STEFFAN HOBBS, by and through his parents and next friends, JIMMY and JANET HOBBS v. MARSHA ZENDERMAN; JOEY KELLENAERS; and PAMELA HYDE, Secretary of the Department of Human Services, in their individual and official capacities
No. 08-2099
UNITED STATES COURT OF APPEALS TENTH CIRCUIT
September 1, 2009
PUBLISH
THE SPECIAL NEEDS ALLIANCE; NEW MEXICO CHAPTER OF THE NATIONAL ACADEMY OF ELDER LAWYERS; NEW MEXICO TRIAL LAWYERS ASSOCIATION; STATES OF COLORADO, ALASKA, DELAWARE, FLORIDA, HAWAII, IDAHO, NEBRASKA, NEVADA, NEW HAMPSHIRE, NEW JERSEY, OKLAHOMA, SOUTH CAROLINA VERMONT, WEST VIRGINIA, and WYOMING, Amici Curiae.
Appeal from the United States District Court for the District of New Mexico (D.C. No. 6:06-CV-00985-BB-WDS)
Paul R. Ritzma, General Counsel/Special Assistant Attorney General (Mark Dawson Jarmie and Mark Standridge, Mark D. Jarmie LLC, with him on the briefs), New Mexico Human Services Department, Santa Fe, New Mexico, for Defendants-Appellees.
Before HENRY, Chief Circuit Judge, BRISCOE, and LUCERO, Circuit Judges.
LUCERO, Circuit Judge.
Steffan Hobbs, by and through his parents as next friends, sued several employees of the New Mexico Human Services Department (“NMHSD“) following that agency‘s denial of Hobbs’ application for Medicaid benefits. NMHSD‘s denial turned on its determination that a certain trust was a “countable resource” because the trust was not being administered for
We hold that the statutory provisions upon which Hobbs relies do not confer private rights enforceable under
I
Hobbs was severely injured in an auto accident in 2000 when he was six years old. He suffered traumatic brain injury that required him to undergo two partial lobectomies. As a result of his injuries, Hobbs is prone to seizures and requires significant assistance in daily activities such as eating and bathing. For purposes of the Medicaid Act, Hobbs is disabled. See
In 2003, Hobbs and his parents entered into a $2.5 million settlement agreement for injuries related to the accident. Under the terms of that agreement, $1.1 million was set aside for a special needs trust to benefit Hobbs. A state court approved the creation of “The Steffan Hobbs Medicaid Payback Trust” (the “Trust“) on May 29, 2003. MassMutual Trust Co., F.S.B., serves as trustee, and Hobbs is listed as the sole beneficiary. Although the Trust purports to be irrevocable, the trust agreement permits “the Trustee and the Guardian . . . to revoke this Trust or amend the terms hereof.”
The trust agreement specifies that it was established pursuant to ”
Expenditures may be made directly to any of [Hobbs‘] family members, or any other person who takes [Hobbs] into his or her home or provides special care or attention to him, to compensate such person for the reasonable value of services provided and to reimburse such person for costs associated with shelter, care, or attention.
From the Trust corpus, $750,000 was used to purchase an annuity, which provides the Trust with gradually increasing monthly payments. As of November 2006, the annuity provided monthly income of $2,479.40 to the Trust. The primary outlay from the Trust is payment to Mrs. Hobbs for “extraordinary care provided to Steffan Hobbs.” Mrs. Hobbs helps her son with dressing and bathing, and she monitors him for seizures. She also transports him to and from school and has helped train school personnel to deal with Hobbs’ injury. Mrs. Hobbs receives a bi-weekly payment from the Trust that, as of November 2006, equaled $1,322.10 per installment. Trust funds have also been used to purchase a 50% interest in the Hobbs’ land and home, home furnishings,
In 2003, Hobbs applied to Medicaid‘s Medically Fragile Waiver Program (the “Program“). That Program provides home care services to Medicaid recipients with serious medical needs. At the time he applied, Hobbs was receiving Supplemental Security Income (“SSI“) and SSI Medicaid. New Mexico Department of Health determined that Hobbs was medically eligible for the Program and reserved a slot for him pending determination of his financial eligibility. Joey Kellenaers, a Management Analyst at NMHSD, was responsible for determining whether Hobbs’ Trust constituted a “countable resource” for Medicaid eligibility purposes. Consistent with NMHSD practice, Kellenaers referred the Trust to NMHSD Office of General Counsel, where Assistant General Counsel Marsha Zenderman reviewed it.
