Indiana Family and Social Services Administration Jennifer Walthall, in Individual Capacity as Secretary of Indiana Family and Social Services v. Bonnie K. Anderson ( 2020 )

ATTORNEYS FOR APPELLANTS ATTORNEY FOR APPELLEE
IFSSA, JENNIFER WALTHALL, AND Michael T. Foster
BARTHOLOMEW COUNTY DIVISION Greensburg, Indiana
OF FAMILY RESOURCES
Curtis T. Hill, Jr.
Attorney General of Indiana FILED
Sep 03 2020, 8:16 am
Benjamin M.L. Jones CLERK
Indiana Supreme Court
Deputy Attorney General Court of Appeals
and Tax Court
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Indiana Family and Social September 3, 2020
Services Administration; Jennifer Court of Appeals Case No.
Walthall, in Individual Capacity 19A-PL-3039
as Secretary of Indiana Family Appeal from the Bartholomew
and Social Services Superior Court
Administration; Bartholomew The Honorable Kathleen Tighe
County Division of Family Coriden, Judge
Resources; and Kindred Nursing Trial Court Cause No.
Care Centers, Limited 03D02-1902-PL-1034
1
Partnership,
1
Although counsel for Kindred did not appear in this Court, and Kindred did not file a brief or participate in
this appeal, Kindred is still a party on appeal. See Ind. Appellate Rule 17(A) (“A party of record in the trial
court or Administrative Agency shall be a party on appeal.”).
Court of Appeals of Indiana | Opinion 19A-PL-3039 | September 3, 2020 Page 1 of 10
Appellants-Respondents,
v.
Bonnie K. Anderson by
Kimberly J. Everroad, Personal
Representative,
Appellee-Petitioner.
Friedlander, Senior Judge.
[1] The Appellants the Indiana Family and Social Services Administration (FSSA);
Jennifer Walthall, the Secretary of FSSA; and the Bartholomew County
Division of Family Resources bring this interlocutory appeal from the trial
court’s order denying their motion to dismiss Bonnie Anderson’s petition for
judicial review and complaint for damages. We affirm in part and reverse in
part.
[2] The Appellants present three issues for our review, which we restate as one:
whether the trial court erred by denying the Appellants’ motion to dismiss.
[3] On February 2, 2006, Bonnie Anderson executed a Family Contract for Home
Healthcare authorizing reimbursement for family members who provided her
with care. In February 2015, Anderson entered a nursing home. She applied
for Medicaid and was eventually approved.
[4] In March 2016, the Anderson Family Supplemental Needs Trust was
established for Anderson’s benefit and was funded by Anderson’s farm
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property. This trust was an irrevocable trust and was to preserve any
governmental assistance Anderson was currently receiving or for which she
may have been eligible.
[5] Anderson passed away on July 31, 2018. In October 2018, the FSSA sent
notice that a transfer penalty was being imposed upon Anderson’s Medicaid
benefits from February 1, 2016 through March 27, 2019 on the basis that
property had been transferred for the purpose of rendering her eligible for
benefits.
[6] Anderson’s representative appealed the FSSA determination, and, after a
hearing, an ALJ reversed the imposition of the transfer penalty on January 2,
2019. The FSSA requested an agency review of the ALJ’s decision, notice of
which is dated January 14. On January 17, counsel for Anderson submitted a
document demanding that Anderson be reimbursed $80,000 that the trust had
been forced to pay to the nursing home because the FSSA incorrectly
considered the trust as an available resource of Anderson’s. The FSSA later
withdrew its request for agency review of the ALJ’s decision. Notice of such
withdrawal is dated January 24 and states that no further action will be taken
on the review.
[7] On February 22, Anderson filed in the trial court a petition for judicial review
challenging the ALJ’s decision and complaint seeking damages under 42
U.S.C. § 1983. She later amended the petition to, among other things, add
Kindred Nursing Care Centers as a defendant.
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[8] The Appellants moved to dismiss the petition/complaint on the grounds that
Anderson lacked standing to seek judicial review, had failed to exhaust her
administrative remedies before seeking judicial review, and had failed to state a
claim under §1983. The magistrate presided over a hearing on the Appellants’
motion, and the judge, relying on the magistrate’s notes from the hearing, later
denied the motion. The Appellants requested and were granted approval to file
this interlocutory appeal.
Lack of Standing
[9] The Appellants first contend their motion to dismiss should have been granted
because Anderson lacks standing to seek judicial review of the ALJ’s decision.
