# Elder v. Putnam

> District Court, E.D. Arkansas · May 29, 2020

URL: https://www.frixlaw.com/law-library/cases/10004691

## Case

- **Court:** District Court, E.D. Arkansas
- **Decided:** May 29, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
NORTHERN DIVISION

GINGER P. ELDER PLAINTIFF

v. Case No. 3:19-cv-00155 KGB

CINDY GILLESPIE, Director, Arkansas
Department of Human Services in her official
and individual capacity, et al. DEFENDANTS

ORDER

Before the Court is defendants Cindy Gillespie, Craig Cloud, Richard Rosen, and David
Sterling’s (collectively “defendants”) motion to dismiss for failure to state a claim (Dkt. No. 10).
Plaintiff Ginger P. Elder responded to the motion (Dkt. No. 12), and defendants replied (Dkt. No.
19). Also before the Court is Ms. Elder’s motion for leave to file her first amended complaint
(Dkt. No. 14). Defendants responded in opposition to Ms. Elder’s motion for leave to amend (Dkt.
No. 17). For the following reasons, the Court grants Ms. Elder’s motion for leave to file her first
amended complaint (Dkt. No. 14) and denies as moot defendants’ motion to dismiss Ms. Elder’s
original complaint (Dkt. No. 10).
The Court also denies as moot defendants’ motion to stay discovery (Dkt. No. 23). The
Court grants defendants’ motion to substitute party (Dkt. No. 24).
I. Factual And Procedural Background
Medicaid is a federally created medical assistance program in which the State of Arkansas
has elected to participate (Dkt. No. 11, at 1). The Arkansas Department of Human Services
(“ADHS”) is the state agency that administers and supervises Arkansas’ Medicaid program (Id.).
Home and Community Based Services (“HCBS”) programs are an optional service under the
federal Medicaid Act (Id., at 2). HCBS programs allow individuals to receive community-based
services in situations where they may otherwise require institutionalization (Id.). ARChoices is an
HCBS operated by ADHS (Id.). It offers different services, including attendant and personal care
services (Id.). An individual must meet specific financial and medical eligibility criteria to be
eligible for ARChoices (Id.).
Ms. Elder represents that she is an ARChoices Medicaid beneficiary who first applied for

ARChoices in 2015 (Dkt. No. 2, ¶ 75). ADHS deemed Ms. Elder to be eligible for ARChoices in
2015, 2016, 2017, and 2018 (Id.). According to Ms. Elder, she was notified by her care provider
on March 12, 2019, and by ADHS on March 15, 2019, that the agency was terminating her
ARChoices eligibility based on a January 2019 assessment (Dkt. No. 12, at 3).1 Ms. Elder avers
that she appealed to ADHS on March 13, 2019, and asked that her services be reinstated (Id.). She
claims that ADHS received the appeal but terminated her ARChoices Medicaid on March 25, 2019
(Id.).
Ms. Elder asserts that, when ADHS decides to terminate or reduce a Medicaid beneficiary’s
benefits, it must maintain the services at the prior level until the outcome of an administrative
hearing as long as the beneficiary appeals within 10 days of the date of notice of adverse action

(Dkt. No. 12, at 2). She claims that ADHS does not have any written procedure or process for
continuing benefit eligibility for Medicaid beneficiaries who appeal adverse agency decisions and,
in practice, ADHS automatically terminates or reduces the benefits in question and restores them
only where the affected beneficiary takes additional action, over and above timely appealing
adverse agency decisions, such as retaining an attorney who contacts ADHS (Id.). According to

1 As a beneficiary of ARChoices, Ms. Elder received attendant care and home-delivered
meals (Dkt. No. 2, ¶ 76). ADHS increased Ms. Elder’s allocation of care hours in 2016, 2017, and
2018 (Id., ¶ 77). Ms. Elder claims that she did not experience improvement in her functional
abilities (Id., ¶ 79). Ms. Elder used attendant and personal care services to help her to get in and
out of bed and chairs, to move from one place to another without falling, to get on and off the
toilet, to clean herself fully after using the toilet, to bathe, to dress, to do laundry, and to prepare
meals. (Id., ¶ 78).
Ms. Elder, this termination of ARChoices Medicaid services prior to an evidentiary hearing
violated her Fourteenth Amendment Due Process rights (Dkt. No. 14-1, ¶ 137). Ms. Elder claims
that each named defendant was personally involved in the systemic failure that led to the
termination of her ARChoices benefits (Dkt. No. 12, at 3).

Defendants are all employees of ADHS (Dkt. No. 2, ¶¶ 9-12). In response to Ms. Elder’s
original complaint, defendants filed a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6) (Dkt. No. 10). Defendants attach to their motion to dismiss additional
documents for the Court’s consideration (Dkt. No. 10-1). Defendants assert that, in their official
capacities, they are entitled to sovereign immunity and that Ms. Elder lacks standing to bring her
official capacity claims for injunctive relief (Id., ¶¶ 4-6). Defendants also assert that they are
entitled to qualified immunity in their individual capacities and that Ms. Elder’s complaint fails to
state a claim upon which relief may be granted against defendants in their individual capacities
(Id., ¶ 7). Ms. Elder responded in opposition to the motion (Dkt. No. 12), and defendants replied
(Dkt. No. 19). Ms. Elder also filed a motion for leave to file an amended complaint (Dkt. No. 14),