To be eligible for the Program, an applicant must possess no more than $2,000 in “countable resources.” Certain trust assets, including those in a “special needs trust,” are not considered countable resources.
A trust containing the assets of an individual under age 65 who is disabled . . . and which is established for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court if the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this subchapter.
Following Zenderman‘s review of the Trust and related documents, she determined that the Trust was a countable resource. On April 15, 2004, Zenderman wrote to Hobbs’ personal injury attorney, stating that the use of Trust funds “has effectively disqualified your client from being eligible for Medicaid.” In particular, Zenderman noted that
under state Medicaid policies, special needs trust funds may not be used, for example, to purchase land and a family home, pay property taxes and insurance on that home, pay for home furnishings (unless related to the beneficiary‘s disabilities), purchase farm animals and outbuildings, compensate a parent for taking care of her disabled child, pay the beneficiary‘s personal income taxes, or pay advisory fees to the trustee‘s affiliates.
Although Hobbs was not then eligible for the Program, Zenderman advised Hobbs’ lawyer to “take whatever legal steps are necessary to remedy these problems” and provided a sample trust to assist Hobbs in “amending the trust so that it [would] meet state Medicaid requirements.”
After receiving this letter, Hobbs’ new attorney contacted Zenderman, and the two corresponded throughout the summer of 2004. On July 29, 2004, Zenderman sent a ten-page letter to Hobbs’ counsel detailing her concerns with the Trust. Zenderman‘s letter discussed specific provisions of the New Mexico Administrative Code, the State Medicaid Manual, and the Social Security Administration‘s Program Operations Manual System (“POMS“), considered several cases to which Hobbs’ counsel had referred Zenderman, and identified a number of problems with the Trust as written. Zenderman relied on sections of the State Medicaid Manual that require a special needs trust be “for the sole benefit” of a disabled individual, along with provisions defining that phrase. She also cited to a section of the POMS that differentiates between compensation paid to third-party care providers and that paid to family members.
A hearing to review NMHSD‘s determination began on April 27 and continued on June 10, 2005. Hobbs was represented by counsel throughout the hearing and was permitted to submit evidence. At the hearing, NMHSD bore the burden of proof to support its decision by a preponderance of the evidence. After considering the evidence, the administrative law judge (“ALJ“) recommended that the NMHSD decision to deny benefits be affirmed, concluding that the Trust payments to Mrs. Hobbs for “providing routine ongoing care” were not “for the sole benefit” of Hobbs. The ALJ expressly declined to rule on whether payments to a family member for “performing the functions of a physical or other therapist, or perform[ing] skilled services” would render the Trust a countable resource. Instead, the ALJ‘s holding was limited to payments for care that Mrs. Hobbs was already legally obligated to provide as a parent. The NMHSD Medical Assistance Division adopted the ALJ‘s recommendation on December 2, 2005. Hobbs then appealed this administrative determination in state court.
In October 2006, the Social Security Administration informed Hobbs that his SSI payments would cease in October because he exceeded the resource limit of $2,000. Because Hobbs was no longer eligible for SSI, so too was he ineligible for the SSI Medicaid benefits he had been collecting.
Hobbs, through his parents as next friends, filed the present suit in the U.S. District Court for the District of New Mexico on October 12, 2006. Hobbs successfully moved to stay his state court administrative appeal pending the outcome of this federal suit. In his complaint, Hobbs asserted claims against Zenderman, Kellenaers, and NMHSD Secretary Pamela Hyde in both their individual and official capacities. Proceeding under
Both parties moved for summary judgment. In an order granting summary judgment to defendants, the district court concluded that NMHSD may review the manner in which a special needs trust is administered to determine Medicaid eligibility and that Hobbs had been afforded due process. With respect to Hobbs’ argument that he was categorically eligible for Medicaid based on his SSI benefits, the
II
A
Before proceeding to the merits, we note that this appeal does not present the primary issue the district court decided. As the district court put it, the “key question in this case is whether a state has authority to assess the administration of a special-needs trust in determining Medicaid eligibility of the trust beneficiary.” Hobbs argued that under the plain text of
On appeal, Hobbs challenged that ruling in his opening brief, arguing that the “district court‘s conclusion that the word ‘established’ as used in
The issue is not whether States have the authority to evaluate and assess the administration of a special needs trust, or to place restrictions on what Special Needs funds may be used for, in determining Medicaid eligibility. In fact, Plaintiff does not contest the States’ authority to do so in this appeal. Rather, the issue presented here involves how the State must carry out its eligibility determinations, and whether it can exercise such authority in the absence of written policies and ascertainable standards in determining Plaintiff‘s Medicaid eligibility.
