437 F. App'x 73
3rd Cir.2011Background
- Mary Sable and Michael Lanza challenge Medicaid agencies' treatment of promissory notes from their children as trust-like devices.
- Notes were purchased by parents from children (Sable: two notes; Lanza: three notes) for roughly $80k, $42.5k, and $80k each, with no collateral and no documented borrower creditworthiness.
- Notes were counted as countable resources affecting Medicaid eligibility for Global Options Medicaid Waiver and long-term care benefits.
- District Court denied a preliminary injunction, holding plaintiffs failed to show likely success on the merits due to insufficient evidence of bona fide loans and potential fiduciary arrangements.
- This Court vacated and remanded once to address resource-counting under regular SSI rules before trust-like analysis; on remand, the District Court again denied relief, and plaintiffs appeal.
- This opinion affirms the District Court’s denial of the preliminary injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether notes qualify as cash loans under POMS 1120.220. | Sable argues presumption favors cash loan, making resources countable. | Agency and court found lack of feasibility/bonafide loan, undermining cash loan status. | No; failure to show feasible repayment negates cash loan status. |
| Whether notes qualify as promissory notes under POMS 1140.300. | Notes could be treated as bona fide negotiable instruments. | Evidence suggested notes aimed at Medicaid eligibility, not bona fide loans. | No; evidence to the contrary precludes promissory note treatment. |
| Whether there was a fiduciary relationship making notes trust-like devices. | Notes reflect trust-like arrangement beneficial to parents. | Parental-child loans in family setting do not automatically create fiduciary relation. | No; plaintiffs failed to show lack of fiduciary relationship; institutions acted properly. |
Key Cases Cited
- NutraSweet Co. v. Vit-Mar Enters., Inc., 176 F.3d 151 (3d Cir. 1999) (preliminary injunction standards and burdens of proof)
- United Jersey Bank v. Kensey, 704 A.2d 38 (N.J. App. Div. 1997) (fiduciary relationships can be implied from circumstances)
- Clyde v. Hodge, 460 F.2d 532 (3d Cir. 1972) (assessing surrounding facts to determine fiduciary relationship)
- New Jersey Hosp. Ass’n v. Waldman, 73 F.3d 509 (3d Cir. 1995) (standard for reviewing preliminary injunction decisions)