and defendants oppose that motion (Dkt. No. 17).
II. Motion To Amend Complaint
The Court begins its analysis by examining Ms. Elder’s motion to amend her complaint,
not defendants’ pending motion to dismiss. Defendants assert that the Court should address
defendants’ pending motion to dismiss first (Dkt. No. 17, at 8-9), but they cite no controlling law
requiring the Court to do so. Further, the Court determines that the better practice under controlling
law is for the Court to examine Ms. Elder’s motion for leave to amend first. See Pure Country,
Inc. v. Sigma Chi Fraternity, 312 F.3d 952, 956 (8th Cir. 2002) (determining that the district court’s
granting a motion to dismiss an original complaint and then denying as moot a then-pending
motion to amend the complaint was “plainly erroneous” and determining that “[i]f anything, [the]
motion to amend complaint rendered moot [the] motion to dismiss the original complaint”).
Pursuant to Federal Rule of Civil Procedure 15(a)(1), a party may amend a pleading once
as a matter of course within 21 days after serving it, or within 21 days after service of the

responsive pleading or a motion under Rule 12(b)(6). After the 21-day period expires, “a party
may amend its pleadings only with the opposing party’s written consent or the court’s leave.” Fed.
R. Civ. P. 15(a)(2). The Court should give leave freely when justice so requires, but “parties do
not have an absolute right to amend their pleadings . . .” Sherman v. Winco Fireworks, Inc., 532
F.3d 709, 715 (8th Cir. 2008).
“[D]enial of leave to amend pleadings is appropriate only in those limited circumstances
in which undue delay, bad faith on the part of the moving party, futility of the amendment, or
unfair prejudice to the non-moving party can be demonstrated.” Roberson v. Hayti Police Dep’t,
241 F.3d 992, 995 (8th Cir. 2001) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). “A district
court’s denial of leave to amend a complaint may be justified if the amendment would be futile.”

Geier v. Missouri Ethics Comm’n, 715 F.3d 674, 678 (8th Cir. 2013).
Ms. Elder moves for leave to amend her complaint to: (1) add defendants Mark White and
John Doe in their official and individual capacities, (2) clarify that damages are not sought against
defendants in their official capacities, (3) add background information about the ARChoices
program and re-organize previous allegations, (4) add factual allegations about the mechanics of
the ADHS’s procedures for reviewing appeals and taking steps necessary to continue benefits, (5)
add factual allegations about the number of appeals filed involving the ARChoices program and
defendants’ responses, (6) update the factual allegations pertaining to Ms. Elder to reflect changes
since she filed the lawsuit, and (7) add and revise factual allegations against the four defendants
named in the original complaint (Dkt. No. 14, ¶¶ 1-7). Ms. Elder contends that the proposed first
amended complaint does not prejudice defendants because it was filed only three days after the
period to amend as of right ended, there are no new claims added against defendants, and the added
named defendant, Mark White, was likely aware of the lawsuit before being added (Id., at 2).

Defendants oppose Ms. Elder’s motion to amend her complaint arguing that, based on Ms.
Elder’s concession that her amended complaint contains no new claims, coupled with the fact that
the factual averments are markedly similar, if not identical to the original complaint, Ms. Elder’s
motion to amend would be futile (Dkt. No. 17, ¶ 7). Defendants claim that Ms. Elder’s amended
complaint would not withstand the challenges presented in the pending motion to dismiss her
original complaint (Id.).
A. Undue Delay, Bad Faith, Or Dilatory Motive
In this case, there is no evidence that Ms. Elder is guilty of undue delay, bad faith, or a
dilatory motive. The Court determines that allowing Ms. Elder to amend her complaint will not
unduly prejudice defendants due to the timing of her motion. Ms. Elder represents that she filed

her motion to amend only three days after the period to amend as of right ended, that there are no
new claims added against defendants, and that the added named defendant, Mark White, was likely
aware of the lawsuit before being added. Defendants do not meaningfully challenge these
assertions.
B. Futility
Defendants challenge Ms. Elder’s motion for leave to amend claiming the proposed
amendments would be futile because, like the original complaint, Ms. Elder’s proposed amended
complaint would be subject to dismissal for the reasons defendants argue in their motion to dismiss
Ms. Elder’s original complaint. An amendment is futile if the amended claim “could not withstand
a motion to dismiss under Rule 12(b)(6).” Silva v. Metropolitan Life Ins. Co., 762 F.3d 711, 719
(8th Cir. 2014) (citation omitted). To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007)).
A claim is facially plausible “when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing
Twombly, 550 U.S. at 556). “While a complaint attacked by a [Federal] Rule [of Civil Procedure]
12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to
provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555
(alteration in original) (citations omitted). “When ruling on a motion to dismiss, the district court
must accept the allegations contained in the complaint as true and all reasonable inferences from
the complaint must be drawn in favor of the nonmoving party.” Young v. City of St. Charles, 244

F.3d 623, 627 (8th Cir. 2001). In determining the sufficiency of a complaint, courts review the
complaint itself and any exhibits attached to the complaint. Zink v. Lombardi, 783 F.3d 1089,
1099 (8th Cir.) (en banc), cert. denied, 135 S. Ct. 2941 (2015) (citing Meehan v. United Consumers
Club Franchising Corp., 312 F.3d 909, 913 (8th Cir. 2002)). Under this standard, a complaint
should be dismissed only where it appears that the plaintiff can prove no set of facts in support of
his claim that would entitle him to relief. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984).
The Court considers whether it is futile to permit Ms. Elder to amend her original complaint
with her proposed amended complaint in the light of arguments defendants raise in their pending
motion to dismiss (Dkt. No. 10). In her proposed amended complaint, Ms. Elder seeks, among
other relief, injunctive relief against defendants in their official capacity and money damages
against defendants in their individual capacity (Dkt. No. 14-1, at 59-61). Defendants do not modify
or adjust the arguments in their pending motion to dismiss Ms. Elder’s original complaint to
account for changes in Ms. Elder’s proposed amended complaint.

