Medicaid Applicant's Federal Lawsuit Dismissed Due to Res Judicata

Ruling that the claim was barred by res judicata, the U.S. Court of Appeals for the Sixth Circuit dismisses the claim of an Ohio Medicaid applicant who sued the state in federal court after the state imposed a penalty period due to annuity purchases by her husband. Stolmayer v. McCarthy (6th Cir., No. 16-3409, Dec. 7, 2016) unpublished.

Wilma Stolmayer entered a nursing home and applied for Medicaid. The state denied her benefits due to excess resources. Her husband purchased annuities. Once Ms. Stolmayer's resources were spent down, she applied for Medicaid again. The state imposed a penalty period due to her husband’s annuity purchases. Ms. Stolmayer appealed, arguing that under Hughes v. McCarthy (6th Cir., No. 12-3765, Oct. 25, 2013), she could transfer unlimited assets to her spouse, but the state ruled that it was not bound by the Hughes decision and affirmed the penalty period.

Ms. Stolmayer sued the state in federal court, and the state moved to dismiss the complaint on the grounds of res judicata. The state argued that its decision was final and entitled to preclusive effect. The district court agreed, and Ms. Stolmayer appealed, arguing that the district court should have first considered whether the unappealed decision was entitled to claim preclusive effect at all.

The U.S. Court of Appeals for the Sixth Circuit affirms, holding that the elements of claim preclusion were met, so the claim is dismissed. According to the court, because Ms. Stolmayer did not raise the argument about whether the unappealed decision was entitled to claim preclusive effect to the district court, the court could not consider that argument. The court notes that based on the fact that it was not clear that the transfer occurred before Ms. Stolmayer was determined eligible for Medicaid, it wasn't clear whether the Hughes decision was applicable.

For the full text of this decision, go to: https://www.opn.ca6.uscourts.gov/opinions.pdf/16a0660n-06.pdf

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