Center for Special Needs Trust Administration, Inc. v. Olson
2012 U.S. App. LEXIS 7536
| 8th Cir. | 2012Background
- Kemmet, a disabled nursing-home resident, transferred $54,450 to a pooled special-needs trust (type C) and later applied for Medicaid; ND DHS approved benefits despite misrecording his age as 54 (actual 78).
- ND later sought reimbursement after discovering the error, relying on transfers to pooled trusts and state regulations disqualifying assets transferred to trusts for under-65 disabled individuals.
- Center for Special Needs Trust Administration (a non-profit) challenged ND’s reimbursement demand and regulations as conflicting with the Medicaid Act, seeking declaratory relief, injunction, and fees under §1988.
- District court granted summary judgment for ND, concluding ND could seek reimbursement and the regulations were not preempted or in conflict; Center appealed.
- Issue framing on standing, preemption, waiver/estoppel, and §1983 remedy; the Eighth Circuit reviews de novo and ultimately affirms the district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Center has standing to sue | Center has injury-in-fact from ND’s interpretation of regulations. | ND’s mootness/standing not satisfied; potential future claims insufficient. | Center has standing; injury-in-fact and redressable injury present. |
| Whether §1396p(d)(4)(C) creates an enforceable federal right under §1983 | §1396p(d)(4)(C) beneficiaries and pooled-trust trustees intend to benefit Center. | Spending-power provision typically lacks private right; only federal enforcement via funds loss. | Yes; three-part Blessing test satisfied; Center has private right of action. |
| Whether CMS guidance and district court deference to CMS letter was proper | District court improperly deferred to CMS letter interpreting §1396p(d)(4). | CMS letter supports North Dakota view and should be relied upon. | District court erred in deferring to CMS letter; not binding precedent; but decision upholding the outcome remains. |
| Whether North Dakota waives or is estopped from seeking reimbursement | Approval of Kemmet’s application created a waiver; induced reliance recognized. | No voluntary relinquishment or affirmative misconduct; no estoppel. | No waiver or estoppel; claim not defeated. |
| Whether state regulations preempt or conflict with the Medicaid Act | ND regs impose additional requirements conflicting with federal law. | No actual conflict; transfers to pooled trusts over 65 subject to penalties; consistent with statute. | No preemption; regulations not preempted by the Medicaid Act. |
Key Cases Cited
- Blessing v. Freestone, 520 U.S. 329 (1997) (three-part Blessing test for private rights under spending power)
- Lankford v. Sherman, 451 F.3d 496 (8th Cir. 2006) (denotes private enforcement under Medicaid provisions; Blessing framework applied)
- Gonzaga Univ. v. Doe, 536 U.S. 273 (2002) (claims under §1983 require a federal right, not just federal law)
- Pediatric Specialty Care, Inc. v. Arkansas Dept. of Human Servs., 293 F.3d 472 (8th Cir. 2002) (supports interpretation of mandatory statutory terms for enforceable rights)
- Arkansas Med. Soc'y, Inc. v. Reynolds, 6 F.3d 519 (8th Cir. 1993) (illustrates enforcement of federal health-care provisions under §1983)