1. Matters Outside The Pleadings
Defendants attach to their motion to dismiss additional documents for the Court’s
consideration (Dkt. No. 10-1). As a threshold matter, in response to defendants’ motion to dismiss,
Ms. Elder contends that the Court should convert defendants’ motion to dismiss into one for
summary judgment and offer Ms. Elder time to conduct discovery (Dkt. No. 12, at 6). In the
alternative, Ms. Elder requests that, if the Court declines to convert defendants’ motion to dismiss
into a motion for summary judgment, it should exclude pages two and three of defendants’ exhibit
(Dkt. No. 10-1) and the statements in defendants’ brief relating to them (Dkt. No. 11, at 4, 14-15,
26-27) (Id., at 9).
Federal Rule of Civil Procedure 12(d) states that:

If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are
presented to and not excluded by the court, the motion must be treated as one for
summary judgment under Rule 56. All parties must be given a reasonable
opportunity to present all the material that is pertinent to the motion.

However, “Rule 12(b)(6) motions are not automatically converted into motions for summary
judgment simply because one party submits additional matters in support of or opposition to the
motion.” State ex rel. Nixon v. Coeur D’Alene Tribe, 164 F.3d 1102, 1107 (8th Cir. 1999). The
court’s ability to consider matters outside the pleadings exists to prevent gaming, specifically so
that “a plaintiff may not avoid an otherwise proper motion to dismiss by failing to attach to the
complaint documents upon which it relies.” BJC Health Sys. v. Columbia Cas. Co., 348 F.3d 685,
687-88 (8th Cir. 2003) (internal quotations omitted).
When considering a motion to dismiss, a court may consider materials that are part of the
public record, do not contradict the complaint, or are necessarily embraced by the pleadings. Id.;
Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d 978, 982 (8th Circ. 2008). Materials embraced
by the complaint include documents whose contents are alleged in a complaint and whose

authenticity no party questions, but which are not physically attached to the pleadings. Zean v.
Fairview Health Servs., 858 F.3d 520, 526-27 (8th Cir. 2017) (internal quotations omitted).
In their motion to dismiss and based on the documents they attach to the motion, defendants
contend that, following Ms. Elder’s request for an appeal, ADHS scheduled a hearing for May 23,
2019 (Dkt. No. 11, at 4). Defendants assert that, on March 22, 2019, a non-party ADHS employee
inadvertently indicated that Ms. Elder did not request that her case remain open pending the
appeals process (Id.). However, according to defendants, the hearing statement reflected that the
case should remain open pending the hearing decision, indicating the agency’s expectation that
Ms. Elder retain her benefits through the appeals process (Id.). Defendants claim that, on May 2,
2019, Ms. Elder’s attorneys notified ADHS of its representation of Ms. Elder and requested a

continuance of the May 23, 2019, hearing (Id.). Defendants represent that, on May 23, 2019, the
date of the original hearing, Ms. Elder’s attorneys notified separate defendant Mr. Rosen that Ms.
Elder had filed this lawsuit and requested that her benefits be restored (Id.). They represent that
this was ADHS’s first notice that Ms. Elder’s benefits had been inadvertently terminated and that
Ms. Elder’s benefits were restored the next day, on May 24, 2019 (Id.).
Ms. Elder contends that defendants use the attachments to their motion to dismiss as
evidence to explain their version of what happened and that attachments used for evidentiary
purposes are matters outside the pleadings (Dkt. No. 12, at 8). She claims that the attachments are
used to establish contested material matters subject to further fact-finding through discovery (Id.,
at 9). She also claims that in one excerpt, defendants connect the contested factual matters to a
legal argument that, if accepted, could insulate them from liability (Id.). In support, Ms. Elder
points to an Eighth Circuit case in which the court found that the purpose of documents submitted
in the defendants’ motion to dismiss was “to discredit and contradict” the plaintiff’s allegations.

BJC Health Sys., 348 F.3d at 687-88. Because the documents were evidence, the plaintiff was
entitled to “an opportunity to discover or to provide additional evidence.” Id.
Defendants claim that the exhibits filed with the motion to dismiss are necessarily
embraced by the complaint and do not contradict Ms. Elder’s allegations, so the Court should
consider them without converting the pending motion to a motion for summary judgment or
striking the corresponding legal arguments (Dkt. No. 19, at 2, 5). Defendants maintain that Ms.
Elder failed to attach to her complaint documents upon which she places significant emphasis and
that attaching the documents to her complaint would demonstrate that they were not issued directly
by any of the named ADHS defendants (Id., at 3). Defendants also claim that the exhibits are
consistent with Ms. Elder’s allegations (Id.). Defendants compare the situation to Zean v. Fairview

Health Services, in which the Eighth Circuit found that documents attached to a motion to dismiss
were embraced by the pleadings because the documents refuted a conclusory allegation stated in
the plaintiff’s complaint. 858 F.3d at 527. The court reasoned that, because a court is not bound
to accept legal conclusions couched as factual allegations, the exhibits were embraced by the
pleadings and properly considered by the district court. Id.
Defendants contend that Ms. Elder’s claim that the termination of her ARChoices benefits
was caused by ADHS’s failure to take whatever steps are necessary to maintain Medicaid Services
is a conclusory allegation and that the holding of Zean therefore applies (Dkt. No. 19, at 5). They
state that Ms. Elder’s lack of personal knowledge about any of ADHS’s internal procedures or
practices regarding appeals or continuing benefits is not due to a lack of discovery but to a failure
to plead sufficiently non-conclusory allegations (Id., at 6). Defendants also claim that the exhibits
and the explanation are not truly contested matters because the complaint does not contest the
existence of forms or process for handling appeals (Id., at 5-6).

