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Holly Hill Nursing LLC v. Padilla

United States District Court, D. Maryland, Southern Division

October 16, 2018

HOLLY HILL NURSING LLC et al., Plaintiffs,
LOURDES R. PADILLA et al., Defendants.



         The plaintiffs[1] in this case are Ohio and Maryland companies that provide care for elderly and infirm patients. Each company purports to be acting in its capacity as the “authorized representative” of a patient who sought Medicaid benefits from the state of Maryland while in the company's care. See 42 C.F.R. § 435.923. The companies have brought this suit against two Maryland state officials, Department of Human Services Secretary Lourdes Padilla and Department of Health Secretary Robert Neall, [2] suing each in his official capacity for allegedly failing to administer the state's Medicaid program in accordance with federal law. Am. Compl., ECF No. 18.

         In broad strokes, Plaintiffs assert that state officials frustrated three of their patients' attempts to secure benefits through Maryland's medical assistance program. They allege, in particular, that program administrators failed to issue timely eligibility determinations and unlawfully required the patients to produce financial records that, because of their mental and physical impairments, they were ill equipped to locate or supply.

         The Amended Complaint, ECF No. 18, brings seven claims. To begin, Plaintiffs seek relief under 42 U.S.C. § 1983 for violations of the federal Medicaid Act, 42 U.S.C. §§ 1396a(a)(1)(A), (a)(8), 1396d(a)(4)(A) (Counts II and III) and deprivations of due process and equal protection under the Fourteenth Amendment to the U.S. Constitution (Count VI). They further allege discrimination under Title II of the Americans with Disabilities Act, 42 U.S.C. § 12132 (Count IV) and under § 504 of the Rehabilitation Act, 29 U.S.C. § 794(a) (Count V). Finally, Plaintiffs ask this Court to issue orders for declaratory relief (Count I) and injunctive relief (Count VII).[3]

         Defendants have filed a motion to dismiss or, alternatively, for summary judgment, asserting a host of jurisdictional and merits-based defenses.[4] As this Memorandum Opinion will explain, I conclude the doctrine of sovereign immunity requires the Court to dismiss several of Plaintiffs' claims. I also conclude Plaintiffs have failed to state a claim under the Rehabilitation Act. Because none of Plaintiffs' claims survives scrutiny, the Motion to Dismiss will be granted.

         I. Background

         Plaintiffs' Amended Complaint takes aim at the processes the State of Maryland has put in place to administer Medicaid benefits under Title XIX of the Social Security Act, commonly known as the Medicaid Act, 42 U.S.C. §§ 1396-1396w-5. The program, which draws funding from both state and federal sources, offers assistance to individuals who cannot afford to pay for their medical care. See generally Dep't of Health & Mental Hygiene v. Campbell, 771 A.2d 1051, 1053-54 (Md. 2001). Federal laws and regulations impose a number of conditions on states that accept federal funding for Medicaid, a few of which are especially relevant for present purposes. First, a state must furnish Medicaid benefits to eligible applicants “with reasonable promptness.” 42 U.S.C. § 1396a(a)(8). Federal regulations go further, requiring states to make eligibility determinations “promptly and without undue delay.” 42 C.F.R. § 435.912(b); see also 42 C.F.R. § 435.952(a) (requiring states to “promptly” evaluate the information they receive in the course of making an eligibility determination). The maximum amount of time permitted for determining an applicant's eligibility is set at 90 days. 42 C.F.R. § 435.912(c)(3). Maryland regulations tighten the timeframe, capping the eligibility-determination period at 30 days. Md. Code Regs.

         To facilitate the eligibility-determination process, Congress requires states to implement an “asset verification program, ” through which applicants authorize the state to obtain relevant financial records from financial institutions. 42 U.S.C. § 1396w(a)-(b). A state agency also must solicit information “from other agencies in the State and other States and Federal programs to the extent the agency determines such information is useful to verifying the [applicant's] financial eligibility.” 42 C.F.R. § 435.948(a). A federal regulation provides: “An individual must not be required to provide additional information or documentation unless information needed by the agency . . . cannot be obtained electronically or the information obtained electronically is not reasonably compatible.” Id. § 435.952(c).

         Here, Plaintiffs brought suit on behalf of three Maryland residents who encountered challenges in their attempts to secure Medicaid benefits through the state program. I will summarize their accounts in brief.[5]

         A. William H.

         Plaintiff Holly Hill Nursing LLC (“Holly Hill”), an Ohio corporation, here seeks to represent the interests of William H., [6] a resident at the Holly Hill Healthcare Center in Towson, Maryland, since August 2016. Am. Compl. ¶¶ 1, 4. While at the facility, William H. was suffering from a range of “severe” illnesses, including pulmonary hypertension, chronic obstructive pulmonary disease, type 2 diabetes, and acute bronchitis, as well as muscle weakness and atrophy. Id. ¶¶ 13, 14. Not long after his arrival at Holly Hill, he designated the facility as his “authorized representative” for purposes of the Medicaid application process and “other ongoing communications” with Maryland Medicaid program administrators, per 42 C.F.R. § 435.923.[7] Id. ¶ 21. Holly Hill submitted an application for long-term care Medicaid benefits on his behalf on November 22, 2016. Id. ¶ 16. Two and a half weeks later, on December 9, 2016, the State sent Holly Hill “various requests for verifications.” Id. ¶ 5. Holly Hill responded that an extension might be necessary. Id. On April 18, 2017, William H. personally wrote to the State to ask for extra time to acquire the requested information. Id. ¶ 17. The State did not respond. Id.

