United States District Court, D. North Dakota
Mary Todd as Trustee of the Ruby Chelson West Residuary Trust, Plaintiff,
Christopher D. Jones, in his official capacity as Executive Director of the North Dakota Department of Human Services, Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO
L. HOVLAND, CHIEF JUDGE
the Court is a motion to dismiss filed by Christopher Jones
as Executive Director of the North Dakota Department of Human
Services (“the Department”) on August 27, 2018.
See Doc. No. 8. Mary Todd, as Trustee of the Ruby
Chelson West Residuary Trust (“Todd”), filed a
response on September 25, 2018. See Doc. No. 10. The
Department filed a reply on October 16, 2018. See
Doc. No. 11. Todd filed a notice of supplemental authority on
March 21, 2019. See Doc. No. 13. The Department
filed a response to Todd's notice on March 25, 2019.
See Doc. No. 14. For the following reasons, the
Court grants the Department's motion to dismiss.
controversy arises from the Department's attempts to
recover assets for Medicaid benefits allegedly paid in error
on behalf of the late Terry David West (“West”).
Todd's complaint asserts the following allegations. West
was a ward of the State of North Dakota and received Medicaid
benefits. West's mother, Ruby Chelson West, died testate
with a will that created a testamentary trust (“the
Trust”). West was a beneficiary of the Trust, which
contained a spendthrift provision limiting West's ability
to direct the trustee's actions and control the trust
assets. Ruby West died in April of 2001, her will was
probated, and the Trust was funded. In November of 2017, the
Department obtained Letters of Administration for West's
estate. The North Dakota State Hospital filed claims against
the estate totaling $831, 591.20. See In the Estate of
Terry David West, No. 09-2017-PR-00366. As personal
representative of the estate, the Department sued Todd in
state district court alleging she breached fiduciary duties
she owed West by not paying him benefits during his life as
the Trust supposedly required. See Estate of Terry West
v. Todd, No. 08-2018-cv-01934.
filed this federal action for declaratory and injunctive
relief on July 17, 2018. The state court stayed its
proceedings pending the resolution of this lawsuit.
Todd's complaint, relying on the Court's federal
question jurisdiction as set forth at 28 U.S.C. § 1331,
asserts two claims:
[The Department] is violating 42 U.S.C. §§
1396a(a)(10)(C)(i), (r)(2)(B) and the federal regulations and
policies relating to treatment of trusts, because the
Department's unwritten policy for considering trusts with
valid spendthrift provisions as available assets establishes
a more restrictive evaluation of Mr. West's resources
than the methodology use [sic] by the SSI program, for which
relief is available pursuant to 42 U.S.C. § 1983.
[The Department] is violating 42 U.S.C. § 1396p(b),
because the Department is seeking to recover from the Trust,
which is not part of Mr. West's estate, for which relief
is available pursuant to 42 U.S.C. § 1983.
See Doc. No. 1, p. 7. Todd requests the Court grant
declaratory relief and permanently enjoin the Department from
acting in the above-described manner. The Department filed a
motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of
the Federal Rules of Civil Procedure on August 27, 2018.
See Doc. No. 8.
Department argues Todd's first claim-that the
Department's Medicaid eligibility policy is improperly
more restrictive than the Supplemental Security Income
(“SSI”) eligibility rules-fails to state a claim
for which relief can be granted. The Department asserts that
under federal law, North Dakota can in fact apply eligibility
requirements that are more restrictive than the SSI rules. As
to the second claim-that the trust is not part of West's
probate estate-the Department urges the Court to abstain from
deciding the issue because it is a probate matter and the
pending state court litigation will answer the question. The
Court agrees with the Department on both claims.
TODD'S CLAIM THAT NORTH DAKOTA'S MEDICAID
ELIGIBILITY POLICY IS IMPROPERLY MORE RESTRICTIVE THAN SSI
relies on 42 U.S.C. §§ 1396a(a)(10)(C)(i) and
(r)(2)(B) to support her argument that the Department is
violating federal law by considering a trust with a valid
spendthrift provision as an available resource. Section
1396(a)(10)(C)(i) requires Medicaid eligibility criteria be
“no more restrictive” than the criteria used to
determine SSI eligibility. Section 1396(r)(2)(B) defines the
term “no more restrictive” in this context.
However, as explained below, Congress has provided states
with a limited exception-termed the “209(b)
option”-that exempts states from this requirement.
See 42 U.S.C. § 1396a(f).
Department has moved to dismiss Todd's first claim under
Rule 12(b)(6) of the Federal Rules of Civil Procedure. Rule
12(b)(6) mandates dismissal of a complaint if it fails to
state a claim upon which relief can be granted. To determine
whether dismissal is warranted, the court must assume the
complaint's factual allegations are true and draw all
reasonable inferences in the plaintiff's favor.
Monson v. Drug Enf't Admin., 589 F.3d 952, 961
(8th Cir. 2009.). Conclusory legal allegations need not be
accepted as true. Ashcroft v. Iqbal, 556 U.S. 662,
XIX of the Social Security Act of 1965 established the
Medicaid program. See 42 U.S.C. § 1396 et
seq. The Medicaid program provides federal funds to
reimburse states for the cost of providing healthcare to
persons who cannot afford it. Savage v. Toan, 795
F.2d 643, 644 (8th Cir. 1986). State Medicaid plans must
comply with federal law. Id. When it comes to
determining whether an individual is eligible for Medicaid,
there are two types of states: SSI states and ...