Court of Appeals of Indiana | Opinion 19A

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A TTORNEY S FOR A PPELLANT S I FSSA, J ENNIFER W ALTHALL , AND B ARTHOLOMEW C OUNTY D IVISION OF F AMILY R ESOURCES Curtis T. Hill, Jr. Attorney General of Indiana Benjamin M.L. Jones Deputy Attorney General Indianapolis, Indiana A TTORNEY FOR A PPELLEE Michael T. Foster Greensburg, Indiana



### I N T H E 

# COURT OF APPEALS OF INDIANA

Indiana Family and Social Services Administration ; Jennifer Walthall, in Individual Capacity as Secretary of Indiana F amily and S ocial S ervices A dministration ; Bartholomew County Division of Family Resources ; and Kindred Nursing Care Centers , Limited Partnership , 1 S eptember 3, 2020 Court of Appeals Ca se No. 19A

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- 3039 Appeal from the Bartholomew Superior Court The Honorable Kathleen T ighe Coriden, Judge Trial Court Cause No. 03D02

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1 Although counsel for Kindred did not appear in this Court, and Kindred di d 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

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Appellant s - Respondent

s ,
v. 

### Bonnie K. Anderson by Kimberly J. Everroad , Personal Representative, Appellee

- Petitioner

.

Friedlander , Senior Judge .
[1] The Appellants t he 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 :

w hether the trial court erred by denying the Appellants ’ motion to dismiss

.
[3] On February 2 , 2006, Bonnie Anderson executed a F amily C ontract for H ome H ealthcare autho rizing 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] I n March 2016 , the Anderson Family Supplemental Needs Trust was established for Anderson’s benefit and was funded by Anderson’s farmCourt of Appeals of Indiana | Opinion 19A

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property. This trust was an irrevocable trust and was to preserve any governmental assistance Anderson was curre ntly receiving or for which she

m ay 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, 2 0 16 through March 27, 2019 o n the basis that property had been transferred for the purpose of rendering her eligible for benefits.

[6] Anderson ’s representative appealed th e FSSA de termination , and , after a hearing, an ALJ reversed the imposition of the transfer penalty on Jan uary 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 nurs ing 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.Court of Appeals of Indiana | Opinion 19A

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[8] The Appellants moved to dismiss the petition /complain t on the grounds that Anderson lacked standing to seek judicial revie w , had failed to e xhaust her administrative remedies before seeking judicial review , and had failed to state a claim under §1983

. The magistrate presided over a hearin g on the Appellants’ motion , and the judge , relying on the magistrate’s notes from the hearing, later deni ed 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

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[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. 21 st Amendment, Inc. v. Ind

. Alcohol & Tobacco C

omm ’ n , 84 N.E.3d 691 (Ind. Ct. App. 2017) , trans. denied (2018). Dismissal is appropriate o nly where it appears th ere 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 rulin g on a motion to dismiss for lack of standing is de novo. Id.Court of Appeals of Indiana | Opinion 19A

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[11] The A dministrative O rders and P rocedures A ct (AOPA ) specifies, in relevant part, that only parties who have standing are entitled to judicial review of a final agency action. S

ee Ind. Code § 4

- 21.5

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- 2(b) ( 1986)

. The doctrine of standing fo cuses on whether the complaining party is the proper person to invoke the court’s power. 21 st Amendment, Inc. , 84 N.E.3d 691

. T o that end, t he AOPA provides: (a) T he 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 ad versely affected by the final agency action.

Ind. Code § 4

- 21.5

- 5

- 3(a) ( 2014)

.
[12] Anderson clearly has standing under S ection 4

- 21. 5

- 5

- 3(a)( 2 )

. Nevertheless, t he Appellants argue that Anderson lack s 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 transferCourt of Appeals of Indiana | Opinion 19A

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penalty, Anderson hardly received complete relief. As explained in Anderson’s petition for judicial review , the FSSA im posed a transfer penalty against her Medicaid benefits because it determined that property was transferred in order for her to become eligible for benefits

. U pon hearing evidence regarding the character of the property and the trust that w ere involved in the transfe r, the ALJ reversed the imposition of the transfer penalty

. T he ALJ’s de cision , however, omitted any determination or direction to the FSSA regarding treatment of the property and the t rust such that the FSSA “ in cluded 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 de nying 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 beca use Anderson waived her right to judicial review by fail ing 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

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- 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 waive s right to judicial review )

.
[14] The Appellants further cite Indiana Code section 4

- 21.5

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- 29(d) (1986) , which requires that, to preserve an objection to an order of an ALJ for judicial review,Court of Appeals of Indiana | Opinion 19A

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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

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[15] As noted above, t he 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 Administ ration 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
contr avention 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 , a nd a request for the alternative remedy of remand to the ALJ for an order of payment. The FSSA later withdrew its request for review . N otice of th at withdrawal was dated January 24 and was sent to Anderson. The notice s tates , “Due to this dismissal, no further action will be taken on th is R eview. ” Id. at 34 (Ex. C to Amended Petition for Judicial Review, p. 1)

.Court of Appeals of Indiana | Opinion 19A

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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 remand ing the case to the ALJ , and th e A ppellants do not suggest that the

o bjection was untimely filed. It is unclear why the agency did not address Anderson’s submission, but once it issued the dismissal and stat ed it would take no further action , Anderson had exhausted her administrative reme dies

. The trial court did not err by denying the Appellants’ motion to dismiss on this basis

. 

### § 1983 Claim
[17] A m otion to dismiss under Rule 12(B)(6) tes t s 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 evaluate s 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 alleg ing 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 politicalCourt of Appeals of Indiana | Opinion 19A

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subdivisions, t he U.S. Supreme Court has held that th e term does not include a state or its administ rative 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 administ rative agencies of the state.

[20] W e turn now to Secretary Walthall

. A lthough Anderson’s petition/complaint is captioned as “Jennifer Walthall, in Individual Capacity as Secretary o f 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) ; Appell ee ’ s Br. p p . 15

- 16.

[21] A state offi cial 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 request ed injunctive relief ; r ather, she seeks an award of M edicaid 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

ca nnot 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. W eCourt of Appeals of Indiana | Opinion 19A

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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] Jud gment affirmed in part and reversed in part.
Bradford, C.J., and Najam, J., concur

.