[10] “A claim of lack of standing is properly treated as a motion to dismiss under
Trial Rule 12(B)(6) for failure to state a claim upon which relief can be
granted.” Bellows v. Bd. of Comm’rs of Cty. of Elkhart, 926 N.E.2d 96, 113 (Ind.
Ct. App. 2010). When we review a ruling on a motion to dismiss under Trial
Rule 12(B)(6), the allegations of the complaint are required to be taken as true.
21stAmendment, Inc. v. Ind. Alcohol & Tobacco Comm’n, 84 N.E.3d 691 (Ind. Ct.
App. 2017), trans. denied (2018). Dismissal is appropriate only where it appears
there is no set of facts under which the plaintiff would be entitled to relief. Id.“A successful 12(B)(6) motion alleging lack of standing requires that the lack of
standing be apparent on the face of the complaint.” Id. at 695. The question of
whether a party has standing is purely one of law and requires no deference to
the trial court’s determination; thus, our review of a ruling on a motion to
dismiss for lack of standing is de novo. Id.Court of Appeals of Indiana | Opinion 19A-PL-3039 | September 3, 2020 Page 4 of 10
[11] The Administrative Orders and Procedures Act (AOPA) specifies, in relevant
part, that only parties who have standing are entitled to judicial review of a final
agency action. See Ind. Code § 4-21.5-5-2(b) (1986). The doctrine of standing
focuses on whether the complaining party is the proper person to invoke the
court’s power. 21st Amendment, Inc., 84 N.E.3d 691. To that end, the AOPA
provides:
(a) The following have standing to obtain judicial review of an
agency action:
(1) A person to whom the final agency action is
specifically directed.
(2) A person who was a party to the proceedings of the
ultimate authority that led to the final agency action,
including the agency whose order was under review in the
proceeding.
(3) A person eligible for standing under a law applicable to
the final agency action.
(4) A person otherwise aggrieved or adversely affected by
the final agency action.
Ind. Code § 4-21.5-5-3(a) (2014).
[12] Anderson clearly has standing under Section 4-21.5-5-3(a)(2). Nevertheless, the
Appellants argue that Anderson lacks standing because she prevailed in the
decision by the ALJ and “received complete relief from the ALJ.” Appellants’
Br. p. 14. While it is true the ALJ reversed the imposition of the transfer
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penalty, Anderson hardly received complete relief. As explained in Anderson’s
petition for judicial review, the FSSA imposed a transfer penalty against her
Medicaid benefits because it determined that property was transferred in order
for her to become eligible for benefits. Upon hearing evidence regarding the
character of the property and the trust that were involved in the transfer, the
ALJ reversed the imposition of the transfer penalty. The ALJ’s decision,
however, omitted any determination or direction to the FSSA regarding
treatment of the property and the trust such that the FSSA “included the trust
estate of the Anderson Family Supplemental Needs Trust as available resources
of [Anderson] to determine . . . [t]hat [Anderson]’s resources exceed acceptable
limits.” Appellants’ App. Vol. 2, p. 43 (Amended Petition for Judicial Review).
The trial court did not err in denying the Appellants’ motion to dismiss based
upon Anderson’s alleged lack of standing.
Failure to Exhaust Administrative Remedies
[13] The Appellants next claim the trial court should have granted their motion to
dismiss because Anderson waived her right to judicial review by failing to
exhaust her administrative remedies—specifically agency review of the ALJ’s
decision—prior to petitioning for judicial review as is required under the
AOPA. See Ind. Code § 4-21.5-5-4(a), (b) (1986) (party may petition for judicial
review only after exhausting all administrative remedies; party that fails to
timely petition for review of order waives right to judicial review).
[14] The Appellants further cite Indiana Code section 4-21.5-3-29(d) (1986), which
requires that, to preserve an objection to an order of an ALJ for judicial review,
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a party must object in a writing that identifies the basis of the objection with
reasonable particularity and is filed with the reviewing authority within fifteen
days after the order is served. Characterizing Anderson’s submission as a
“response” to their request for review, the Appellants claim Anderson failed to
make a request for agency review and therefore failed to exhaust her
administrative remedies.
