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Weatherbee v. Richman

January 22, 2009


The opinion of the court was delivered by: McLAUGHLIN, Sean J., J.


This matter is before the Court upon Defendant's motion to dismiss for failure to state a claim pursuant to Fed .R. Civ. P. 12(b)(6).


On September 1, 2006, Plaintiff Theodore E. Weatherbee ("Weatherbee") was admitted to Golden Living Center-Kinzua nursing facility in Warren, Pennsylvania. (Complaint ¶5). On February 28, 2007, Plaintiff requested a resource assessment from the Department of Public Welfare ("DPW"), the agency charged with administering the Medicaid Program within the Commonwealth of Pennsylvania, in order to determine his eligibility for Medical Assistance - Long Term Care (MALTC) benefits to assist with his nursing home expenses. (Complaint ¶7). After allowing for the available community spouse resource allowance (CSRA) permitted under the Medicare Catastrophic Coverage Act of 1988 (hereinafter, "Medicaid Act") and other available deductions, the DPW determined that Weatherbee had $442,696.05 in available resources to pay for nursing facility services. (Complaint ¶8).

On September 22, 2006, Weatherbee's wife, Adeline A. Weatherbee ("Adeline"), spent $10,000 on two pre-paid funerals. On November 14, 2006, she spent $21,252.50 on a new vehicle. (Complaint ¶9). Both purchases were permissible under MA-LTC regulations.

On November 29, 2006, Adeline used the remaining available resources to purchase a single premium immediate irrevocable annuity (#A005390257) (hereinafter, the "Annuity" or "Weatherbee Annuity") from the Jefferson-Pilot Life Insurance Company. (Complaint ¶10). This annuity was primarily funded through an existing $387,756.06 deferred annuity owned by Plaintiff and his wife. The new annuity provided for a payment stream to Adeline, the community spouse, in the amount of $4,423.47 per month for 107 months. Id. The annuity contract contained an endorsement (form AE-147) purporting to restrict assignment or transfer of the policy:

Assignment. This policy is irrevocable and immediate. This policy cannot be transferred, surrendered or assigned. This policy has no cash value. The terms of this provision apply and take precedence over any other provision of this policy which are [sic] inconsistent with these statements. (Complaint ¶13; Exhibit B).

On February 28, 2007, Plaintiff filed an application for MA-LTC benifits with DPW seeking assistance with his nursing home bill. (Complaint ¶15). DPW did not dispute the purchase of the prepaid funerals and new vehicle, but denied eligibility after determining that the payment stream from the Jefferson-Pilot annuity was an available resource to Weatherbee:

55 PA. Code §178.1(a), 55 PA. Code §178.1(g), 55 PA. Code §178.1(I). Based on the above regulations, your application for nursing home payments/Medicaid is being rejected based on your household's excess resources including the annuity with Jefferson-Pilot Life Insurance Company-A005390257. The spousal resource limit maximum is currently $101,640. (Complaint ¶16; Exhibit D). The DPW determined that the income stream from the annuity was an available resource because the income stream could be sold on the secondary market for cash.

(Complaint ¶19). In so doing, it relied in part on the provisions of 62 PA. STAT. ANN. § 441.6(b) and (c) (hereinafter, the "Pennsylvania statute").*fn1

Weatherbee initially requested an administrative hearing from DPW. However, on May 30, 2007, Weatherbee, by his next friend and agent Cheryl L. Vecchio, filed the instant action for declaratory and injunctive*fn2 relief pursuant to 42 U.S.C. §1983 against Estelle B. Richman, Secretary of the Department of Public Welfare. Specifically, Weatherbee seeks a declaration that 62 PA. STAT. ANN. § 441.6 is preempted by the Medicaid Act and that the DPW's denial of benefits in this case was improper.


