Court Opinion

ID: 4562755
Source: CourtListenerOpinion
Date Created: 2020-09-03 17:03:56.666472+00
Date Added: 2024-06-11T08:49:08.865436
License: Public Domain

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

      Court of Appeals of Indiana | Opinion 19A-PL-3039 | September 3, 2020   Page 2 of 10
      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.

      Court of Appeals of Indiana | Opinion 19A-PL-3039 | September 3, 2020   Page 3 of 10
[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
       Court of Appeals of Indiana | Opinion 19A-PL-3039 | September 3, 2020        Page 5 of 10
       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,
       Court of Appeals of Indiana | Opinion 19A-PL-3039 | September 3, 2020     Page 6 of 10
       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).

       Court of Appeals of Indiana | Opinion 19A-PL-3039 | September 3, 2020      Page 7 of 10
[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

       Court of Appeals of Indiana | Opinion 19A-PL-3039 | September 3, 2020      Page 8 of 10
       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

       Court of Appeals of Indiana | Opinion 19A-PL-3039 | September 3, 2020       Page 9 of 10
       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.

       Court of Appeals of Indiana | Opinion 19A-PL-3039 | September 3, 2020   Page 10 of 10