Precedential
Precedential
(Argued)
(Argued)
funds, the
accounts.
trust
pools
these
996 (3d Cir. 1993). But should we conclude that even one of
the Plaintiffs has an injury regarding a specific provision of
Section 1414, we need not examine the effect of that
provision on the other Plaintiffs. See Montalvo-Huertas v.
Rivera-Cruz, 885 F.2d 971, 976 (1st Cir. 1989) (Where
coplaintiffs have a shared stake in the litigation close
identity of interests and a joint objective the finding that one
has standing to sue renders it superfluous to adjudicate the
other plaintiffs standing.).
Defendants deny Plaintiffs have an injury in fact as
regards the expenditure and special needs provisions.12 So
we must determine whether any of the Plaintiffs have been
subject to actual enforcement of the expenditure or special
needs provisions or are likely to have these provisions
12
14
We hold that
V.B
Defendants central argument, cutting across both the
private-right-of-action and the merits sections of their brief, is
that 42 U.S.C. 1396p(d)(4) does not mandate that the States
exempt special needs trusts meeting its criteria. Defendants
argument has been embraced by both the Second and Tenth
Circuits. See Wong v. Doar, 571 F.3d 247 (2d Cir. 2009);
Keith v. Rizzuto, 212 F.3d 1190 (10th Cir. 2000).
Meanwhile, the Eighth Circuit suggests in a passing reference
that 1396p(d)(4) is mandatory. See Norwest Bank of N.D.,
N.A. v. Doth, 159 F.3d 328, 330 (8th Cir. 1998). Having
given careful consideration to Defendants arguments and to
the positions of our sister circuits, we conclude that 42 U.S.C.
1396p(d)(4) imposes mandatory obligations upon the
States.
Defendants key point is that the beginning of the
special needs exemption states: This subsection shall not
apply to any of the following trusts[.]
42 U.S.C.
1396p(d)(4) (emphasis added). This language refers to the
portion of the Medicaid statute requiring States to count trusts
against eligibility. It abrogates that section insofar as it
applies to special needs trusts. Both parties agree that this
lifts the obligation levied upon the States by the trustcounting provisions and says that the States do not have to
apply the trust-counting provisions to qualifying special needs
trusts. But the provision does not specifically say that Any
31
V.C.2
We also conclude that the Supremacy Clause provides
Plaintiffs with an independent basis for a private right of
action in this case.17 Supreme Court precedent establishes
17
19
V.D
Our preemption analysis must necessarily examine
each individual component of the Pennsylvania statute to
determine whether it conflicts with the Medicaid statute. But
we begin by determining whether Congress had an
overarching intent in enacting the trust-counting provisions
and the special needs exemptions.
The basic principles of a preemption analysis are
familiar. First, the intent of Congress is the ultimate
touchstone of preemption analysis. Farina, 625 F.3d at 115
(quoting Medtronic, 518 U.S. at 485). Second, we start[]
with the basic assumption that Congress did not intend to
displace state law. Id. at 116 (quoting Maryland v.
Louisiana, 451 U.S. 725, 746 (1981)). Third, when we are
dealing with Spending Clause legislation, we require
Congress to speak unambiguously, because such legislation
is in the nature of a contract between Congress and the States,
and the States are entitled to know the conditions under which
they are accepting. Pennhurst State Sch. & Hosp. v.
Halderman, 451 U.S. 1, 17 (1981).
Bearing these principles in mind, we discern an
overarching intent behind the trust exemptions. First,
Congress intended to mandate the exemption of special needs
trusts from the trust-counting rules. We explained our
reasoning for this conclusion in Section V.B.
Second, Congress intended that special needs trusts be
defined by a specific set of criteria that it set forth and no
others. We base this upon Congress choice to provide a list
of requirements to be met by special needs trusts. The
venerable canon of statutory construction expressio unius
est exclusio alterius essentially says that where a specific
list is set forth, it is presumed that items not on the list have
been excluded. See, e.g., U.S. Term Limits, Inc. v. Thornton,
514 U.S. 779, 793 n.9 (1995) (noting that application of
expressio unius leads to the conclusion that the qualifications
for office expressed in the Constitution are the sole
requirements and other requirements cannot be imposed);
Waggoner v. Gonzales, 488 F.3d 632, 636 (5th Cir. 2007)
(applying expressio unius to a list of requirements and
concluding that expression of the extreme hardship
requirement
forecloses
conclusion
that
additional
requirements exist beyond extreme hardship). Absent an
explicit statement or a clear implication that States are free to
expand the list, expressio unius leads us to conclude they are
not.
42
21
V.D.1
Pennsylvanias 50% retention provision provides:
[U]pon the death of the beneficiary or upon the
earlier termination of the trust, the department
and any other state that provided medical
assistance to the beneficiary must be reimbursed
from the funds remaining in the trust up to an
22
V.D.3
The special needs requirement of Section 1414(b)(2)
attempts to restrict pooled special needs trusts to beneficiaries
with special needs that will not be met without the trust. 62
Pa. Stat. Ann. 1414(b)(2). The Pennsylvania statute defines
special needs as those items, products or services not
covered by the medical assistance program, insurance or other
third-party liability source for which a beneficiary of a special
needs trust or his parents are personally liable and that can be
provided to the beneficiary to increase the beneficiarys
quality of life and to assist in and are related to the treatment
of the beneficiarys disability.23 These limitations do not
appear in the Medicaid statute, which only requires that
individuals be disabled.24
23
V.D.5
The enforcement provision of Section 1414(c) states:
If at any time it appears that any of the requirements of
subsection (b) are not satisfied or the trustee refuses without
good cause to make payments from the trust for the special
needs of the beneficiary and, provided that the department or
any other public agency in this Commonwealth has a claim
against trust property, the department or other public agency
may petition the court for an order terminating the trust. 62
Pa. Stat. Ann. 1414(c). The District Court held this
provision preempted, but we believe it is a reasonable
exercise of the Commonwealths retained authority to
regulate trusts. We therefore hold that the enforcement
provision is not preempted by federal law.
The pooled special needs trust is a unique type of trust.
It is one legal entity, but with many separate beneficiaries,
each having a claim over a specific account within the trust.
It is entirely reasonable for the Commonwealth to seek a
method of enforcement tailored to this legal entity. Assume,
for example, that the non-profit trustee has a dozen accounts
within the trust. Eleven of those twelve accounts it manages
well. But for one of those accounts, it breaches the sole
benefit requirement and makes distributions of account funds
to relatives and friends of the disabled beneficiary, or even
worse to its own employees. It is the nonprofit that is at
fault, and the nonprofit that can no longer be trusted to
manage any of the accounts. It is entirely reasonable for the
Commonwealth to seek cancellation of the entire trust.
54
57