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Guggenheimer Health & Rehabilitation Center v. Carey

United States District Court, W.D. Virginia, Lynchburg Division

April 17, 2018

Guggenheimer Health & Rehabilitation Center, authorized representative for Charles E. Bedat, Plaintiff,
Daniel Cary, in his official capacity as Secretary of Health and Human Services, ET AL., Defendants.



         Guggenheimer Health & Rehabilitation Center (“the Center”), purporting to act for Charles E. Bedat, filed suit against Virginia's Secretary of Health and Human Resources and its Director of the Department of Medical Assistance Services (collectively, “Defendants”). The Center is a long-term nursing home, and Mr. Bedat is an elderly, disabled resident who receives 24-hour care from it. The crux of the complaint is that Defendants' denial of Bedat's application for Medicaid benefits-which he needs to pay the Center-violated due process, various provisions of Medicaid, the Americans with Disabilities Act, and the Rehabilitation Act. The Center attached to its complaint an undated “designation of authorized representative” form signed by Bedat, which the Center contends authorizes it to sue on his behalf. Defendants moved to dismiss on several grounds, e.g., sovereign immunity, estoppel, Rooker-Feldman doctrine, Younger abstention, and failure to state a claim. They also argued that the Center cannot litigate Bedat's rights and thus lacks standing.

         The complaint alleges that Bedat suffered “dementia and other cognitive” ailments and that he “lacked mental capacity and/or the ability to manage his own affairs, ” thus negating the validity of the designation form and the Center's concomitant standing to sue on his behalf. Even if Bedat's incapacity does not undercut the designation form, then the executed, dated, notarized, and heretofore unrevoked power of attorney he granted to attorney Henry C. Devening before the initiation of this lawsuit does. Also, the Center does not have organizational standing. Without a basis to litigate Bedat's claims for him, the Center lacks standing, and the case must be dismissed without prejudice.


         There are two kinds of motions to dismiss under Rule 12(b)(1) for lack of jurisdiction. Both are implicated here. When a defendant makes a facial challenge to jurisdiction, the familiar Twombly/Iqbal standard applies-the court assumes the truth of all well-pled facts, disregards legal conclusions, and analyzes whether the facts satisfy the law's requirements for jurisdiction. See Ben-Davies v. Blibaum & Assocs., P.A., 695 Fed.Appx. 674, 676 (4th Cir. 2017) (quoting Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009)). In a factual challenge, however, a defendant asserts that some extrinsic fact undermines jurisdiction, in which case the court regards “the pleadings' allegations as mere evidence on the issue” and may “consider materials outside the pleadings.” The Piney Run Pres. Ass'n v. Cty. Comm'rs of Carroll Cty., Md., 523 F.3d 453, 459 n.6 (4th Cir. 2008); Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991).


         The Center is a Virginia corporation located in Lynchburg, Virginia. (Complaint ¶ 1). Bedat was admitted to the Center on January 11, 2016, and has received care from it since that date. (Id. ¶ 12). According to the complaint, Bedat “is an elderly, disabled man who suffers from various medical conditions, including dementia and other cognitive physical ailments, that require him to receive twenty-four hour care and assistance.” (Id. ¶10). He allegedly “lacked mental capacity and/or the ability to manage his own affairs.” (Id. ¶ 11).

         The Center alleges that “Bedat designated [the Center] as his Authorized Representative” sometime before October 3, 2016. (Complaint ¶¶ 1, 19). The basis of this authorization is a form attached to the complaint and signed by Bedat. (Dkt. 1-1). The form states that it “authorizes specific person(s) from the facility to handle the resident's dealings with Medicaid.” (Id.). It purports to authorize “Vicky Campbell” at the Center “to be [Bedat's] authorized representative, ” and “also authorize[s] any employees or agents of the [Center], including attorneys hired by the [Center], to now represent [Bedat] when . . . taking action as necessary to establish [his] eligibility for Medicaid.” (Id.). The form further states that Bedat “understand[s] and agree[s] that any legal proceeding in regards to [his] Medicaid eligibility may be pursued either in [his] name or in the name of the facility, ” and it purports to waive “any potential or actual conflicts of interest, which may exist from this appointment of authorized representation.” (Id.).

         In June 2016, six months after his admission to the Center, Bedat applied for Medicaid coverage. (Complaint ¶ 14). But for the denial of coverage, Medicaid would have paid Bedat, funds which then would have paid for his care at the Center. (Id. ¶¶ 13, 46). The Center alleges that Defendants denied Bedat coverage in September 2016 because he was “over resourced, ” (id. ¶ 16), and Bedat undertook an administrative appeal, which was denied on March 1, 2017. (Id. ¶¶ 18-24). The Center then filed this lawsuit through counsel in November 2017.

