Duncan v. Sullivan Cnty.

JENNIFER DUNCAN and KAREN KENNING,in her capacity as Trustee of the JENNIFER DUNCAN SUPPLEMENTAL NEEDS TRUST, Plaintiffs, v. SULLIVAN COUNTY; INDEPENDENT LIVING, INC.; JOSEPH TODORA;WILLIAM MOON; VICTORIA SAWALL; COLLEEN CUNNINGHAM; CONSTANTINA HART;RACHEL INNELLA; MICHAEL ALLEN; MARC ISAACS; SAMUEL L. SPITZBERG;HOWARD ZUCKER; JOHN DOE 1-10; and JANE DOE 1-10, Defendants.

18 CV 9269 (VB)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

March 2, 2020

OPINION AND ORDER

Briccetti, J.:

Plaintiffs Jennifer Duncan and Karen Kenning, in her capacity as Trustee of the Jennifer Duncan Supplemental Needs Trust, bring this action against: (i) the "Sullivan County Defendants," comprising Sullivan County, Joseph Todora, William Moon, Colleen Cunningham, Constantina Hart, Victoria Sawall, and Rachel Innella; (ii) current and former officials of New York State's Office of Temporary and Disability Assistance ("OTDA")—Michael Allen, Marc Isaacs, Samuel D. Roberts, Michael P. Hein, and Samuel L. Spitzberg (the "OTDA Defendants"); (iii) New York State Department of Health Commissioner Howard Zucker (with the OTDA Defendants, the "State Defendants"); and (iv) Independent Living, Inc., for claims relating to the termination of Duncan's federally funded medical assistance benefits ("Medicaid").

Now pending are four motions to dismiss plaintiffs' first amended complaint ("FAC") pursuant to Rule 12(b)(6), filed by, respectively: (i) the State Defendants (Doc. #101); (ii) Sullivan County, Todora, Moon, and Cunningham (Doc. #108); (iii) Independent Living (Doc. #112); and (iv) Hart, Innella, and Sawall (Doc. #118).

For the following reasons, the State Defendants' motion (Doc. #101) is GRANTED IN PART and DENIED IN PART; Sullivan County, Todora, Moon, and Cunningham's motion (Doc. #108) is GRANTED IN PART and DENIED IN PART; Independent Living's motion (Doc. #112) is GRANTED; and Hart, Innella, and Sawall's motion (Doc. #118) is GRANTED IN PART and DENIED IN PART.

The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331.

BACKGROUND

For the purpose of ruling on the motions to dismiss, the Court accepts as true all well-pleaded allegations in the FAC and draws all reasonable inferences in plaintiffs' favor, as summarized below.

I. The Medicaid Program

Medicaid, a joint federal-state program, provides federal funding for state programs that provide medical assistance, rehabilitation, and other services to individuals with limited income and resources. States choosing to participate in Medicaid must administer the program through a single state agency.

New York State's Department of Health ("DOH") is the state agency responsible for the administration of Medicaid in New York. DOH delegates day-to-day operations of certain aspects of Medicaid to local departments of social services, including Sullivan County's Department of Family Services ("DFS").

DOH has delegated to OTDA supervision of the State's social service programs and review of local social services departments' determinations regarding individuals' social servicesprogram benefits. Thus, an individual who wishes to challenge a local social services department's determination regarding his or her Medicaid coverage may do so by requesting a "fair hearing" before an OTDA Administrative Law Judge ("ALJ").

II. Duncan's Consumer-Directed Personal Assistance Program Services

About twenty years ago, Duncan was allegedly diagnosed with several solvent- and toxicant-induced medical conditions, rendering her disabled and in need of significant at-home care and assistance. According to Duncan, these conditions require her to avoid exposure to certain chemicals found in many household products, including common cleaning fluids, perfumes, colognes, and deodorants. Accordingly, Duncan and visitors to her home must wear clothing laundered with non- or less-toxic solutions, such as borax.

From April 2009 to October 10, 2014, Duncan, a resident of Sullivan County, received consumer-directed personal assistance services through the Consumer Directed Personal Assistance Program ("CDPAP"), as administered by DFS. CDPAP is available through a Medicaid Managed Long Term Care Health Plan, and allows states to provide eligible beneficiaries with an optional choice of self-directed personal assistance services to accommodate their medical needs. Specifically, CDPAP allows individuals with an approved self-directed services plan and budget to purchase personal care assistance and related services, thus permitting eligible individuals to independently hire, supervise, and manage personal care assistants ("PCAs").

According to Duncan, she utilized CDPAP because it was the only program available to her through which she could control the dress, and use of personal products, of any PCAs providing assistance. This was important to Duncan because of her medical conditions and sensitivity to various solvents and toxicants.