Ms. Elder’s claims in her proposed amended complaint go beyond conclusory allegations;
therefore, this case is dissimilar to the situation in Zean. Further, the attachments to defendants’
motion to dismiss appear to be presented for the purpose of establishing matters that are contested
by the parties. Defendants use the documents to argue a process for identifying timely appeals and
maintaining benefits, the ADHS employee responsible for the termination of Ms. Elder’s benefits,
the agency’s expectations for Ms. Elder’s benefits during the appeal process, and the agency’s
state of mind in effectuating the termination. Having considered controlling precedent and the
attachments themselves, the Court determines that the attachments are not properly considered by
the Court at the motion to dismiss stage. Accordingly, to rule on whether permitting Ms. Elder to
file her proposed amended complaint would be futile, the Court will exclude pages two and three

of the exhibit (Dkt. No. 10-1, at 2, 3) and the statements in defendants’ brief relating to them (Dkt.
No. 11, at 4, 14-15, 26-27).
2. Official Capacity Claims

Defendants assert several challenges to Ms. Elder’s ability to bring claims against them in
their official capacities.
a. Money Damages

Pursuant to § 1983, Ms. Elder is suing defendants in their official capacities for violating
her Fourteenth Amendment Due Process rights (Dkt. No. 14-1, ¶ 132-139). Ms. Elder’s proposed
amended complaint clarifies that she does not seek money damages from defendants in their
official capacities (Dkt. No. 14, ¶ 2). Ms. Elder does seek prospective injunctive relief against
defendants in her proposed amended complaint.
b. Sovereign Immunity
Defendants maintain that Ms. Elder’s claims against them in their official capacities fail

because defendants are entitled to sovereign immunity and because Ms. Elder lacks standing to
bring official capacity claims for injunctive relief; defendants maintain that this Court lacks subject
matter jurisdiction (Dkt. No. 10, ¶¶ 4, 6). The Court disagrees.
The Eleventh Amendment presents a jurisdictional bar to any suit that is in actuality
directed against the State, whether the action is nominally instituted against the State, a state
agency or instrumentality, or a state official. See, e.g., Fla. Dep’t of State v. Treasurer Salvors,
458 U.S. 670 (1982); Alabama v. Pugh, 438 U.S. 781 (1979); Edelman v. Jordan, 415 U.S. 651
(1974). Without the State’s consent, this jurisdictional bar applies regardless of the nature of the
relief sought. See Seminole Tribe of Florida v. Florida, 517 U.S. 44, 54 (1996); Puerto Rico
Aqueduct & Sewer Authority v. Metcalf & Eddy, Inc., 506 U.S. 139, 146 (1993); Pennhurst State

School & Hosp. v. Halderman, 465 U.S. 89, 100-01 (1984). “Congress may abrogate the States’
immunity from suit pursuant to its powers under § 5 of the Fourteenth Amendment,” but such
abrogation must be “unmistakably clear in the language of the statute.” Coleman v. Court of
Appeals of Md., 566 U.S. 30, 35 (2012) (internal quotations and citations omitted).
In determining whether Eleventh Amendment immunity applies to a particular entity, this
Court must examine the particular entity in question and its powers and characteristics as created
by state law to determine whether the suit is in reality a suit against the State. See Hadley v. N.
Arkansas Cmty. Tech. Coll., 76 F.3d 1437, 1439 (8th Cir. 1996). The defendants in this case are
employees of the ADHS and are being sued in their official capacities. A claim against a state
official in his or her official capacity is treated as a claim against the entity itself. Kentucky v.
Graham, 473 U.S. 159, 166 (1985). Therefore, Ms. Elder’s claims against defendants are claims
against the State of Arkansas and defendants are immune from suit except when Congress has
validly abrogated the State’s sovereign immunity.

The doctrine set forth in Ex Parte Young, 209 U.S. 123 (1908), is an exception that
abrogates a State’s sovereign immunity protection. It provides that state officials may be sued in
their official capacities for prospective injunctive relief to prevent future federal constitutional or
statutory violations. Id. To determine whether a plaintiff has alleged a proper Ex Parte Young
claim, the federal court “need only conduct a ‘straightforward inquiry into whether [the] complaint
alleges an ongoing violation of federal law and seeks relief properly characterized as prospective.’”
Verizon Md. Inc. v. Pub. Serv. Comm’n of Md., 535 U.S. 635, 645 (2002) (quoting Idaho v. Coeur
d’Alene Tribe of Idaho, 521 U.S. 261, 296 (1997) (O’Connor, J., concurring)). The plaintiff must
also name as a defendant the state official who is responsible for enforcing the contested statute,
policy, or practice in his or her official capacity. See Greenawalt v. Ind. Dep’t of Corr., 397 F.3d

