Dadone v. Saul, Commissioner of Social Security

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

MARGARET DADONE, Case No: 1:20-cv-390

Plaintiff, McFarland, J.

v. Bowman, M.J.

COMMISSIONER OF SOCIAL SECURITY,

Defendant.

REPORT AND RECOMMENDATION

In May 15, 2020, Plaintiff filed suit against the Commissioner of Social Security,

the Director of Ohio’s Department of Medicaid (“ODM”), and the Interim Director of the

Hamilton County Jobs and Family Services (“Hamilton County JFS”). Plaintiff voluntarily

dismissed all claims with prejudice against ODM and Hamilton County JFS, leaving the

Commissioner as the sole remaining Defendant. (Doc. 36). Currently pending is the

Commissioner’s motion to dismiss all claims under Rule 12(b)(6), Fed. R. Civ. P. (Doc.

25). For the reasons that follow, the undersigned recommends that the Commissioner’s

motion be GRANTED.

I. Background1

The Commissioner of Social Security is responsible for administering both Title II

and Title XVI of the Social Security Act (“Act”). Plaintiff is a mentally disabled individual

who was entitled to receive Supplemental Security Income (“SSI”) under Title XVI of the

Act as a child. She began receiving SSI benefits on or about 1977. (Complaint, Doc. 1 at

1This Court’s review of a motion to dismiss filed under Rule 12(b)(6), Fed. R. Civ. P. is limited to the

pleadings. Therefore, solely for purposes of the pending motion, all facts alleged in the complaint are

assumed to be true.

(“DAC”) benefits under Title II of the Act. (Doc. 1 at ¶¶2, 27). Title XVI of the Act permits

payment of SSI benefits only if an individual’s income does not exceed a specified

amount; benefits paid under Title II of the Act are considered income under the SSI

program. Based on the higher amount of DAC benefits to which Plaintiff became entitled,

her SSI benefits were terminated in June 2014. (Doc. 1 at ¶28).

Shortly after her SSI benefits ended, Defendant Hamilton County JFS notified her

that she was no longer eligible for free Medicaid for the Disabled due to excess income

(the DAC benefits) unless she spent down her assets. (Doc. 1 at ¶¶29-31; see also id. at

¶¶3-5, 13). Plaintiff alleges that the notice was erroneous because she should have

qualified for a statutory exception to the spenddown provision. (Doc. 1 at ¶3, 31). Plaintiff

alleges that all three Defendants failed to give adequate notice of her continued

entitlement to Medicaid under the relevant statutory provision, 42 U.S.C. § 1383c(c).

Plaintiff dismissed her first six claims, all of which were asserted against

Defendants ODM and Hamilton County JFS. In her Seventh Claim for relief, Plaintiff

alleges that the Commissioner of Social Security “failed to provide” information to

Hamilton County JFS identifying her as an individual who had lost SSI benefits based

upon her increase in or entitlement to DAC benefits. (Doc. 1 at ¶¶49-50). In her Eighth

Claim, Plaintiff alleges that the Social Security Administration “has failed to take steps to

ensure that ODM and Hamilton County JFS administer the Medicaid program in

conformance with applicable federal laws and regulations,” which in turn allegedly violates

Plaintiff’s rights under the Medicaid laws and the Due Process Clause of the Fifth

Amendment. (Doc. 1 at ¶¶51-52). In her prayer for relief, Plaintiff seeks monetary

damages, including reimbursement for expenses incurred to pay for health insurance and

fees and costs.

II. Analysis

A. Background of SSI and Medicaid Eligibility Requirements

Under Title XIX of the Social Security Act, the federal government provides a grant

to the State of Ohio to administer its Medicaid program. See 42 U.S.C. § 1396b. In most

but not all States, an individual who is eligible to receive SSI is also eligible to receive

Medicaid under the State plan. However, when the SSI program was created in 1972,

Congress permitted States with existing Medicaid eligibility rules that were more

restrictive than the eligibility rules for SSI to grandfather in those existing rules. The

impacted States are commonly known as “209(b)” States after the original subsection of

the 1972 law. See generally, 42 U.S.C. § 1396a(f) (current provision).2 Ohio was a 209(b)

State until August 1, 2016, at which time it amended its eligibility rules to allow all SSI

beneficiaries to be entitled to Medicaid. Critically, at all relevant times at issue in the

complaint, Ohio was a 209(b) State.