[15] As noted above, the FSSA requested an agency review of the ALJ’s January 2
decision reversing the imposition of the transfer penalty, notice of which was
sent to Anderson and was dated January 14. On January 17, counsel for
Anderson submitted a document stating: “The Applicant demands that the
Indiana Family and Social Services Administration reimburse the Applicant for
the $80,000 which the Anderson Special Needs Trust was forced to pay to the
Kindred Nursing [H]ome in Columbus in June 2016 because the Anderson
Special Needs Trust was wrongfully treated as an available resource in
contravention of the ALJ Hearing Decision of January 2, 2019.” Appellants’
App. Vol. 2, p. 36 (Ex. C to Amended Petition for Judicial Review, p. 3).
Counsel included on the submission the case number, the hearing case number,
the date of the ALJ’s decision, and a request for the alternative remedy of
remand to the ALJ for an order of payment. The FSSA later withdrew its
request for review. Notice of that withdrawal was dated January 24 and was
sent to Anderson. The notice states, “Due to this dismissal, no further action
will be taken on this Review.” Id. at 34 (Ex. C to Amended Petition for Judicial
Review, p. 1).
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[16] Anderson’s submission is not a response to the Appellants’ request for review
but is a request for review in its own right. Anderson clearly sets out her
objection with reasonable particularity, even suggesting the alternative remedy
of remanding the case to the ALJ, and the Appellants do not suggest that the
objection was untimely filed. It is unclear why the agency did not address
Anderson’s submission, but once it issued the dismissal and stated it would take
no further action, Anderson had exhausted her administrative remedies. The
trial court did not err by denying the Appellants’ motion to dismiss on this
basis.
§ 1983 Claim
[17] A motion to dismiss under Rule 12(B)(6) tests the legal sufficiency of a
complaint. Trail v. Boys & Girls Clubs of Nw. Indiana, 845 N.E.2d 130 (Ind.
2006). As we observed above, this Court evaluates whether the allegations in
the complaint establish any set of circumstances under which a plaintiff would
be entitled to relief, and we accept as true the facts alleged in the complaint. Id.[18] Anderson brought a § 1983 claim alleging that the Appellants wrongfully
denied her Medicaid benefits, causing her to incur irreparable financial losses.
The Appellants assert that the FSSA and Walthall, in her official capacity as
Secretary of the FSSA, are not subject to suit under § 1983.
[19] Section 1983 creates a civil action against any “person” who acts under color of
state law to deprive an individual of a federal right. 42 U.S.C.A. § 1983.
Although for § 1983 purposes the term “person” does include a state’s political
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subdivisions, the U.S. Supreme Court has held that the term does not include a
state or its administrative agencies. J.A.W. v. State, Marion Cty. Dep’t of Pub.
Welfare, 687 N.E.2d 1202 (Ind. 1997) (citing Will v. Mich. Dep’t of State Police,
491 U.S. 58, 109 S. Ct. 2304, 105 L. Ed. 2d 45 (1989)). Thus, Anderson cannot
maintain a § 1983 action against the FSSA and the Bartholomew County
Division of Family Resources, as they are administrative agencies of the state.
[20] We turn now to Secretary Walthall. Although Anderson’s petition/complaint
is captioned as “Jennifer Walthall, in Individual Capacity as Secretary of Indiana
Family and Social Services Administration,” Anderson states her claims are
against Walthall in her official capacity. Appellants’ App. Vol. 2, p. 40
(Amended Petition for Judicial Review) (emphasis added); Appellee’s Br. pp.
15-16.
[21] A state official in her official capacity is a “person” under § 1983 when sued for
injunctive (prospective) relief. Crouch v. State, 147 N.E.3d 1026 (Ind. Ct. App.
2020) (citing Will, 491 U.S. at 71, 109 S. Ct. at 2312). Anderson has not
requested injunctive relief; rather, she seeks an award of Medicaid benefits for
the nursing home costs, an award of attorney fees, reimbursement for the value
of the farm property, and an award for emotional distress. Appellants’ App.
Vol. 2, p. 46 (Amended Petition for Judicial Review). Accordingly, Anderson
cannot maintain a § 1983 claim against Walthall in her official capacity.
[22] Based on the foregoing, we conclude the trial court did not err by denying the
Appellants’ motion to dismiss Anderson’s petition for judicial review. We
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conclude it was error for the court to deny the Appellants’ motion to dismiss
Anderson’s complaint for damages setting out a § 1983 action because such
action may not be maintained against the FSSA, the Bartholomew County
Division of Family Resources, or Walthall in her official capacity.
[23] Judgment affirmed in part and reversed in part.
Bradford, C.J., and Najam, J., concur.
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