587, 589 (7th Cir. 2005). Declaratory relief is available under Ex Parte Young when there is an
ongoing or threatened violation of federal law. Green v. Mansour, 474 U.S 64, 73 (1985).
However, the Ex Parte Young doctrine cannot be used to obtain an injunction requiring the
payment of funds from the State’s treasury. See Edelman v. Jordan, 415 U.S. 651, 666 (1974).
In their motion to dismiss Ms. Elder’s original complaint, defendants assert that the Ex
Parte Young exception is not applicable to Ms. Elder’s complaint because she cannot demonstrate
an ongoing violation of federal law (Dkt. No. 11, at 8). Defendants also assert that Ms. Elder’s
cause of action does not seek prospective relief because Ms. Elder’s ARChoices benefits have
resumed and the possibility that Ms. Elder will be exposed to future injury is too speculative (Dkt.
No. 11, at 10; Dkt. No. 19, at 10). Defendants claim that Ms. Elder cannot demonstrate a sound
basis for the injunctive relief she seeks because she cannot point to a deliberate policy aimed at
interfering with ARChoices beneficiaries’ benefits pending appeal (Dkt. No. 19, at 13).
Defendants also claim that Ms. Elder’s request that the State be forced to adopt a specific policy

and be subject to constant monitoring by the federal courts does not form the proper basis for
entitlement to injunctive relief and runs afoul of comity and federalism principles (Id., at 20).
Ms. Elder rebuts the assertion that she does not seek prospective injunctive relief (Dkt. No.
12, at 10). Ms. Elder alleges that ADHS lacks a constitutionally adequate process for maintaining
the benefits of beneficiaries who timely apply (Id.). To remedy this, Ms. Elder requests that the
Court grant a permanent injunction that orders defendants in their official capacity to implement a
process to ensure that Ms. Elder and other Medicaid beneficiaries who timely appeal adverse
agency actions receive continuing benefits pending the outcome of the evidentiary hearing (Id.).
Ms. Elder contends that she does not seek merely the restoration of her Medicaid but relief that
will prevent an ongoing deprivation of her constitutional rights should any adverse action arise

(Id.). Ms. Elder represents that her ARChoices Medicaid eligibility is reevaluated every year,
which places her at a substantial risk of an adverse action each time she is evaluated (Id., at 12).
Here, given the operative pleading standard and the filings before the Court, and drawing
all reasonable inferences in Ms. Elder’s favor, the Court determines that Ms. Elder has alleged
sufficient facts in her proposed amended complaint to support her claims and to overcome
defendants’ assertion of sovereign immunity. The Ex Parte Young doctrine requires that Ms.
Elder’s proposed amended complaint allege an ongoing violation of federal law and seek relief
properly characterized as prospective. Ms. Elder claims that “[c]learly established constitutional
due process principles require that a Medicaid beneficiary have the opportunity for an evidentiary
administrative hearing before services are terminated.” (Dkt. No. 14-1, ¶ 2). Ms. Elder alleges
that, as a matter of custom, policy, or practice, ADHS automatically terminates or reduces the
services of Medicaid beneficiaries subject to adverse agency actions regardless of the timing of
any appeal request, which she maintains is a violation of her Fourteenth Amendment Due Process

rights. She alleges facts that she claims support her allegations of a custom, policy, or practice on
the part of defendants and defendants’ notice. She also alleges facts demonstrating how she
maintains defendants applied this challenged custom, policy, or practice to her and could do so
again in the future. According to Ms. Elder, ADHS assesses her ARChoices eligibility at least
once per year, which places her at substantial risk of an adverse action each time she is evaluated
(Dkt. Nos. 12, at 12; 14-1, ¶ 120).
The Court finds that Ms. Elder’s proposed amended complaint sufficiently alleges a claim
against defendants in their official capacities for prospective injunctive relief at this stage of the
litigation. The Court recognizes that Ms. Elder’s Medicaid benefits have been reinstated; however,
the Court determines that Ms. Elder has sufficiently alleged that her claims are not moot, for the

reasons explained in this Order. Defendants’ assertions that Ms. Elder’s requested injunctive relief
runs afoul of comity and federalism principles is a matter to be determined later in this litigation,
once the parties have had the opportunity to conduct discovery and brief all issues before the Court.
Accordingly, the Court determines that granting Ms. Elder leave to file her proposed
amended complaint is not futile based on defendants’ claims of sovereign immunity.
c. Standing
Defendants also assert in their motion to dismiss her original complaint that Ms. Elder lacks
standing to sue defendants in their official capacities (Dkt. No. 11, at 10).2 To establish
constitutional standing, a plaintiff must demonstrate: (1) an injury in fact, (2) a causal connection

between that injury and the challenged conduct, and (3) the likelihood that a favorable decision by
the court will redress the alleged injury. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).
A plaintiff who seeks injunctive relief must show that she “faces a threat of future or ongoing
harm.” Park v. Forest Serv. of the United States, 205 F.3d 1034, 1037 (8th Cir. 2000). An injury
resulting from past conduct alone is not enough to support a claim for injunctive relief. Id.
Speculation of future injury is insufficient to warrant injunctive relief. Los Angelos v. Lyons, 461
U.S. 95, 111 (1983). A plaintiff must show that the threat of injury is real and immediate. O’Shea
v. Littleton, 414 U.S. 488, 496 (1974). If a plaintiff lacks standing, a district court has no subject
matter jurisdiction over the matter and must dismiss the case. Young Am. Corp. v. Affiliate Comp.
Servs., Inc., 424 F.3d 840, 843 (8th Cir. 2005).

A party invoking federal jurisdiction must support each of the standing requirements with
the same kind and degree of evidence at the successive stages of litigation as any other matter on
which a plaintiff bears the burden of proof. Lujan, 504 U.S. at 561; Constitution Party of S. Dakota
v. Nelson, 639 F.3d 417, 420-21 (8th Cir. 2011). Therefore “general factual allegations of injury
resulting from the defendant's conduct” will suffice to establish Article III standing at the pleading
stage, “for on a motion to dismiss we presume that general allegations embrace those specific facts

2 The Court does not understand defendants to challenge Ms. Elder’s standing to bring
claims against defendants in their individual capacity.
that are necessary to support [a contested] claim.” Lujan, 504 U.S. at 561 (internal quotation marks
and citation omitted).
Defendants allege that Ms. Elder lacks standing because she cannot demonstrate that she
faces any real or immediate threat of harm (Dkt. No. 11, at 11). They contend that, because Ms.