An individual who is receiving SSI but who has too much income to qualify for

Medicaid is allowed to spend down her excess income on medical expenses in order to

become eligible for Medicaid. Aware that receipt of higher DAC benefits could cause an

individual who was otherwise eligible to receive SSI to become ineligible to receive

Medicaid, Congress enacted a special Medicaid eligibility rule for individuals receiving

DAC benefits. See 42 U.S.C. §1383c(c). Under that 1987 remedial statute, an individual

who is receiving SSI but who “ceases to be eligible for [SSI] because of” receipt of DAC

2States that are not 209(b) States may enter into agreements known as “1634 agreements.” In 1634 States,

the Commissioner makes Medicaid eligibility determinations for certain SSI beneficiaries. See 42 U.S.C. §

1383c(a); see also 20 C.F.R. § 416.2116.

…she would be eligible for [SSI] in the absence of” the DAC benefits. Id. In this lawsuit,

Plaintiff argues that the Commissioner had a duty to provide notice that she alleges would

have ensured that she remained entitled to continue her Medicaid benefits under 42

U.S.C. § 1383c(c), even after receipt of DAC benefits, without a spenddown requirement.

(Doc. 1 at ¶3).

B. Whether the Commissioner Has a Statutory or Regulatory Duty

In her claim against the Commissioner, Plaintiff specifically alleges that the

Defendant failed to notify ODM and Hamilton County of Plaintiff’s “status as a DAC

beneficiary and the effect of that status” which “omission contributed to the state and local

governments’ failure to determine that Ms. Dadone was entitled to Medicaid coverage

without a spenddown….” (Doc. 41 at 5).3 Plaintiff’s theory of liability against the

Commissioner therefore is built upon the premise that the Defendant had a legal duty to

notify ODM, Hamilton County JFS, and possibly Plaintiff herself of her continued eligibility

for Medicaid under the remedial statute. Alternatively, Plaintiff suggests that the

Commissioner had some form of supervisory or oversight duty to ensure that ODM and

Hamilton County JFS provided her with proper notification under § 1383c(c).

The Commissioner persuasively argues that no such legal duty existed in 2014, in

part because Ohio was a 209(b) State at that time. Unlike in other statutory provisions,4

Congress chose not to include any express language in § 1383c(c) that would impose a

3Plaintiff’s claim against the Commissioner stands in contrast to a dismissed claim against ODM that alleged

that the Commissioner did “routinely” send ODM information “identifying individuals who have lost SSI

benefits because of entitlement to an increase in DAC benefits” but that ODM failed to act on that

information. (Doc. 1 at ¶37).

4For example, the Commissioner admits it has a statutory duty to provide notification to States of a group

of disabled widows and widowers whose eligibility was affected by an actuarial change. See, e.g., 42

U.S.C. §1383c(b).

would impose a legal duty on the Commissioner to notify either ODM or Hamilton County

JFS when an individual may qualify to continue receiving Medicaid benefits under

§1383c(c).5 In the absence of some legally enforceable duty, Plaintiff has failed to state

any viable claim against the Commissioner.

In her response, Plaintiff concedes that Congress has “fail[ed] to expressly place

a duty on SSA.” (Doc. 41 at 7). However, Plaintiff argues that the Commissioner still

should be held liable because it voluntarily “assumed” a duty to notify when it amended

its own internal Program Operations Manual System (“POMS”). (Doc. 41 at 2, 9). Plaintiff

points to a POMS provision that was added by SSA in 1988, approximately a year after

Congress enacted the remedial statute. The referenced text states that SSA “notifies the

1634 States about members of this group” – an allusion to the group of individuals like

Plaintiff who become DAC beneficiaries eligible for continuation of Medicaid benefits

under the remedial statute, § 1383c(c). (See Doc. 41-4 at 4, POMS SI 01715.015 (B)(4))