         The State ultimately denied William H.'s application, issuing a notice of denial on May 1, 2017. Id. ¶ 19. However, on March 27, 2018, about four months after Holly Hill initiated this suit, the State notified William H. that it had deemed him eligible for Medicaid benefits.[8] See Notice of Eligibility 3, Mot. to Dismiss Ex. 1, ECF No. 19-2. The period of eligibility was to run from November 2017 to October 2018. Id.

         B. June H.

         A second plaintiff, St. Mary's Nursing Center, Inc. (“St. Mary's”), is here representing the interests of June H., who resided at the company's facility in Leonardtown, Maryland, from June 4, 2014, until her death on February 16, 2016. Am. Compl. ¶¶ 2, 5.

         While at St. Mary's, June H. suffered from mental illnesses, including dementia, that impaired her ability to think, communicate, or care for herself. Id. ¶ 23. She also suffered from epilepsy, major depressive disorder, and type 2 diabetes. Id. ¶ 22. These conditions left her unable to participate in the Medicaid application process “without assistance.” Id. ¶ 25.

         June H.'s application for long-term care medical assistance is dated October 3, 2014. Id. At the time, it was her son, David, who acted as her attorney-in-fact and authorized representative. Id. June H. and David, whose own health was in decline after a cancer diagnosis, struggled to provide verifications. Id.

         June H. submitted a second Medicaid application on October 20, 2015, roughly one year after the first application had been filed. Id. The government issued a notice of ineligibility the following month, on November 19, 2015, explaining the decision was based on her failure to provide required information. Id. ¶ 26. The notice permitted her to reactivate her application by submitting requested verifications by April 20, 2016. Id. The notice further directed her to explain certain transfers she had made to her son. Id.

         David died on December 2, 2015, leaving his widow to take over as June H.'s secondary attorney-in-fact. Id. ¶ 27. David's widow soon named St. Mary's as June H.'s authorized representative. Id. St. Mary's submitted “some” verifications to the government in early February 2016 but, because of June H.'s physical and mental disabilities, the facility was unable to provide an explanation about the transfers to her son. Id.

         June H. died February 16, 2016. Id. ¶ 29. St. Mary's submitted a request for a good faith waiver on March 9, 2016. Id. The government did not respond to the request. Id. While a county case worker initially indicated the application would be approved, the government soon afterward stated in an email the application was being denied. Id. ¶ 30. On November 15, 2016, an administrative law judge dismissed an appeal of the denial, holding the appeal was untimely. Id. ¶ 33.

         C. Christine D.

         The third plaintiff, Howard Leasing Co. (“Howard Leasing”), is an Ohio company that owns and operates the Marley Neck Health & Rehabilitation Center in Glen Burnie, Maryland. Am. Compl. ¶ 3. Howard Leasing is here representing Christine D., a patient who, like June H., suffered from mental illness, including dementia. Id. ¶ 35. Her illness impaired her ability to think, communicate, or care for herself. Id.

         Christine D.'s application for long-term medical assistance was dated December 10, 2015. Id. ¶ 36. Two days later, the State asked her to provide additional information. Id. She died on January 18, 2016, without having designated anyone to serve as her authorized representative for Medicaid benefits. Id. ¶¶ 6, 40. Nevertheless, the State continued to send requests for verifications. Id. ¶ 38. These requests included a revised request for information on February 16, 2016, and a “reminder notice” on May 7, 2016. Id. The State finally issued a notice of denial on June 3, 2016, citing Christine D.'s failure to provide requested verifications. Id. ¶ 39.

         The personal representative of Christine D.'s estate unsuccessfully appealed the denial. Id. ¶ 42-44. Later, just before this suit was filed, the personal representative designated Marley Neck as Christine D.'s authorized representative under 42 C.F.R. § 435.923. Id. ¶ 41.

         II. Standard of Review

         A district court assesses a motion to dismiss on the pleadings, without need of a hearing. Smith v. Montgomery Cty. Corr. Facility, No. PWG-13-3177, 2014 WL 4094963, at *1 (D. Md. Aug. 18, 2014). A complaint that “fails to state a claim upon which relief can be granted” warrants dismissal under Federal Rule of Civil Procedure 12(b)(6). Pegues v. Wal-Mart Stores, Inc., 63 F.Supp.3d 539, 541 (D. Md. 2014). Under Rule 8(a)(2), the complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Beyond that, the Supreme Court has held that claims for relief must be “plausible, ” specifying that “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 663.

         When reviewing a motion to dismiss, “[t]he court may consider documents attached to the complaint, as well as documents attached to the motion to dismiss, if they are integral to the complaint and their authenticity is not disputed.” Sposato v. First Mariner Bank, No. CCB-12- 1569, 2013 WL 1308582, at *2 (D. Md. Mar. 28, 2013); see also CACI Int'l v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150, 154 (4th Cir. 2009). However, if the Court considers matters outside the pleadings, the Court must treat the motion as a motion for summary judgment. Fed.R.Civ.P. 12(d); Syncrude Canada Ltd. v. Highland Consulting Grp., Inc., 916 F.Supp.2d 620, 622-23 (D. Md. 2013).

         III. ...

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