Elder’s benefits resumed on the day after she filed her complaint, then she faces no injury in fact
(Id.). Defendants claim that a favorable decision by this court would not redress Ms. Elder’s injury,
because there is no ongoing alleged violation (Id.). Defendants claim that the possibility that Ms.
Elder will be exposed to future injury is too speculative and is not immediate; therefore, her claim
is too hypothetical to demonstrate an actual case or controversy (Id., at 10).
Ms. Elder claims that she has standing because: (1) she suffered an injury in fact when
ADHS terminated her ARChoices Medicaid; (2) defendants’ unlawful conduct is fairly traceable
to her injuries because, if defendants had not terminated her ARChoices Medicaid pending her
appeal, she would not have suffered any of the injuries alleged; and (3) a favorable decision will
redress the injuries because injunctive relief against defendants in their official capacity will ensure

continuing benefits for a timely appeal of any adverse action the agency takes against her in the
future (Dkt. No. 12, at 11-12). Ms. Elder asserts that injunctive relief is necessary because ADHS
does not claim that it has implemented a constitutionally adequate system, which is particularly
necessary because ADHS will be assessing her ARChoices eligibility at least once per year and
placing her at substantial risk of an adverse action each time (Id., at 12).
Defendants do not raise mootness in support of their motion to dismiss; however, Ms. Elder
claims that their arguments implicate mootness with respect to her injunctive relief claim (Id.).
Federal courts do not have the power to decide moot questions; “[i]n general a case becomes moot
when the issues presented are no longer live or the parties lack a legally cognizable interest in the
outcome.” Murphy v. Hunt, 455 U.S. 478, 482 (1982) (internal quotations and citations omitted).
Ms. Elder maintains that her injury persists and the relief she seeks means that her claim for
injunctive relief is not moot. Ms. Elder also maintains that, even if the claim is moot, two
exceptions to the doctrine apply that permit her to maintain her claim.

First, she claims that the voluntary cessation exception applies, which states that “a
defendant’s voluntary cessation of a challenged practice does not deprive a federal court of its
power to determine the legality of the practice.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.
(TOC), Inc., 528 U.S. 167, 189 (2000). Ms. Elder contends that, while defendants assert that they
voluntarily reinstated her Medicaid benefits a day after being informed of the present lawsuit, mere
restoration of benefits unlawfully terminated does not establish that a similar termination could
not be reasonably expected to occur again (Dkt. No. 12, at 13). Ms. Elder’s ARChoices eligibility
is reassessed at least once a year, so Ms. Elder avers that she will be exposed to the risk of an
unconstitutional deprivation of benefits again (Id., at 14). Therefore, Ms. Elder claims she could
be in the same situation again upon her next reassessment if her claims are determined to be moot

because ADHS would be free to return to its practices of having no system to continue benefits
upon timely appeal (Id.).
Second, Ms. Elder alleges that another exception to mootness applies, which is that this is
a claim that is capable of repetition and evading review (Dkt. No. 12, at 13-14). “The exception
applies where (1) the challenged action is in its duration too short to be fully litigated prior to
cessation or expiration, and (2) there is a reasonable expectation that the same complaining party
will be subject to the same action again.” Fed. Election Comm’n v. Wisconsin Right to Life, Inc.,
551 U.S. 449, 462 (2007). A “reasonable expectation” is something more than a merely physical
or theoretical possibility; rather, there must be a demonstrable probability that the same
controversy, involving the same complaining party, will recur. Murphy, 455 U.S. at 482. “The
capable of repetition yet evading review rule is an extraordinary and narrow exception to the
mootness doctrine.” Randolph v. Rodgers, 170 F.3d 850, 856 n. 7 (8th Cir. 1999); see also Missouri
ex rel. Nixon v. Craig, 163 F.3d 482, 485 (8th Cir. 1998) (exception applies only in “exceptional

circumstances” (quotation marks omitted)). This doctrine does not apply when the issue might
recur in someone else’s case, but not the plaintiff’s case. Heles v. South Dakota, 682 F.2d 201,
202 (8th Cir. 1982).
In Honig v. Doe, 484 U.S. 305 (1988), the doctrine applied to a disabled student’s challenge
to his suspension from school for disruptive behavior. The Supreme Court found that given his
“inability to conform his conduct to socially acceptable norms” or “govern his aggressive,
impulsive behavior,” it was “reasonable to expect that [the student would] again engage in the type
of misconduct that precipitated this suit” and “be subjected to the same unilateral school action for
which he initially sought relief.” Honig, 484 U.S. at 320-321. The doctrine also applied in Turner
v. Rogers, 564 U.S. 431 (2011), where the Supreme Court determined that an indigent person

repeatedly held in civil contempt for failing to make child support payments, who was at the time
over $13,000 in arrears, and whose next hearing was only five months away, was destined to find
himself in civil contempt proceedings again. The challenged denial of appointed counsel at his
contempt hearing was determined to be capable of repetition. See 564 U.S., at 440. See also
Missourian v. Fiscal Accountability v. Klahr, 830 F.3d 789 (8th Cir. 2016) (examining the
doctrine’s application in election issue cases).
Ms. Elder contends that the agency’s failure deprives individual beneficiaries of their
benefits for the limited period between the date of the adverse action and the administrative
hearing, which is typically no more than 90 days (Dkt. No. 12, at 14). She states that three months
is not enough time to litigate the issue in federal court and that there is a reasonable expectation
that she will be subject to the same action again because her benefits are subject to a yearly
reassessment (Id., at 14-15).
At this stage of the proceeding, the Court declines to find that permitting Ms. Elder to file

