $167, 147.21 had been repaid to him, thereby, reducing the less than market value transfers to $302, 885.75. Because OCDSS determined that Plaintiff Ciardi would not become eligible until he spent down to New York State's $14, 400 maximum Medicaid resource level to qualify for Medicaid nursing home benefits, it set a new eligibility date of August 1, 2011 and started the penalty period as of this date. In June 2013, Plaintiff Ciardi contested the recalculation of his eligibility date to August 1, 2011, relying upon a letter dated October 28, 2010, written by Richard R. McGreal ("McGreal"), Associate Regional Director of the Center for Medicaid Services in Boston, Massachusetts, which provided "informal written interpretive guidance" to Michael P. Starkowski ("Starkowski"), Commissioner, Department of Social Services, regarding Connecticut's "treatment of partial returns with the respect to the application of a penalty period for a disqualifying transfer of assets pursuant to § 1917 of the Social Security Act." (ECF No. 1, Ex. 3). OCDSS took the position that when determining Plaintiff Ciardi's eligibility for nursing facility services and the appropriate penalty period for uncompensated asset transfers, it was governed by the A.D. 06 OMM/ADM-5, pp.18-19. Plaintiff Ciardi filed a request for a Fair Hearing, but later withdrew it.
D. Procedural History of Plaintiff Ciardi's Case
Following the filing and later withdrawal of his request for a Fair Hearing, Plaintiff Ciardi, by his agent Carl Quance ("Agent Quance"), commenced this action against Defendant Eileen Tiberio, Commissioner, OCDSS ("Defendant Tiberio"), and the DOH Defendant, challenging the decision by OCDSS and the policy of the DOH that, "after an initial determination had been made that Plaintiff was ineligible for medical assistance (Medicaid') due to an uncompensated transfer of assets, but some of those assets had been returned, when his penalty period of ineligibility from those transfers was recomputed, the penalty period was not started on the same date as the original penalty period but rather was started on a later date." ECF No. 1. The Complaint set forth two statements of claim alleging, respectively, separate violations of (1) 42 U.S.C. §§ 1396a(a)(18) and 1396p(c)(1)(A) and (D)(ii); and (2) 42 U.S.C. § 1396a(a)(17)(B), and alleging as to each statement of claim, that relief is appropriately available pursuant to 42 U.S.C. § 1983 and the Supremacy Clause. Id. By his Complaint, Plaintiff Ciardi sought a judgment (1) declaring the OCDSS decision null and void, enjoining Defendant Tiberio to require OCDSS to recompute his Medicaid eligibility using the correct penalty period start date, and ordering Defendant Tiberio to require OCDSS to provide Medicaid coverage for his nursing home care at the expiration of the correct penalty period; and (2) declaring the provisions of A.D. 06 OMM/ADM-5, pp.18-19, to be null and void, and enjoining the DOH Defendant from applying them to him by DOH.
Now, before the Court is Plaintiff Ciardi's Motion for Preliminary Injunction (ECF No. 8) filed pursuant to Fed.R.Civ.P. 65(a), seeking the following injunctive relief: (1) ordering Defendant Eileen Tiberio to cause OCDSS to recompute his Medicaid eligibility date to be effective as of October 1, 2012 on the ground that OCDSS erroneously determined that the 32.97 month penalty period of Medicaid eligibility for his nursing home care due to uncompensated transfers of assets began on August 1, 2011, which OCDSS computed to account for the partial return of gifts that resulted in that penalty period, rather than on January 1, 2010, the date he was eligible for Medicaid other than nursing home services, in violation of 42 U.S.C. §§ 1396a(a)(18), 1396p(c)(1)(A) and D(ii) and 1396a(a)(17)(B); and (2) ordering the DOH Defendant to require DOH to cease applying to him the provisions of Administrative Directive 06 OMM/ADM-5, pp. 18-19, pursuant to which the OCDSS determination was made, regarding the start date of a penalty period after transferred assets have been partially returned. Plaintiff Ciardi submitted Plaintiff's Memorandum of Law in Support of Motion for Preliminary Injunction ("Pl. Ciardi's Mem.") (ECF No. 8-2), wherein he stated: no testimony will be required before a decision on the preliminary injunction motion and "[s]ince there are no disputed material facts, and the motion solely concerns questions of law, the court may treat this motion as one for summary judgment" in like manner as the pending cross motions in Aplin v. McCrossen. Pl. Ciardi's. Mem. 1-2, ECF No. 8-2.