(emphasis added). However, the express language of the POMS provision refers only to

SSA’s notification to “the 1634 States” and is silent with respect to any similar notification

to 209(b) States. Therefore, even assuming that the POMS provision creates a legal duty

that would support a private right of action by an individual DAC beneficiary in an affected

1634 State,6 the same POMS provision cannot be read to support any similar duty to

5Although the complaint includes references to other provisions, none support imposing a legal duty on the

Commissioner to notify the state or county of § 1383c(c) eligibility, or to supervise State or county

notification. See, e.g., 42 U.S.C. § 1306 (establishing the Medicaid and CHIP Payment and Access

Commission (“MACPAC”), an advisory body of which the Commissioner is not a member).

6The undersigned finds no need to consider this issue beyond the realm of theoretical possibility. But see

Davis v. Secretary of Health and Human Services, 867 F.2d 336, 340 (6th Cir. 1989) (stating that “the

POMS is a policy and procedure manual that employees of the Department of Health & Human Services

use in evaluating Social Security claims and does not have the force and effect of law….”).

State.

Plaintiff also refers briefly to a 1989 Department of Health and Human Services

Medicaid Operations Letter. Although Plaintiff fails to provide a valid citation or copy of

the text, Plaintiff asserts that Letter 89-55 generally informed the States that “SSA would

identify persons eligible for Medicaid under… § 1383c(c).” (Doc. 41 at 7). In a policy

argument, Plaintiff argues that unless the Commissioner takes on this duty, “[t]here is

currently no other way for the state agencies to obtain the identity of these [DAC]

beneficiaries and the significance of the beneficiaries’ status in a systematic manner,”

without which the remedial statute is less effective. Plaintiff’s policy argument is

unconvincing because it is not the province of this Court to make law, but to interpret it.

It is telling that despite the passage of more than three decades since the 1989

Operations Letter, Plaintiff can cite to no authority that supports the imposition of a legal

duty on the Commissioner based upon Letter 89-55.

Last, Plaintiff alludes to two class action lawsuits settled in New York and in West

Virginia as support for the imposition of a legal duty of notification or oversight on the

Commissioner. Aside from the obvious fact that Plaintiff is not a party to the referenced

class actions, neither authority is persuasive for the proposition cited. Plaintiff fails to

provide a citation to the West Virginia suit but appears to be referring to Carter et al. v.

Willis-Miller, Case No. 1:91-cv-01240 (W.D. Va.), a case that did not involve the

Commissioner or any federal defendant. With respect to the New York lawsuit, Plaintiff

asserts that the terms of settlement “judicially imposed” an “obligation” on the

Commissioner to notify New York of DAC beneficiaries’ status. However, the language

of the Stipulation and Order attached as an exhibit to Plaintiff’s response reflects no such

& Human Services had already provided information about potential class members to

New York in 1992, and required the Secretary (through the Centers for Medicare and

Medicaid Services), to update State Medicare Manual instructions “to address the

obligations of the State Medicaid Agencies…” (Doc. 41-2, McMahon v. Dowling, Case

No. 91-621C, Stipulation and Order at 3) (emphasis added).

C. Whether the Commissioner Has a Procedural Due Process Duty

Plaintiff’s attempt to state a procedural due process claim similarly fails to state

any claim against the Commissioner as a matter of law. To establish a procedural due

process claim under 42 U.S.C. § 1983, Plaintiff must prove: (1) that she had a

constitutionally protected property interest; (2) that she was deprived of her protected

interest by the defendant; and (3) that the defendant governmental agency did not afford

her adequate procedural rights before depriving her of her property interest. Daily Serv

LLC v. Valentino, 756 F.3d 893, 904 (6th Cir. 2014).

