A United States district court rules that a nursing home cannot sue the state in federal court for denying a resident's undue hardship waiver because the issue was already decided in state court. Colonial Park Care Center v. Dallas (U.S. Dist. Ct., M.D. Penn., No. 1:16-CV-302, Sept. 13, 2016).
John Matjasic entered Colonial Park Care Center after he suffered a stroke. The nursing home applied for Medicaid on his behalf. The state imposed a penalty period because Mr. Matjasic had made transfers for less than market value within the look-back period. The nursing home filed an undue hardship waiver, which the state denied. The nursing home then unsuccessfully appealed the state's decision to the state trial court.
The nursing home sued the state in federal court, asking for a declaratory judgment that the state's decision to deny the undue hardship waiver violates federal Medicaid law. The state filed a motion to dismiss, arguing that the nursing home's claims are barred by res judicata because the issue already had been adjudicated in the state court.
The U.S. District Court, Middle District of Pennsylvania, grants the state's motion to dismiss, holding that the nursing home's claim is barred by res judicata. According to the court, the state court action and this lawsuit appear distinct, but they arise from the same factual circumstances and contain the same witnesses and documents. The court rules that nothing prevented the nursing home from raising the federal claims in the state court, so it cannot now raise claims in federal court.
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