Defendant Tiberio and the DOH Defendant have each submitted a Memorandum in Opposition to the requested injunctive relief (ECF No. 13; ECF No. 14), as well as supporting affidavits. Replying thereto. Plaintiff Ciardi submitted Plaintiff's Reply Memorandum in Support of Motion for Preliminary Injunction (Pl. Ciardi's Reply Mem.) (ECF No. 17).
Also pending for determination are Defendants' motions filed subsequent to the full briefing of Plaintiff Ciardi's preliminary injunction motion, namely, Defendant Tiberio's Motion to Dismiss for Failure to State a Claim pursuant to Fed.R.Civ.P. 12(b)(6) (ECF No. 20), and the DOH Defendant's Motion for Summary Judgment referencing the documentation submitted in the related case, Alpin v. McCrossen, and contending that no genuine issues exist for trial (ECF No. 21). In his opposition to both motions, Plaintiff Ciardi voiced his intentions to rely on the prior briefing of the preliminary injunction motion and, like the DOH Defendant, to reference the summary judgment briefs filed in Alpin v. McCrossen. ECF No. 24. Additionally, asserting his agreement with the DOH Defendant's position that the action is ripe for summary judgment, Plaintiff Ciardi proposed to have the Court convert Defendant Tiberio's 12(b)(6) motion to dismiss to a motion for summary judgment pursuant to Fed.R.Civ.P. 12(d), alleging it includes material outside the Complaint. Id. All motions have been fully briefed and the parties' responses and replies, if any, have been considered in determining these motions.
A. Proper Legal Standard
Before proceeding further, some discussion of the proper legal standard to be utilized in assessing the legal question presented in this case is necessary. First, I accept Plaintiff Ciardi's invitation to treat his motion for a preliminary injunction as one for summary judgment (Fed. R. Civ. P. 56) in like manner as the pending cross motions in Aplin v. McCrossen, given that no testimony is required, there are no disputed material facts, and the motion solely concerns a question of law.
Next, the Court must consider whether to convert Defendant Tiberio's Rule 12(b)(6) motion to one for summary judgment, as Plaintiff Ciardi has proposed, based upon her requests: first, to have the Court consider the attached Mangiarella Declaration (ECF. No. 20-3), including its four exhibits consisting of true and correct copies of A.D. 06 OMM/ADM-5 dated July 20, 2006, in its entirety, including Appendix I (Listing of Attachments and attached forms); Plaintiff Ciardi's applications for Medicaid benefits dated, respectively, February 26, 2010 and March 29, 2012, and correspondence regarding these applications; and the cover page and the complete language of § 3258.10(c)(3) of the HHS/CMS State Medicaid Manual; and second, to take judicial notice of the New York State plan provisions assessing penalty periods as a result of less than fair market transfers during the look-back period by Medicaid applicants, an attachment to the Sheppard Aff. Ex. 1 (ECF No. 13-4). Viewing these documents as matters outside his Complaint, Plaintiff Ciardi has asserted that conversion is appropriate.
I look to the Second Circuit's guidance to district courts upon the presentation of requests to look at matters outside the pleading on a motion to dismiss:
[When] considering a motion under Fed.R.Civ.P. 12(b)(6) to dismiss a complaint for failure to state a claim on which relief can be granted, the district court is normally required to look only to the allegations on the face of the complaint. If, on such a motion, matters outside the pleading are presented to and not excluded by the court, the court should normally treat the motion as one for summary judgment pursuant to Fed.R.Civ.P. 56. In any event, a ruling on a motion for dismissal pursuant to Rule 12(b)(6) is not an occasion for the court to make findings of fact.
In certain circumstances, the court may permissibly consider documents other than the complaint in ruling on a motion under Rule 12(b)(6). Documents that are attached to the complaint or incorporated in it by reference are deemed part of the pleading and may be considered. In addition, even if not attached or incorporated by reference, a document upon which the complaint solely relies and which is integral to the complaint may be considered by the court in ruling on such a motion.
See Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007) (citations and internal quotation marks omitted); Peone v. County of Ontario, 12-CV-6012 CJS, 2013 U.S. Dist. LEXIS 27698, at *2 (W.D.N.Y. Feb. 26, 2013). None of the documents specified by Defendant Tiberio is attached to the Complaint. I do not find them to be incorporated by reference or solely relied on in and integral to the Complaint.
Rule 12(d) addresses the presentation of matters outside the pleadings and specifies a notice requirement:
If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable ...