Medicaid Applicant Who Did Not Appeal Final Agency Decision on Spousal Annuity May Not Sue State

A federal district court in Ohio rules that a federal lawsuit by a Medicaid applicant against the state agency that imposed a penalty period due to the purchase of a spousal annuity is barred by res judicata because the applicant did not appeal the final agency decision. Trask v. McCarthy (U.S. Dist. Ct., S.D. Ohio, No. 1:16-cv -52, Aug. 24, 2016).

Phillip Trask entered a nursing home. Mr. Trask and his wife, Ursula, bought an annuity that was payable to Mrs. Trask. Mr. Trask applied for Medicaid, but the state Medicaid agency determined the annuity purchase was an improper transfer and imposed a penalty period. Mr. Trask appealed and after a hearing, the agency issued a final decision upholding the penalty period. Mr. Trask did not appeal the decision to court. Subsequently, the state Medicaid agency issued a new policy that stated that the purchase of an annuity by a nursing home resident's spouse before the resident applied for Medicaid would not be an improper transfer.

Mr. Trask sued the state in federal court under 42 U.S.C. § 1983, arguing that under Medicaid law, the state should not have considered the purchase of the annuity to be an improper transfer. The state argued that the case should be dismissed because the claims have already been litigated.

The U.S. District Court, District of Southern Ohio, grants the motion to dismiss, holding that Mr. Trask's claim is barred by res judicata. According to the court, the issue of whether the state's imposition of a transfer penalty violated federal law was already litigated in the administrative proceedings and the claim in this case arises from the same set of facts. The court further finds that even if res judicata didn't bar the claim, under the Eleventh Amendment, courts can't award payment for past public benefits.

For the full text of this decision, go to: https://cases.justia.com/federal/district-courts/ohio/ohsdce/1:2016cv00528/193657/10/0.pdf?ts=1472138428

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