Rule 8(a) of the Federal Rules of Civil Procedure states that a pleading must set forth a claim for relief which contains a short and plain statement of the claim showing that the pleader is entitled to relief. A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) must be viewed in the light most favorable to the plaintiff and all the well-pleaded allegations of the complaint must be accepted as true. Erickson v. Pardus, ___ U.S. ___, ___ 127 S.Ct. 2197, 2200 (2007); Neitzke v. Williams, 490 U.S. 319 (1989); Estelle v. Gamble, 429 U.S. 97 (1976). The issue is not whether the plaintiff will prevail at the end but only whether he should be entitled to offer evidence to support his claim. Neitzke; Scheuer v. Rhodes, 419 U.S. 232 (1974). As the United States Supreme Court recently held in Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955 (May 21, 2007), a complaint must be dismissed pursuant to Rule 12 (b)(6) if it does not allege "enough facts to state a claim to relief that is plausible on its face." Id. at ___, 1974 (rejecting the traditional 12 (b)(6) standard set forth in Conley v. Gibson, 355 U.S. 41 (1957)). The court must accept as true all allegations of the complaint and all reasonable factual inferences must be viewed in the light most favorable to plaintiff. Angelastro v. Prudential-Bache Securities, Inc., 764 F.2d 939, 944 (3rd Cir. 1985). The Court, however, need not accept inferences drawn by plaintiff if they are unsupported by the facts as set forth in the complaint. See California Pub. Employee Ret. Sys. v. The Chubb Corp., 394 F.3d 126, 143 (3rd Cir. 2004) (citing Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3rd Cir. 1997)). Nor must the court accept legal conclusions set forth as factual allegations. Twombly, ___ U.S. ___, 127 S.Ct. at 1965 citing Papasan v. Allain, 478 U.S. 265, 286 (1986). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, ___ U.S. ___, 127 S.Ct. at 1965. Although the United States Supreme Court does "not require heightened fact pleading of specifics, [the Court does require] enough facts to state a claim to relief that is plausible on its face." Id. at ___, 1974.

In other words, at the motion to dismiss stage, a plaintiff is "required to makes a 'showing' rather than a blanket assertion of an entitlement to relief." Smith v. Sullivan, 2008 WL 482469 (February 22, 2008) (quoting Phillips v. County of Allegheny, ___ F.3d ___, 2008 WL 305025, at *5 (3rd Cir. Feb. 5, 2008)). "This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element." Phillips, 2008 WL 305025, at *6 (quoting Twombly, ___ U.S. at ___, 127 S.Ct. at 1965 n.3).


The Court has federal question jurisdiction as one of the issues presented is whether the Department misinterpreted federal law with respect to Weatherbee's right to Medicaid benefits. Lindy v. Lynn, 501 F.2d 1367, 1369 (3rd Cir.1974); see alsoJames v. Richman, 547 F.3d 214, 217 (3rd Cir. 2008) ("The District Court had federal question jurisdiction, as the primary issue presented was whether the Department has misinterpreted federal law regarding James's right to Medicaid benefits").In addition, Weatherbee has asserted a challenge under the Supremacy Clause, U.S. CONST. art. VI, cl. 2., to 62 PA. STAT. ANN. § 441.6(b) and (c).


The Medicare Catastrophic Coverage Act of 1988 (MCCA), 42 U.S.C. §1396 et seq., sets forth the rules that the DPW must follow in determining Medicaid eligibility for applicants such as Weatherbee. The spousal impoverishment provisions of the MCCA "permit a spouse living at home (called the 'community spouse') to reserve certain income and assets to meet the minimum monthly maintenance needs he or she will have while the other spouse (the 'institutionalized spouse') is institutionalized, usually in a nursing home, and becomes eligible for Medicaid." Wisconsin Department of Health and Family Services v. Blumer, 534 U.S. 473, 478 (2002). By adopting the MCCA, Congress sought to protect community spouses from becoming impoverished while simultaneously barring financially secure couples from sheltering their resources in order to qualify for Medicaid. Id. at 480 (citing H.R. Rep. No. 100-105, pt. 2, p. 65) (bill seeks to "end th[e] pauperization" of the community spouse "by assuring that the community ...

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