10th Circuit Dismisses Claim by a Medicaid Applicant’s Estate that Oklahoma’s Medicaid Hearing Process Violated Federal Law

The U.S. Court of Appeals for the Tenth Circuit holds that a claim by a Medicaid applicant’s estate against state Medicaid officials, arguing that the state’s process for conducting Medicaid hearings violates federal law, is barred by the Eleventh Amendment and the estate lacks standing. Estate of Schultz v. Brown (U.S. Ct. App., 10th Cir., No. 20-6079, Feb. 19, 2021).

Velma Schultz applied for Medicaid benefits. After the Oklahoma Department of Human Services (DHS) denied her application, she appealed to a hearing officer, but she died while the appeal was pending. The hearing officer reversed the DHS’s decision, and DHS appealed to the DHS director.

Ms. Schultz’s estate filed a case in federal district court against the director of DHS, challenging the state’s process for reviewing Medicaid claims. Federal law requires that Medicaid hearings be conducted by an impartial official who wasn’t involved in the initial eligibility decision. The estate argued that the same official who makes the original eligibility decision also represents DHS at the hearing and helps the director draft a decision. The estate asked for an injunction to end DHS’s appeal and to implement an impartial hearing process. While the federal case was pending, DHS overturned the hearing officer’s decision and denied Ms. Schultz’s application. The district court dismissed the estate’s case because the state officials were immune under the Eleventh Amendment and Ms. Schultz’s death made the case moot. The estate appealed.

The United States Court of Appeals, Tenth Circuit, affirms, holding that the case is barred by the Eleventh Amendment and the estate lacks standing. The court rules that the Eleventh Amendment bars the estate’s request for an injunction ending DHS’s appeal because the appeal was no longer pending, so it was asking for retroactive relief. The court also rules that the estate lacks standing to request prospective relief because Ms. Schultz is dead, meaning that the estate “cannot allege the continuing or impending harm required to pursue prospective relief.”

For the full text of this decision, go to: https://www.ca10.uscourts.gov/opinions/20/20-6079.pdf

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