Gragert v. Lake
541 F. App'x 853
10th Cir.2013Background
- George Gragert, an individual requiring institutional care, applied for Medicaid; eligibility turned on whether a promissory note held by his wife counted as a family “resource.”
- Gragert and his wife sold a rental house to their son and took a promissory note for $28,800 payable to the wife; the note contained an explicit prohibition on assignment, sale, transfer, or conveyance of the note or its payments (with a narrow estate-planning trust exception).
- The state agency treated the promissory note as a liquid resource under 20 C.F.R. § 416.1201 and denied Medicaid; the district court granted summary judgment to defendants on that basis, finding Gragert offered no contrary evidence.
- Gragert appealed under 42 U.S.C. § 1983, arguing the note was illiquid and thus not a countable resource under SSI/Medicaid rules; the availability of § 1983 for his statutory claims remained unresolved and was not decided below.
- This panel, relying on its intervening decision in Morris, held that a nontransferable promissory note that cannot be converted to cash is not a resource under 20 C.F.R. § 416.1201, vacated the district court’s judgment, and remanded for further proceedings consistent with that interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the promissory note is a countable Medicaid resource | Note is illiquid and nontransferable; therefore not a resource under the SSI regulation | Promissory notes are ordinarily liquid resources; Gragert failed to rebut the regulatory presumption | The note’s express prohibition on assignment/sale makes it illiquid and not a resource under 20 C.F.R. § 416.1201; summary judgment for defendants vacated and case remanded |
| Whether Gragert may introduce evidence in district court not developed administratively | The note itself and expert report suffice to rebut presumption; no requirement that administrative record be exclusive in a § 1983 challenge | Agency argued Gragert failed to present evidence at administrative level and should be barred from new evidence on appeal | Court noted administrative-record-bar argument fails if § 1983 private action exists; here the note itself was submitted administratively and expert report considered; remand permits consideration of evidentiary and procedural issues |
| Whether § 1983 provides a private remedy for the Medicaid statutory claims asserted | Gragert relies on Medicaid statutes and regs to assert enforceable individual rights via § 1983 | Agency contends those Medicaid provisions may not create a § 1983 enforceable right | Court did not decide the § 1983 availability issue; left it open for the district court to consider on remand |
| Whether precedent permits treating nontransferable income instruments as non-resources | Gragert relied on Morris, Lopes, James, Roach for nontransferable instruments counting as income, not resources | Agency relied on regulatory presumption that promissory notes are ordinarily liquid | Court followed Morris and analogous circuit decisions: nontransferability that precludes conversion to cash renders an instrument illiquid and not a resource |
Key Cases Cited
- Morris v. Okla. Dep’t of Human Servs., 685 F.3d 925 (10th Cir. 2012) (held nontransferable annuity not a resource under SSI rule; guided present decision)
- Lopes v. Dep’t of Soc. Servs., 696 F.3d 180 (2d Cir. 2012) (nontransferable annuity treated as income, not countable resource)
- James v. Richman, 547 F.3d 214 (3d Cir. 2008) (similar holding on nontransferable annuity exclusion from resources)
- Roach v. Morse, 440 F.3d 53 (2d Cir. 2006) (informal nonassignable loan not a resource)
- Reutter ex rel. Reutter v. Barnhart, 372 F.3d 946 (8th Cir. 2004) (discussing evidentiary and procedural aspects in SSI/Medicaid eligibility disputes)
- Houghton ex rel. Houghton v. Reinertson, 382 F.3d 1162 (10th Cir. 2004) (on § 1983 challenges to Medicaid decisions and relation to SSI rules)
- Gonzaga Univ. v. Doe, 536 U.S. 273 (2002) (framework for whether a federal statutory provision creates enforceable individual rights under § 1983)