Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00891/USCOURTS-azd-2_11-cv-00891-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 28:2201 Declaratory Judgment

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Helen Pfeffer,

Plaintiff, 

vs.

Arizona Health Care Cost Containment

System Administration, an Agency of the

State of Arizona; Thomas K. Betlach, in

his capacity as Director of AHCCCS, 

Defendants. 

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No. CV-11-0891-PHX-GMS

ORDER

Pending before the Court is Plaintiff’s Motion for Preliminary Injunction (Doc. 9), and

Defendants’ request in their Response that the Court dismiss or stay this case (Doc 13). For

the reasons provided below, the Court denies both Plaintiff’s motion and Defendants’ request

for a dismissal or stay.

BACKGROUND

In August 2009, Plaintiff Helen Pfeffer enrolled at Emeritus, an assisted living facility.

Although her monthly social security and pension income of $1,220 was insufficient to cover

the $3,700 per month cost of her care, she used cash savings to cover the difference. In early

2010, Plaintiff engaged the law firm Jackson White and its employees to be her authorized

representatives and apply for benefits under the Arizona Long Term Care System

(“ALTCS”), a program administered by the Arizona Health Care Cost Containment System

Case 2:11-cv-00891-GMS Document 34 Filed 09/30/11 Page 1 of 6
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Administration (“AHCCCS”). ALTCS is the state program that administers the Federal

Medicaid program within the State of Arizona. 

Shortly after engaging Jackson White, Plaintiff wrote checks totaling $91,200 to her

daughter, Virginia Burger, depleting all but $217 of her personal assets. Plaintiff does not

contest that she wrote the checks to become ALTCS eligible. One week later, on February

24, 2010, she filed her ALTCS application. By depleting her assets, Plaintiff became

insolvent and thus unable to pay Emeritus for her care. Either she or her authorized

representatives understood that, at a minimum, the attempted transfer of funds to her

daughter would result in a period of ineligibility during which Plaintiff would not receive

ALTCS benefits. It is uncontested that, depending upon how AHCCCS characterized the

transfer, the period of ineligibility would have lasted a minimum of ten months, and possibly

much longer.

 Ms. Burger testified that at the time the $91,200 were transferred to her, she planned

to use the funds to cover the costs of Plaintiff’s care until Plaintiff qualified for ALTCS

benefits. The evidence confirms that Ms. Burger has done just that. She has been paying

about $3,000 per month of the transferred funds towards Plaintiff’s care—$2,500 per month

to Emeritus and $500 per month for hearing aids and other sundry needs. Although Ms.

Burger testified that she believes she could use the funds for purposes other than her mother’s

care, she has not done so. To date, approximately $38,000 remains of the amount her mother

transferred to her. 

On August 2, 2010, AHCCCS denied Plaintiff’s application for ALTCS benefits,

determining that her countable resources exceeded the $2,000 limit allowed by law.

AHCCCS explained that it did not consider the $91,200 which Plaintiff gave her daughter

to be a gift. Rather AHCCCS designated the money as funds available to Plaintiff, and

therefore included the $91,200 in its computation of Plaintiff’s resources. Plaintiff

subsequently requested an administrative hearing to review the AHCCCS’s decision. In this

hearing, the Administrative Law Judge (ALJ) recommended the reversal of AHCCCS’s

denial of benefits. The ALJ’s recommendation, however, was subsequently reviewed by the

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director of AHCCCS, who dismissed the recommendation as meritless.

Plaintiff filed her Complaint in the instant action on May 3, 2011, seeking, among

other things, a declaratory judgment that AHCCCS must provide her with ALTCS benefits.

(Doc. 1). Plaintiff now moves for a preliminary injunction to compel AHCCCS to give her

immediate care benefits until this case is resolved (Doc. 9). In their Response to Plaintiff’s

injunction motion, Defendants not only ask that her motion be denied, but request that the

case be dismissed or stayed “pending a consideration on the merits through the administrative

process.” (Doc. 13 at 11).

DISCUSSION

I. Plaintiff’s Motion for Preliminary Injunction

A. Legal Standard

A preliminary injunction is “an extraordinary remedy never awarded as of right.”

Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). Rather, “[a] plaintiff

seeking a preliminary injunction must establish that he is likely to succeed on the merits, that

he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance

of equities tips in his favor, and that an injunction is in the public interest.” Id. at 20; see also

Preminger v. Principi, 422 F.3d 815, 823 n.5 (9th Cir. 2005) (“At the preliminary injunction

stage, Plaintiffs have the burden of proof.”). All four factors must be satisfied for the Court

to grant a preliminary injunction. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127,

1135 (9th Cir. 2011). In addition, because the function of a preliminary injunction is to

preserve the status quo pending determination of the merits, there is heightened scrutiny

where a movant seeks to alter, rather than maintain, the status quo. Dahl v. HEM Pharms.

Corp., 7 F.3d 1399, 1403 (9th Cir. 1993) (holding that mandatory, as opposed to prohibitory,

injunctions are subject to heightened scrutiny). 

 B. Analysis 

As stated, to obtain a preliminary injunction, Plaintiff must show that she is likely to

prevail on the merits. Winter, 555 U.S. at 20. Plaintiff contends that her transfer to Ms.

Burger was an unconditional gift. (Doc. 9 at 2). Because the $91,200 was a gift, she argues,

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1

This section of the POMS has been in effect since February 3, 2010. See POMS SI

01120.201, available at https://secure.ssa.gov/apps10/poms.nsf/lnx/0501120201.

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AHCCCS is required to apply the federal regulations dealing with uncompensated transfers.