(Appellant‘s Reply Br. at 2-3.) Given this concession, we are in the somewhat unusual position of assuming without deciding that the statute at issue permits States to “evaluate and assess the administration of a special needs trust, [and] to place restrictions on what Special Needs funds may be used for, in determining Medicaid eligibility.” (Id.)
We further note that this case is not an appeal of NMHSD‘s denial of benefits to Hobbs. NMHSD is not a party to this case. Rather, pursuant to New Mexico Statutes §§ 27-3-4 and 39-3-1.1, Hobbs has a direct appeal of the NMHSD decision currently pending in New Mexico state court. Hobbs is free to contest the manner in which NMHSD applied
Rather than challenging States’ authority to monitor the administration of special needs trusts or appealing the NMHSD‘s denial, Hobbs raises several other contentions before us. First, he alleges that his special needs trust met the requirements of
B
We review a grant of summary judgment de novo, applying the same standard as the district court. Weigel v. Broad, 544 F.3d 1143, 1150 (10th Cir. 2008). Summary judgment is appropriate “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law.”
III
We consider first whether the statutory provisions at issue provide Hobbs a right of action cognizable under
It is well established that some statutory rights may be enforced via
First, Congress must have intended that the provision in question benefit the plaintiff. Second, the plaintiff must demonstrate that the right assertedly protected by the statute is not so vague and amorphous that its enforcement would strain judicial competence. Third, the statute must unambiguously impose a binding obligation on the States. In other words, the provision giving rise to the asserted right must be couched in mandatory, rather than precatory, terms.
Blessing v. Freestone, 520 U.S. 329, 340-41 (1997) (quotation omitted). A statute embodies congressional intent to benefit the plaintiff only if it is “phrased in terms of the persons benefited.” Gonzaga Univ., 536 U.S. at 284.
A
Regarding Hobbs’ claim under
Section 1396p requires States to count certain trust assets as resources available
Interpreting the intersection of these two provisions, this court concluded in Keith that “Congress required that states generally count trust assets and income for purposes of determining Medicaid eligibility, but exempted [
Hobbs cites Lewis v. Rendell, 501 F. Supp. 2d 671 (E.D. Pa. 2007), a case in which the court determined
Hobbs’ citation to Wong v. Daines, 582 F. Supp. 2d 475 (S.D.N.Y. 2008), is unavailing for the same reason. In that case, the district court concluded that
Finally, Hobbs relies on
We are compelled to conclude that
B
Hobbs’ claim under
[a] State plan for medical assistance must . . . if medical assistance is included for any group of individuals described in [
42 U.S.C. § 1396d(a) 4] . . . include a description of . . . the methodology to be employed in determining [Medicaid] eligibility, which shall be no more restrictive than the methodology which would be employed under the supplemental security income program . . .
include reasonable standards . . . for determining eligibility for and the extent of medical assistance under the plan which . . . provide for taking into account only such income and resources as . . . would not be disregarded (or set aside for future needs) in determining [the applicant‘s] eligibility for [SSI] aid assistance or benefits.
Both methodology provisions fail the first prong of the Blessing test. Gonzaga University explained that the first prong requires “an unambiguously conferred right,” 536 U.S. at 283, and that rights-conferring statutes must be “phrased in terms of the persons benefited” rather than speaking “only in terms of institutional policy and practice,” id. at 284, 288 (quotation omitted). “Statutes that focus on the person regulated rather than the individuals protected create no implication of an intent to confer rights on a particular class of persons.” Alexander v. Sandoval, 532 U.S. 275, 289 (2001).