Here, Plaintiff alleges that she had a property interest in the continuation of

Medicaid benefits, and that she was deprived of that interest without sufficient notice of

her entitlement to continued benefits under § 1383c(c). However, Plaintiff clearly alleges

that Hamilton County JFS provided her with a notice concerning the cut-off of her state

Medicaid benefits. While Plaintiff complains that the County incorrectly stated that she

was ineligible to continue benefits without a spenddown, she fails to provide any rational

basis for attributing the County’s erroneous notice to the federal Defendant. Plaintiff cites

to no authority to suggest that the Defendant Commissioner was constitutionally required

to supervise Ohio or Hamilton County JFS in their administration of Ohio’s Medicaid

program. In sum, Plaintiff’s contention that “SSA did not meet its obligation to notify the

significance of that status,” see (Doc. 41 at 8), is not persuasive because the Defendant

Commissioner had no such obligation. Instead, it is Ohio and/or Hamilton County JFS

that administer the Medicaid benefits to which Plaintiff claims she was entitled, and it is

the State and/or County agencies (and not the Defendant Commissioner) that allegedly

deprived Plaintiff of any process to which she was due.7 Therefore, Plaintiff fails to state

a due process claim against the Commissioner.

D. The Commissioner’s Entitlement to Sovereign Immunity

Last but not least, Plaintiff seeks recovery of monetary damages, attorney’s fees

and costs. “The United States, as sovereign, is immune from suit save as it consents to

be sued.” United States v. Sherwood, 312 U.S. 584, 586 (1941). “This principle extends

to agencies of the United States as well, which are immune absent a showing of a waiver

of sovereign immunity.” Whittle v. United States, 7 F.3d 1259, 1262 (6th Cir. 1993)

(additional citation omitted). Here, Plaintiff does not argue that the Commissioner has

expressly or even impliedly waived its sovereign immunity against such claims. See Lane

v. Pena, 518 U.S. 187, 192 (1996) (“To sustain a claim that the Government is liable for

awards of monetary damages, the waiver of sovereign immunity must extend

unambiguously to such monetary claims.”). Instead, Plaintiff simply asks for the

opportunity “to proceed through discovery to determine why the Commissioner has been

unable to devise a system that effectively fulfills its obligation to implement a remedial

statute.” (Doc. 41 at 9).

7Apart from the inappropriate blending of distinct governmental entities, Plaintiff also fails to allege whether

she exercised her right to administrative review of ODM and/or HCJFS’s determination that she was

ineligible for continuation of Medicaid benefits without a spenddown, or whether she sought any other form

of redress prior to filing this lawsuit. In her response, Plaintiff concedes that she did not question the

County’s notice, and did not exercise any available procedural due process rights. (Doc. 41 at 5).

no such legal obligation. The undersigned understands that Plaintiff firmly believes that

the remedial statute would be more effective, and that beneficiaries like her would avoid

the harm she alleges that she endured, if only the Commissioner were to play an

“essential role in the implementation of [§1383c(c)].” (Doc. 41 at 10). However, Congress

chose not to assign any notification or oversight duties to the Commissioner when it

enacted the remedial statute and the Commissioner remains entitled to sovereign

immunity.

III. Conclusion and Recommendation

For the reasons discussed, IT IS RECOMMENDED THAT the Defendant

Commissioner’s motion to dismiss (Doc. 25) be GRANTED and that all remaining claims

against the Commissioner be dismissed for failure to state a claim.

s/ Stephanie K. Bowman

Stephanie K. Bowman

United States Magistrate Judge

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

MARGARET DADONE, Case No: 1:20-cv-390

Plaintiff, McFarland, J.

v. Bowman, M.J.

COMMISSIONER OF SOCIAL SECURITY, et al.

Defendants.

NOTICE

Pursuant to Fed. R. Civ. P. 72(b), any party may serve and file specific, written

objections to this Report & Recommendation (“R&R”) within FOURTEEN (14) DAYS of

the filing date of this R&R. That period may be extended further by the Court on timely

motion by either side for an extension of time. All objections shall specify the portion(s)

of the R&R objected to, and shall be accompanied by a memorandum of law in support

of the objections. A party shall respond to an opponent’s objections within FOURTEEN

(14) DAYS after being served with a copy of those objections. Failure to make objections

in accordance with this procedure may forfeit rights on appeal. See Thomas v. Arn, 474

U.S. 140 (1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981).