Medicaid Applicants May Seek to Enjoin State From Counting Promissory Notes

A U.S. district court finds that a group of New Jersey Medicaid applicants may proceed in federal court with a lawsuit seeking to enjoin the state from counting promissory notes as available resources, but that the applicants are not entitled to a preliminary injunction. Sable v. Velez (U.S. Dist. Ct., D.N.J., No. 09-2813, Oct. 13, 2009).

A group of New Jersey residents lent money to close relatives in return for promissory notes. The individuals then applied for Medicaid. The state denied their applications for benefits, claiming that the promissory notes were trust-like instruments and qualified as available resources.

The group of applicants filed a lawsuit in federal district court under 42 U.S.C. § 1983, asking the court to enjoin the state from counting promissory notes as trust-like devices. The state opposed the motion for preliminary injunction. It also moved to dismiss, arguing there was no private right of action under § 1983 and the court should abstain because of the availability of an administrative remedy.

The U.S. District Court for the District of New Jersey denies both the motion to dismiss and the request for preliminary injunction. The court holds that the Medicaid Act has rights-creating language and is enforceable through § 1983. It also finds that the applicants are not required to avail themselves of remedial procedures provided by the state when § 1983 provides a federal cause of action. In addition, the court finds that the question of whether these promissory notes qualify as trust-like devices turns on whether or not the relatives were holding the money they received for the applicants' benefit. The court holds that the applicants have not presented enough evidence that they will likely prevail on this issue, so the preliminary injunction is denied.

For the full text of this decision, go to: https://attorney.elderlawanswers.com/full-text-of-opinion-in-sable-v-velez-us-dist-ct-dnj-no-09-2813-oct-13-2009-7914

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