The Indiana Court of Appeals ruled that a trial court did not abuse its discretion in denying a Medicaid applicant’s motion for relief from judgment. The motion sought
to revive a federal civil rights claim and a request for attorney’s fees after the state agency had reversed its denial of Medicaid benefits on remand. The appeals court found that the applicant had had a full and fair opportunity to litigate the claim, and that the agency’s change of position did not alter the independent ground on which the claim was dismissed. Harves v. Indiana Family & Soc. Servs. Admin., No. 25A-PL-2833 (Ind. Ct. App. Sept. 21, 2026).
In January 2019, Natalie Harves, then age 91, and her children executed several documents, including one creating an irrevocable trust funded with $557,240 of her assets. Four months later, Harves applied for Medicaid nursing home benefits. In December 2019, the Indiana Family and Social Services Administration (FSSA) denied the application, finding that the trust assets were available to her and that her resources therefore exceeded the eligibility threshold. Natalie died three days later. After the denial was upheld through the administrative process, her personal representatives petitioned for judicial review of the denial of benefits. The petition also included a claim under 42 U.S.C. § 1983, seeking to enjoin the FSSA Secretary from denying Natalie her alleged statutory right to benefits under color of law by including the trust assets as countable resources, and to recover attorney’s fees under 42 U.S.C. § 1988.
The trial court affirmed the FSSA’s denial of benefits and later granted summary judgment to the FSSA Secretary on the 42 U.S.C. § 1983 claim. Natalie’s personal representatives appealed both orders. The Court of Appeals of Indiana reversed the order denying benefits because both the FSSA and the trial court had failed to consider whether circumstances existed under which payment from the trust could be made to or for Natalie’s benefit under 42 U.S.C. § 1396p(d)(3)(B)(i) and remanded the case to the trial court with instructions to return the matter to the FSSA (see Natalie v. Rusyniak, 219 N.E.3d 166 (Ind. Ct. App. 2023)). However, the court of appeals affirmed the order granting summary judgment in favor of the FSSA Secretary on the 42 U.S.C. § 1983 claim. Natalie’s personal representatives petitioned for a rehearing, arguing that the benefits claim and the § 1983 claim shared a common nucleus of operative facts and that, because they had prevailed on the benefits claim, they were a prevailing party entitled to fees. Rehearing was denied, and Natalie’s personal representatives did not seek transfer.
On remand, the FSSA reversed course, approving Natalie’s application for benefits and awarding full coverage from July 2019 through December 2019. The FSSA paid the benefits in full in November 2024. Natalie’s personal representatives then returned to the trial court and filed a motion for relief from the judgment on the § 1983 order, arguing that the FSSA’s change in position had substantially changed the circumstances on which the § 1983 order was based and that she was entitled to an award of attorney fees. The trial court denied the motion, and Natalie’s personal representatives appealed.
The Court of Appeals of Indiana noted that Trial Rule 60(B)(7) permits relief from a judgment only in exceptional circumstances that were not reasonably foreseeable when the prior judgment was entered, that such a motion addresses the procedural and equitable grounds for relief from legal finality rather than the merits of the judgment, and that it is not a substitute for a direct appeal or a means of reviving an expired attempt to appeal.
The court rejected Natalie’s personal representatives’ argument that the reversal of the benefits claim and FSSA’s new eligibility determination changed the factual and legal foundation of the 42 U.S.C. § 1983 order. It reasoned that the trial court had granted summary judgment on the § 1983 claim in part because Natalie’s personal representatives had alleged no ongoing injury that could be remedied by an injunction and sought, in substance, only retrospective relief, i.e., the retrospective payment of funds from the state treasury—relief the trial court held was barred; the FSSA’s approval of Natalie’s application for Medicaid benefits on remand did not alter that basis. Natalie’s personal representatives had had a full and fair opportunity to litigate the § 1983 claim, which was resolved adversely to her at both the trial and appellate levels.
The court also rejected Natalie’s personal representatives’ assertion that it had affirmed the § 1983 order in the earlier appeal only because she had not yet fully prevailed on the benefits claim. Instead, the court clarified that the order was affirmed because Natalie’s personal representatives had not meaningfully addressed the merits of the § 1983 order on appeal, treating it as an afterthought.
The court ruled that Natalie’s personal representatives did not establish exceptional circumstances that were not reasonably foreseeable when the § 1983 order was entered or when the earlier appeal was decided. The time to litigate the propriety of that order had passed, and the trial court did not abuse its discretion by denying the motion and rejecting the attempt to relitigate those issues. Therefore, the court declined to consider the parties’ arguments on the merits of the § 1983 claim and affirmed the trial court’s denial of the motion for relief from judgment.
Subscribe to the Knowledge Bank.