Like the statute considered in Gonzaga University, the methodology provisions contained in
Hobbs cites to numerous circuit cases that have found rights articulated in
Hobbs, by contrast, relies on
described in section 1396d(a).”
None of these passing references provides the necessary “‘rights-creating’ language critical to showing the requisite congressional intent to create new rights.” Gonzaga Univ., 536 U.S. at 287. The methodology provisions are not “phrased in terms of the persons benefited,” id. at 284 (quotation omitted); they are unmistakably directed not to the benefited class but to the administrators of state Medicaid plans. As in Gonzaga University, the individual references merely describe “the type of policy or practice” that a state official must follow. id. at 288.
Our conclusion that the methodology provisions do not provide rights enforceable under
Ninth Circuit
Accordingly, Hobbs may not enforce
IV
Lastly, we address whether the New Mexico officials were entitled to qualified immunity as to Hobbs’ constitutional claims. When a defendant moves for summary judgment on the basis of qualified immunity, the plaintiff must carry a two-part burden for his claims to survive. Serna v. Colo. Dep‘t of Corr., 455 F.3d 1146, 1150 (10th Cir. 2006). Under these circumstances, the plaintiff must show both “that the defendant‘s actions violated a constitutional or statutory right” and that “the right at issue was clearly established at the time of the defendant‘s unlawful conduct.” Medina v. Cram, 252 F.3d 1124, 1128 (10th Cir. 2001) (quotation omitted).
Qualified immunity shields government officials from “harassment, distraction, and liability when they perform their duties reasonably.” Pearson v. Callahan, 129 S. Ct. 808, 815 (2009). This doctrine affords “protection to all but the plainly incompetent or those who knowingly violate the law.” Malley v. Briggs, 475 U.S. 335, 341 (1986). “The relevant, dispositive inquiry in determining whether a right is clearly established is whether it would be clear to a reasonable [official] that his conduct was unlawful in the situation he confronted.” Saucier v. Katz, 533 U.S. 194, 202 (2001), overruled on other grounds by Pearson, 129 S. Ct. at 818.8
Hobbs argues that defendants violated his substantive due process rights by determining his eligibility for Medicaid benefits under unwritten and unascertainable standards. He relies primarily on Morton v. Ruiz, 415 U.S. 199 (1974), and its statement that “the determination of eligibility cannot be made on an ad hoc basis by the dispenser of the funds.” Id. at 232.
1
In Ruiz, the plaintiff challenged a decision by the Bureau of Indian Affairs (“BIA“) to deny him benefits because he did not live on a reservation. Id. at 204-05. The statute at issue required that BIA “shall direct, supervise, and expend such moneys as Congress may from time to time appropriate, for the benefit, care, and assistance of the Indians throughout the United States.”
The Supreme Court concluded that Congress intended these benefits to extend to Indians living near reservations as well as those living on reservations. Id. at 230. It then noted that the BIA “has placed itself under the structure of the APA procedures” and its own internal rules required publication of benefit-eligibility standards in the Federal Register and codification in the Code of Federal Regulations. Id. at 233. “Where the rights of individuals are affected,” the Court held, “it is incumbent upon agencies to follow their own procedures.” Id. at 235.
Because the BIA had repeatedly represented to Congress that benefits would be available to Indians living near reservations, the Court deemed it “essential that the legitimate expectation of these needy Indians not be extinguished by what amounts to an unpublished ad hoc determination of the agency that was not promulgated in accordance with [the BIA‘s] own procedures, to say nothing of those of the Administrative Procedure Act.” Id. dealings with these dependent and sometimes exploited people.” Id. (quotation omitted).
