A federal district court in Connecticut allows the use of offensive collateral estoppel against the state and grants a preliminary injunction prohibiting it from treating a community spouse's income stream from a non-assignable annuity as an available resource, although the court stays execution of its decision pending the outcome of a similar case now before the Second Circuit. Gale v. Bremby (U.S. Dist. Ct., D. Conn., No. 3:11-CV-972-AVC, March 28, 2012).
When the three plaintiffs applied for Medicaid nursing home benefits, their applications were (or would be) denied based on a Connecticut Department of Social Services' (DSS) regulation that treats a community spouse's actuarially sound and non-assignable annuity income stream as an available resource. The plaintiffs filed a motion for preliminary injunction in federal district court seeking to enjoin DSS's practice. They argued that based on the doctrine of offensive collateral estoppel, the court's prior decision in Lopes v. Starkowski, (U.S. Dist. Ct., D. Conn., No. 3:10-CV-307, Aug. 11, 2010) -- holding that Connecticut could not treat income streams from annuities as available assets for the purposes of Medicaid eligibility -- was controlling and prevented re-litigation of the issue. DSS countered that Lopes was not binding, at least until the state's pending appeal of that decision is resolved.
Finding the issue in this case to be materially the same as that addressed in Lopes, the U.S. District Court for the District of Connecticut grants in part the motion for a preliminary injunction. The court concludes that the denial of Medicaid benefits constitutes irreparable harm per se and that based on offensive collateral estoppel and the preclusive effect of the Lopes decision, at least one of the plaintiffs has established a likelihood of success on the merits. (The court holds that an applicant whose application has been denied but who has not reapplied does not have a claim.) However, the court stays execution of the decision pending resolution of Connecticut's appeal of Lopes to the Second Circuit.
Longtime National Academy of Elder Law Attorneys member René H. Reixach, Jr., and Richard A. Marchese, Jr., both of Woods Oviatt Gilman LLP, represented the plaintiffs, along with ElderLawAnswers member attorneys Brendan Daly and Paul Czepiga, all of whom are also counsel on Lopes. Reixach, who credits Marchese with developing the collateral estoppel issue, told ElderLawAnswers that because most circuit courts of appeal have limited the use of offensive collateral estoppel against state actors, this decision will be of most value to attorneys in the Second Circuit, which has not set such a limit. Our thanks to Reixach for alerting us to the decision.
For the full text of this decision, click here.
To read an article on Lopes v. Starkowski (U.S. Dist. Ct., Dist. Conn., No. 3:10-CV-307, August 11, 2010), click here.
To read the full amicus brief, submitted by the U.S. Department of Health and Human Services (HHS) to the Second Circuit Court of Appeals in Lopes, click here.
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