III. Fiscal Intermediary Independent Living

By law, local districts, like Sullivan County, must pay CDPAP PCAs through third-party fiscal intermediaries, such as Independent Living. Independent Living contracts with Sullivan County to provide insurance and wage and benefit processing to PCAs employed by CDPAP-eligible beneficiaries. However, third-party fiscal intermediaries, like Independent Living, have no authority to manage, hire, or fire CDPAP PCAs.

In April 2009, Duncan entered into an agreement with Independent Living under which Independent Living agreed to act as the third-party fiscal intermediary for Duncan's PCAs. In other words, Independent Living agreed to be the fiscal intermediary between Duncan, who hired her PCAs, and DFS, which administered CDPAP. As a result, Independent Living agreed to provide insurance, and wage and benefit processing, to Duncan's PCAs.

IV. Termination of Duncan's CDPAP Services

Federal regulations implementing the Medicaid program require DOH to redetermine the eligibility of Medicaid beneficiaries at least every twelve months. Thus, around June 2014, Duncan requested assistance from DFS to obtain and complete Medicaid recertification forms. However, Sawall, Innella, or one or more of the other Sullivan County Defendants allegedly refused to provide Duncan recertification assistance in retaliation for complaints Duncan made previously about other social services, or lack thereof. On August 1, 2014, Duncan's Medicaid coverage and benefits were terminated.

According to Duncan, in September 2014, one or more of the Sullivan County Defendants notified Independent Living that Duncan's Medicaid coverage had terminated as of August 1, 2014. Independent Living then notified Duncan that, effective October 10, 2014, it would discontinue providing fiscal intermediary services to Duncan's PCAs. IndependentLiving also notified Duncan's PCAs that it would no longer provide fiscal intermediary services for any continued work for Duncan after October 10, 2014.

Upon learning that her Medicaid coverage had been terminated, Duncan requested a fair hearing before OTDA as to her Medicaid recertification and CDPAP eligibility.

According to Duncan, when a Medicaid recipient requests a fair hearing, she is entitled to receive her benefits unchanged until a decision is made following the hearing. Indeed, Duncan alleges that around October 8, 2014, OTDA ordered Duncan's CDPAP aid to continue. OTDA allegedly further ordered Duncan's Medicaid reinstated, retroactive to August 1, 2014, until a fair hearing decision was rendered. Duncan notified Independent Living of OTDA's orders and requested it rescind the notices it sent to her PCAs to inform them that they could continue to work for Duncan for pay. Duncan alleges Independent Living did not rescind the notices.

According to Duncan, a Medicaid recipient who requests a fair hearing may also request a local agency conference to resolve the matter short of a fair hearing determination. Thus, at some unspecified time, Duncan requested an agency conference with DFS, as provided for by regulation, to contest the discontinuance of her Medicaid coverage and CDPAP services. Duncan alleges Todora, Moon, and Hart refused Duncan's request for an agency conference.

According to Duncan, the OTDA ALJ who presided over a fair hearing session directed DFS to restore Duncan's CDPAP pending a final decision, and to provide Duncan with access to her complete Medicaid case file. Notwithstanding these directives, Duncan alleges the Sullivan County Defendants, and specifically Hart, refused to provide her case file.

Duncan further alleges Hart and other Sullivan County Defendants then conspired to initiate an involuntary guardianship proceeding against Duncan, seeking to deprive her of any opportunity "to enforce[e] her rights against them." (Doc. #100 ("FAC") ¶ 89). Theguardianship proceeding was dismissed in March 2017, after a judge directed DFS to provide Duncan "the help she needed." (Id. ¶ 91). However, DFS agreed to pay for fifteen weekly hours of CDPAP services only, and, at some unspecified later date, discontinued same.

After DFS discontinued "the minimal 15 hour program," Duncan sought another fair hearing, and OTDA again ordered aid to continue. (FAC ¶ 92). According to Duncan, DFS refused to comply with OTDA's directive. Duncan further alleges that OTDA Defendant Allen stated OTDA Defendants Isaacs and Roberts instructed other OTDA officials "to refrain from taking effective action to enforce the Aid Continuing directive." (Id. ¶ 95).

According to Duncan, OTDA had reissued aid-continuing directives in 2015, 2016, and 2017, but DFS and Independent Living have not complied with these directives. (FAC ¶ 78).

Duncan further alleges that on June 14, 2017, OTDA Defendant Spitzberg participated in a conference call concerning Duncan's case, but took no action to enforce OTDA's aid-continuing directive despite having knowledge of same.

According to Duncan, OTDA Defendant Isaacs scheduled multiple telephonic hearings regarding...