her proposed amended complaint would be futile on this basis. In her proposed amended
complaint, Ms. Elder sufficiently alleges that she suffered an injury in fact when her ARChoices
Medicaid benefits were terminated before she had the opportunity for an appeal hearing, and she
has linked the alleged injury to the defendants. Ms. Elder’s proposed amended complaint clarifies
that she is not seeking an injunction to restore her current benefits but for the purpose of
prospective relief in the event this situation occurs after future ADHS evaluations. Although Ms.
Elder’s benefits were restored, she sufficiently alleges in her proposed amended complaint that her
receipt of benefits is subject to review annually and potentially more frequently, and she may be
subject to termination of her benefits before an appeal hearing again because of ADHS’s alleged
practice of terminating or reducing the services of Medicaid beneficiaries subject to adverse

agency actions regardless of the timing of any appeal request.
Ms. Elder has alleged sufficiently that she has standing at the pleading stage of the
litigation, and the Court determines that permitting Ms. Elder to file her proposed amended
complaint would not be futile on this basis. However, the Court will reconsider defendants’
standing argument when the parties have had an opportunity to conduct discovery regarding
ADHS’s appeals process and the likelihood of similar events reoccurring in the future.
3. Individual Capacity Claims
Defendants assert that Ms. Elder’s claims against them in their individual capacities fail
because Ms. Elder’s complaint fails to state a claim upon which relief can be granted for her alleged
Due Process violation against defendants in their individual capacities and because they are
entitled to qualified immunity (Dkt. No. 11, at 12). The Court examines these arguments in the
context of the alleged futility of Ms. Elder’s proposed amended complaint.
a. Failure To State A Claim

To establish personal liability in a § 1983 action, it is enough to show that the official,
acting under color of state law, caused the deprivation of a federal right. Hafer v. Melo, 502 U.S.
21, 25 (1991). Defendants contend that Ms. Elder’s Due Process claims against defendants in their
individual capacities fail because the Due Process clause is not implicated by a state official’s
negligent act (Dkt. No. 11, at 12). They represent that no ADHS defendant intended for Ms.
Elder’s ARChoices benefits to terminate after the agency received her request for a hearing and
that the termination was the inadvertent error of a non-party ADHS employee (Id., at 14).
Defendants assert that Ms. Elder’s claims also fail because she cannot establish a causal link to,
and direct responsibility for, the temporary interruption of her ARChoices benefits by the named
defendants (Id., at 15). Defendants maintain that her complaint is wholly void of any factual

allegations that demonstrate that any of the defendants personally took steps to terminate her
ARChoices benefits or any other conduct that violates her constitutional rights (Id., at 17). Finally,
defendants claim that Ms. Elder does not establish a plausible claim because respondeat superior
is not a basis for § 1983 liability and because Ms. Elder cannot show that defendants received
notice of a pattern of unconstitutional acts committed by a subordinate or that defendants were
deliberately indifferent to or authorized those acts (Id., at 18-19).
Ms. Elder claims that defendants violated her Fourteenth Amendment Due Process rights
by terminating her ARChoices Medicaid services prior to an evidentiary hearing (Dkt. No. 14-1,
¶ 137). She claims that the violation stemmed from each individual defendant’s contribution to a
systemic failure to implement basic procedures needed to administer the Medicaid program
according to established law (Dkt. No. 12, at 16, 19). She asserts that, to establish an agency
official’s liability premised on an agency policy, a plaintiff must show only the official’s personal
involvement in the policy at issue (Id., at 26). Further, according to Ms. Elder, her complaint

shows that each defendant had notice of a pattern of unconstitutional acts and were deliberately
indifferent to the actions of their subordinates, which establishes the plausibility required for her
claim (Id., at 33).
Having reviewed the allegations in Ms. Elder’s proposed amended complaint, the Court
determines that Ms. Elder has sufficiently alleged her claims against each of the defendants she
sues. To the extent defendants dispute Ms. Elder’s allegations and the inferences to be drawn from
those allegations, such inquiries are not appropriate for the Court at the motion to dismiss stage.
Defendants insist Ms. Elder complains at most about negligent conduct, but Ms. Elder in her
proposed amended complaint alleges sufficient facts which, if accepted as true, state a claim
against defendants. Further, Ms. Elder includes allegations in her proposed amended complaint

that detail each defendant’s purported involvement, and she sufficiently alleges notice. At this
stage, the Court must accept Ms. Elder’s allegations as true. Ms. Elder’s claims in her proposed
amended complaint against defendants in their individual capacity are not futile on this basis.
b. Qualified Immunity
Defendants also assert in their motion to dismiss Ms. Elder’s original complaint that they
are entitled to qualified immunity, which protects government officials “from liability for civil
damages insofar as their conduct does not violate clearly established statutory or constitutional
rights of which a reasonable person would have known.” Harlow v. Fitzgerald, 457 U.S. 800,
818 (1982). Qualified immunity balances two important interests—the need to hold public
officials accountable when they exercise power irresponsibly and the need to shield officials from
harassment, distraction, and liability when they perform their duties reasonably. The protection of
qualified immunity applies regardless of whether the government official’s error is “a mistake of
law, a mistake of fact, or a mistake based on mixed questions of law and fact.” Groh v. Ramirez,