See 42 U.S.C. § 1396p(c)(1)(A),(B) (stating that state Medicaid plans “must” assess a period

of ineligibility to individuals who “dispose[ ] of assets for less than fair market value” within

60 months of their application for benefits). In those regulations, gifts are not counted

towards the amount of total resources available to an individual for purposes of Medicaid

eligibility. See id. Rather, applicants who give gifts within 60 months of applying for

Medicaid are assessed an ineligibility period. Id. In Plaintiff’s case, the ineligibility period

would have lasted between 10 and 15 months. See id. If those regulations had been applied,

Plaintiff would presently be eligible for ALTCS benefits, and Ms. Burger would be allowed

to keep the remaining $38,000 of the funds Plaintiff transferred to her.

AHCCCS, on the other hand, contends that the transfer of funds from Plaintiff to Ms.

Burger did not constitute an unconditional gift, but rather created a revocable trust or a

“device that is similar to a trust.” 42 U.S.C. § 1396p(d)(3)(A), (6). If so, Plaintiff would not

be eligible for ALTCS benefits until the substantial part of the transferred funds had been

exhausted. See id (stating that both revocable trusts and devices similar to trusts “shall be

considered resources available to the individual”). In short, the merits of Plaintiff’s case

hinge on whether the $91,200 she gave Ms. Burger constituted a gift, or created a trust-like

device.

According to the Program Operating Manual System (POMS) published by the Social

Security Administration (SSA), a trust-like device is a “legal instrument, device, or

arrangement, which may not be called a trust under State law, but which is similar to a trust.”

POMS SI 01120.201G, available at

https://secure.ssa.gov/apps10/poms.nsf/lnx/0501120201#g (emphasis added).1

 The SSA

treats such a device or arrangement as a trust where 1) “it involves a grantor who transfers

property,” 2) “the property is transferred to an individual . . . with fiduciary obligations,” and

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Plaintiff asserts that the ALJ who reviewed AHCCCS’s decision found no evidence

of intent by Plaintiff to create a trust. (Doc. 9 at 13). The Court, however, is not bound by the

ALJ’s decision. Moreover, the ALJ’s determination regarding Plaintiff’s intent was “stricken

in its entirety” upon subsequent review by the director of AHCCCS. (Doc. 1, Ex. A at 1).

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3) “the grantor transfers the assets to be held, managed or administered by the individual .

. . for the benefit of the grantor.” Id. 

First, to be a trust-like device, an arrangement must involve “a grantor who transfers

property.” Id. In the instant case, Plaintiff, the grantor, transferred $91,200 to Ms. Burger.

This $91,200 constitutes transferred property. 

Second, the property must be transferred to an individual “with fiduciary obligations.”

Id. Ms. Burger has testified that at the time the funds were transferred, she intended to use

the funds to pay for Plaintiff’s care until Plaintiff qualified for Medicaid. Moreover, for the

past 18 months, Ms. Burger has been using the transferred funds to make periodic and

recurring payments for Plaintiff’s care at Emeritus and to pay for Plaintiff’s other sundry

needs. (Doc. 21 at 10). These recurring payments, taken together with Ms. Burger’s stated

intent, the insolvency created by the transfer, and the prolonged period to follow the transfer

in which Plaintiff would be unable to pay for her care, establish a significant likelihood that

Plaintiff invested Ms. Burger not only with $91,200, but also with fiduciary obligations in

relation to those funds.2

Lastly, the grantor must transfer the assets “to be held, managed or administered by

the individual . . . for the benefit of the grantor.” POMS SI 01120.201G, available at

https://secure.ssa.gov/apps10/poms.nsf/lnx/0501120201#g. As discussed, Ms. Burger has

been holding the transferred funds in her account and administering them exclusively for

Plaintiff’s benefit. Although Ms. Burger testified that she could also use those funds for

purposes other than her mother’s care, she has not done so during the entire 18 months since

the transfer. There is a significant likelihood, therefore, that Plaintiff transferred the funds

to Ms. Burger “to be held, managed, [and] administered” for her benefit. Id.

In sum, it appears likely that Plaintiff’s claimed uncompensated transfer was in

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actuality the instigation of a “device, or arrangement . . . that is similar to a trust.” Id. See

also 42 U.S.C. § 1396p(d)(6). Plaintiff, therefore, has not met her burden of establishing that

she is likely to succeed on the merits. This alone is fatal to her motion. 

II. Defendants’ Request for Dismissal or Stay.

In their response to Plaintiff’s injunction motion, Defendants assert that this case

should be dismissed or stayed “pending a consideration on the merits through the

administrative process.” (Doc. 13 at 11). Plaintiff, however, has already exhausted her

administrative remedies. Her case underwent an OAH hearing on February 18, 2011, and the

Director of AHCCCS subsequently exercised his authority not to certify the ALJ’s

recommendations. (See Doc. 1, Ex. A). Plaintiff has not appealed the Director’s decision to

the Superior Court pursuant to A.R.S. §§ 12-901–914 (2011), but rather notes in her reply

that “[t]here is no pending State proceeding at issue.” (Doc. 14 at 7). Defendants’ arguments,

therefore, pertaining to the Colorado River doctrine are irrelevant. See Colo. River Water

Conservation Dist. v. United States, 424 U.S. 800, 818–19 (1976) (discussing several factors

a federal court may consider when “assessing the appropriateness of dismissal in the event

of concurrent jurisdiction”) (emphasis added).

CONCLUSION

Plaintiff has not met her burden of demonstrating likely success on the merits. The

Court, therefore, will not issue an injunction.

IT IS THEREFORE ORDERED that Plaintiff's Motion for Preliminary Injunction

(Doc. 9) is DENIED.

DATED this 30th day of September, 2011.

Case 2:11-cv-00891-GMS Document 34 Filed 09/30/11 Page 6 of 6