We do not read Ruiz to require state or federal agencies to promulgate detailed regulations for every conceivable circumstance that may arise in making benefits determinations. See Pulido v. Heckler, 758 F.2d 503, 506 (10th Cir. 1985) (“[A]s a general rule, an administrative agency is not required to promulgate detailed rules interpreting every statutory provision that may be relevant to its action.“). “[T]he choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency.” SEC v. Chenery Corp., 332 U.S. 194, 203 (1947); accord NLRB v. Bell Aerospace Co. Div. of Textron, Inc., 416 U.S. 267, 294 (1974) (“[T]he choice between rulemaking and adjudication lies in the first instance within the [agency‘s] discretion.“). Rather, the provision at issue in Ruiz was invalid because the BIA violated its own procedures when it did not publish the rule. The Supreme Court has subsequently clarified that Ruiz held “that the
We recognize that absolute discretion in government decision-making invites mischief. See, e.g., United States v. Wunderlich, 342 U.S. 98, 101 (1951) (Douglas, J., dissenting) (“Absolute discretion is a ruthless master. It is more destructive of freedom than any of man‘s other inventions.“); Holmes v. N.Y. City Housing Auth., 398 F.2d 262, 265 (2d Cir. 1968) (“[A]bsolute and uncontrolled discretion in an agency of government vested with the administration of a vast program, such as public housing, would be an intolerable invitation to abuse.“). Further, we are sympathetic to the special needs trust practitioners appearing as amici who seek guidance from NMHSD. Yet, we must also acknowledge that a rigid rule-making requirement “would make the administrative process inflexible and incapable of dealing with many of the specialized problems which arise.” Chenery Corp., 332 U.S. at 202; cf. United States v. Platte, 401 F.3d 1176, 1189 (10th Cir. 2005) (“The Constitution does not, however, impose impossible standards of specificity.” (citation and alteration omitted)).
Balancing these somewhat competing principles, courts have found benefits determinations to be insufficiently guided by standards only when agencies acted absent any ascertainable limit on eligibility. In Ruiz, the statute at issue merely provided “for the benefit, care, and assistance of the Indians throughout the United States,”
These cases upon which Hobbs relies establish, at most, a due process right to be free from eligibility determinations made without reference to any publicly-available standard. As did the Fourth Circuit in interpreting this line of cases, so do we acknowledge the possibility “that an apparent standard might be so vague as to be no standard at all,” but “we are not aware of any pertinent case so holding.” Harris v. Lukhard, 733 F.2d 1075, 1080 (4th Cir. 1984). We need not delineate the precise boundary of the right Hobbs alleges because the standards applied by defendants here are a far cry from no standards at all.
2
Eligibility for Medicaid is based on an extraordinarily complex set of interlocking statutes, federal and state regulations, and other interpretive documents. In the present case, NMHSD was applying the eligibility standards contained in
[A] trust is considered to be established for the sole benefit of a spouse, blind or disabled child, or disabled individual if the trust benefits no one but that individual, whether at the time the trust is established or any time in the future. . . . [A] trust that provides for funds or property to pass to a beneficiary who is not the spouse, blind or disabled child, or disabled individual is not considered to be established for the sole benefit of one of these individuals.
§ 3257.B.6.
These detailed provisions—which themselves comprise only a small corner of the eligibility regulation universe—bear little resemblance to the entirely generalized spending statutes considered in the cases Hobbs cites. See Ruiz, 415 U.S. at 205 n.7; Carey, 588 F.2d at 232; White, 530 F.2d at 753 n.8, 754; Baker-Chaput, 406 F. Supp. at 1137. Unlike those provisions, which relate no information as to who may be eligible for benefits, Hobbs was well informed of the standard used to govern whether his Trust would be a countable resource for determining Medicaid eligibility: The Trust would be exempt if it “benefits no one but [Hobbs], whether at the time the trust is established or any time in the future.” State Medicaid Manual § 3257.B.6.
The evidence presented to the district court confirms that this “sole benefit”11 standard was applied in Hobbs’ case.
The mere fact that written regulations do not cover every contingency does not rise to the level of a constitutional violation. Substantive due process does not command an agency to promulgate a Napoleonic Code. At most, Hobbs was entitled to have his eligibility determination made pursuant to a written, ascertainable standard. Defendants here applied such a standard in determining eligibility. Accordingly, we conclude that the defendants did not violate Hobbs’ substantive due process rights.
B
Hobbs also argues that defendants violated his procedural due process rights. We see no merit to this contention. “The fundamental requirement of [procedural] due process is the opportunity to be heard at a meaningful time and in a meaningful manner.” Mathews v. Eldridge, 424 U.S. 319, 333 (1976) (quotation omitted). Hobbs was afforded a “fair hearing” pursuant to
V
For the foregoing reasons, the judgment of the district court is AFFIRMED.