540 U.S. 551, 567 (2004) (Kennedy, J., dissenting) (quoting Butz v. Economou, 438 U.S. 478, 507
(1978), for the proposition qualified immunity covers “mere mistakes in judgment, whether the
mistake is one of fact or one of law”).
The proper standard for addressing qualified immunity at the Rule 12(b)(6) stage is whether
immunity is established on the face of the complaint. Hafley v. Lohman, 90 F.3d 264, 266 (8th
Cir.1996), cert. denied, 519 U.S. 1149 (1997). At this stage in the litigation, to overcome the
defense of qualified immunity, Ms. Elder’s complaint must state facts showing that she will
plausibly be able to establish that: (1) that defendants violated a statutory or constitutional right
and (2) that the right was “clearly established” at the time of the challenged conduct. Harlow v.
Fitzgerald, 457 U.S. 800, 818 (1982); Foster v. Mo. Dep’t of Health & Senior Servs., 736 F.3d

759, 762 (8th Cir. 2013) (quoting Winslow v. Smith, 696 F.3d 716, 731 (8th Cir. 2012)). “If the
answer to either question is no” then a defendant is entitled to qualified immunity. Doe v. Flaherty,
623 F.3d 577, 583 (8th Cir. 2010). “For a right to be clearly established, ‘existing precedent must
have placed the statutory or constitutional question beyond debate.’” White v. Pauly, 137 S.Ct.
548, 551 (2017) (citing Mullenix v. Luna, 136 S.Ct. 305, 308 (2015)). The law is clear if it gives
the official “fair warning” that his conduct violated an individual’s rights when the officer acted.
Hope v. Pelzer, 536 U.S. 730, 741 (2002).
To resolve whether permitting Ms. Elder to file her proposed amended complaint would
be futile due to qualified immunity at this stage, the Court examines Ms. Elder’s proposed amended
complaint. She alleges that defendants violated her due process rights and that her due process
rights were clearly established at the time of the challenged conduct. From the face of Ms. Elder’s
proposed amended complaint, the Court cannot determine that granting Ms. Elder leave to file her
proposed amended complaint would be futile based on defendants’ allegations of qualified

immunity.
III. Motion To Dismiss
Because the Court grants Ms. Elder’s motion to amend her complaint, the Court denies as
moot defendants’ pending motion to dismiss (Dkt. No. 10).
IV. Motion To Stay Discovery
Also before the Court is a motion to stay discovery filed by defendants (Dkt. No. 23). In
the motion, defendants request a stay of discovery pending this Court’s ruling on their motion to
dismiss and Ms. Elder’s motion for leave to amend her complaint (Id., ¶ 6). Defendants aver that
the interests of judicial economy and efficiency mitigate in favor of staying discovery until the
Court has had an opportunity to consider and rule on the pending dispositive motions (Id., ¶ 9).

Defendants represent that their counsel conferred with counsel for Ms. Elder prior to filing the
motion and that while plaintiff does not join the motion to stay, she does agree that the parties may
hold off on exchanging initial disclosure pending a resolution on the motion to stay (Id., ¶ 10).
Pursuant to Rule 26(c) of the Federal Rules of Civil Procedure, district courts have broad
discretion to stay discovery. Steinbuch v. Cutler, 518 F.3d 580, 588 (8th Cir. 2008) (citing Lakin
v. Prudential Sec., Inc., 348 F.3d 704, 713 (8th Cir. 2003)); see also Maune v. Int’l Bhd. of Elec.
Workers, 83 F.3d 959, 963 (8th Cir. 1996) (upholding the district court’s granting of a party’s
request to stay discovery); Blair v. Douglas County, No. 8:11CV349, 2013 WL 2443819, at *1 (D.
Neb. June 4, 2013) (“[I]t is a settled proposition that a court has broad discretion and inherent
power to stay discovery until preliminary questions that may dispose of the case are determined.”).
The Court in this Order rules on defendants’ pending motion to dismiss and Ms. Elder’s
pending motion to amend her complaint. As a result, the Court denies as moot defendants’ motion

to stay discovery (Dkt. No. 23).
V. Motion To Substitute Party
Pending is defendants’ motion to substitute party (Dkt. No. 24). Defendants represent that
Craig Cloud, sued in his individual and official capacity, is no longer employed with ADHS and
that Jerald Sharum replaced Mr. Cloud as the Director of Provider Services and Quality Assurance
(Id., ¶ 2). Defendants move to substitute Mr. Sharum, in his official capacity only, as Director of
Provider Services and Quality Assurance. Ms. Elder filed no response to this motion, and the time
for filing a response passed. For good cause shown, the Court grants defendants’ motion to
substitute party and directs the Clerk to substitute as a defendant Mr. Sharum in his official
capacity for Mr. Cloud in his official capacity.

IV. Conclusion
For these reasons, the Court grants Ms. Elder’s motion to amend her complaint (Dkt. No.
14). The Court directs Ms. Elder to file her amended complaint within 14 days from the date of
this Order. The Court directs the Clerk to issue a new summons in this action reflecting the added
defendants and directs the U.S. Marshall to serve Mark White pursuant to the Court’s earlier order
granting Ms. Elder’s motion to proceed in forma pauperis (Dkt. No. 3).
The Court denies as moot defendants’ motion to dismiss Ms. Elder’s original complaint
(Dkt. No. 10). The Court denies as moot defendants’ motion to stay discovery (Dkt. No. 23). The
Court grants defendants’ motion to substitute party (Dkt. No. 24).
It is so ordered this 29th day of May, 2020. .
Kustins 4. Padua
Kristine G. Baker
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10004691. Public record. Not legal advice.