Claim May Proceed Over Denial of Medicaid Benefits for Excess Resources Even Though the Applicant's Spouse Was Attempting to Sell Property

A U.S. district court denies the Alabama Medicaid commissioner’s motion to dismiss a case involving a bona fide effort to sell by a Medicaid applicant's spouse that is also proceeding in state court, finding that the cases are sufficiently different. May v. Azar (U.S. Dist. Ct., M.D. Ala., No. 2:18-cv-885-TFM-SMD, Nov. 4, 2019). 

Jean May entered a nursing home and after she spent down her resources, she applied for Medicaid. Her husband owned a half-interest in a junkyard. He submitted an 'agreement to sell' form, and put the junkyard on the market. The state denied Ms. May benefits due to excess resources, counting the junkyard as a resource. The state claimed that the 'bona fide effort to sell' exclusion was not available to the spouse of a Medicaid applicant. 

Ms. May appealed the decision, but the court upheld the denial. Ms. May appealed the decision in state court, but she also sued the Medicaid commissioner in her official capacity in federal court, claiming the commissioner violated Medicaid law and failed to furnish Medicaid benefits with reasonable promptness. The Medicaid commissioner filed a motion to dismiss, arguing that the state properly denied Ms. May benefits and that the court could not hear this case because there was a parallel state court case.

The United States District Court, Middle District of Alabama, denies the motion to dismiss in part, holding that the federal action is sufficiently different from the state case. The court finds that the federal case is a substantially new claim that wasn't presented in the state court because "while the issue of whether the bona-fide effort to sell real property exemption should have been applied to [Ms.] May’s claim for Medicaid benefits is a common issue that is presented here and in the state court action, this action also presents the issue of whether [the commissioner] provided [Ms.] May Medicaid assistance with 'reasonable promptness.'" The court notes that the issue of whether the state properly denied benefits to Ms. May is being litigated in the state court and may present issues of res judicata. The court grants leave to the commissioner to reassert her motion to dismiss with a new argument.  

For the full text of this decision, go to:
Did you know that the ElderLawAnswers database now contains summaries of more than 2,000 fully searchable elder law decisions dating back to 1993?  To search the database, click here.