Joseph Stolmayer v. John McCarthy
673 F. App'x 467
| 6th Cir. | 2016Background
- Wilma Stolmayer entered a nursing home (Aug. 2014) and applied for Medicaid (Dec. 2014); Stark County initially denied coverage for excess resources but later found her eligible as of March 1, 2015 with a restricted coverage period through Feb. 2018.
- The County and Ohio Department of Job and Family Services determined Mr. Stolmayer made “improper transfers” (purchase of annuities) that exceeded the Community Spouse Resource Allowance (CSRA), triggering a penalty period under 42 U.S.C. § 1396r-5(f)(1).
- Mrs. Stolmayer administratively appealed; the Ohio Department affirmed, rejecting her reliance on this Court’s decision in Hughes v. McCarthy and noting state courts were split and the Ohio Supreme Court had not definitively adopted Hughes at that time.
- The Stolmayers did not pursue a state-court appeal from the Department’s decision. Instead they sued Director McCarthy under 42 U.S.C. § 1983 in federal court, alleging violations of the Medicaid Act and the Supremacy Clause.
- The district court dismissed the § 1983 complaint under res judicata, treating the unappealed administrative decision as a preclusive final judgment; the Stolmayers appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an unappealed state administrative determination can have claim-preclusive effect against a § 1983 challenge | Stolmayers: Department’s decision should not preclude federal suit; reliance on Hughes means the transfer was not improper | McCarthy: The Department’s final administrative decision is a final judgment under Ohio law and thus preclusive | Court: Did not decide the circuit-split; affirmed because plaintiffs forfeited the argument by not raising it below and did not dispute that Ohio res judicata elements were met |
| Whether the elements of Ohio claim preclusion are satisfied here | Stolmayers: argued merits but did not dispute preclusion elements on appeal | McCarthy: Elements (final valid decision, same parties/privies, same claims/transaction) are met | Court: District court correctly found the four elements satisfied; plaintiffs did not challenge that finding |
| Whether Hughes v. McCarthy requires a different result because transfers to a spouse for sole benefit are exempt from penalty | Stolmayers: Hughes controls and renders the transfer permissible when for spouse’s sole benefit | McCarthy: State agency applied Ohio law and administrative rule, and state authority declines to follow Hughes | Court: Not clear Hughes applies here because timing of transfers relative to eligibility was ambiguous in complaint; court declined to resolve conflict absent presentation below |
| Whether the district court erred by applying Ohio preclusion law instead of entertaining the federal § 1983 claim | Stolmayers: Ohio exhaustion/preclusion should not bar federal § 1983 relief | McCarthy: Federal courts give state judgments the same preclusive effect they would have in state courts | Court: Federal courts must generally apply state preclusion rules; plaintiffs forfeited any challenge to applying Ohio law |
Key Cases Cited
- Hughes v. McCarthy, 734 F.3d 473 (6th Cir. 2013) (held transfers to spouse for spouse’s sole benefit may avoid transfer penalty when made before eligibility determination)
- Carroll v. City of Cleveland, [citation="522 F. App'x 299"] (6th Cir. 2013) (unappealed administrative decisions can have preclusive effect under Ohio law)
- Buck v. Thomas M. Cooley Law Sch., 597 F.3d 812 (6th Cir. 2010) (standard of review for Rule 12(b)(6) and de novo review of legal issues)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard: plausibility requirement)
- Univ. of Tenn. v. Elliott, 478 U.S. 788 (U.S. 1986) (federal courts give state judgments the same preclusive effect as state courts)
- Estate of Atkinson v. Ohio Dep’t of Job & Family Servs., 40 N.E.3d 1121 (Ohio 2015) (Ohio Supreme Court declined to follow Hughes in a related transfer context)