         The default rule in federal court is that one may litigate only his own rights and interests, not those of others. See, e.g., Domino's Pizza, Inc. v. McDonald, 546 U.S. 470, 479 (2006); Laird v. Tatum, 408 U.S. 1, 13-14 n.7 (1972); Freilich v. Upper Chesapeake Health, Inc., 313 F.3d 205, 215 (4th Cir. 2002) (holding doctor had no standing to assert patients' ADA claims and observing “longstanding principle that third parties themselves usually will be the best proponents of their own rights”); Smith v. Frye, 488 F.3d 263, 272 (4th Cir. 2007); Myers v. Loudoun Cty. Pub. Sch., 418 F.3d 395, 400 (4th Cir. 2005); Hummer v. Dalton, 657 F.2d 621, 625-26 (4th Cir. 1981) (holding plaintiff cannot act “as a knight-errant” for others). “To have standing, it is elementary that the [plaintiff's] own interests must be implicated.” Gratz v. Bollinger, 539 U.S. 244, 289 (2003) (Stevens, J., dissenting).

         The Center, however, claims that it may litigate on behalf of Mr. Bedat because it is, as the complaint's caption states, his “authorized representative.”[1] That authorization, it says, springs from the designation of authorized representative form.[2]

         In Virginia, a person lacking mental capacity cannot enter into a valid agreement. E.g., Edmunds v. Chandler, 203 Va. 772, 777 (Va. 1962) (affirming lack of mental capacity for person with IQ of 51 and mental capability of a seven-year-old).[3] One is competent to enter an agreement if he or she “has sufficient mental capacity to understand the nature of the transaction and agree to its provisions.” Jones v. Peacock, 267 Va. 16, 19 (Va. 2004). And, as the Center correctly observes, every adult is presumed competent. Brown v. Resort Developments, 238 Va. 527, 529 (Va. 1989); Bigger v. Doe, 960 F.2d 145, at *4 (4th Cir. 1992) (applying Virginia law to determine competency); Bailey v. Bailey, 54 Va.App. 209, 215 (Va. Ct. App. 2009); Drewry v. Drewry, 8 Va.App. 460, 467 (Va. Ct. App. 1989); e.g., Chesapeake & O. Ry. Co. v. Mosby, 93 Va. 93, 24 S.E. 916, 916 (Va. 1896). But the face of the complaint plainly alleges that Bedat was stricken with “dementia” and other cognitive ailments, “lacked mental capacity, ” cannot manage his own affairs, and requires 24/7 care and assistance. (Complaint ¶¶ 10-11). The Court holds that these allegations are overwhelmingly sufficient to rebut the presumption of competency.[4]

         The Center's brief resists this conclusion, asserting that “[n]owhere does Mr. Bedat allege that he lacks all mental capacity or that he was incapable of any type of competency.” (Dkt. 18 at ECF 17 (emphasis added)). The Center cannot run away from the complaint's allegations so easily. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (requiring courts to “assume the[] veracity” of “well-pleaded factual allegations”); Ben-Davies, 695 Fed.Appx. at 676 (quoting Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009)) (instructing that facial challenge to jurisdiction requires taking facts in the complaint as true). The facts alleged simply don't bear the fine distinctions and careful parsing the Center places on them. It cannot plead without limitation or nuance (and with a Rule 11(b) certification) that Bedat lacked mental capacity, could not manage his own affairs, and has dementia, and then-when the obvious issue of Bedat's capacity is raised-backtrack in its brief. “It is well-established that parties cannot amend their complaints through briefing.” vonRosenberg v. Lawrence, 849 F.3d 163, 167 n.1 (4th Cir. 2017) (quoting S. Walk at Broadlands Homeowner's Ass'n, Inc. v. Open Band at Broadlands, LLC, 713 F.3d 175, 184 (4th Cir. 2013)). Confronted with the complaint's allegations, the Center can only hypothesize about Bedat's mental state. Without citation to anything (be it the complaint or otherwise), the Center asserts Bedat “still possessed sufficient competency to the point that a form, benefitting him and not adverse to his interests, could be explained to him and knowingly executed by him.” (Dkt. 18 at ECF 17 (emphasis added)). The Court declines to credit such speculation against the complaint's contrary, clear, and unequivocal allegations.[5]

         Even if one assumes Bedat was competent to assign power to act on his behalf, Defendants point out another problem, one the Court considers a factual challenge to jurisdiction. Defendants provided a copy of a power of attorney (“POA”) from Bedat to attorney Henry C. Devening. (Dkt. 11-8). The POA authorizes Devening “to transact any and all of [Bedat's] business and to do and perform all things and acts relating to my property.” (Id. at 1). The POA includes the power to collect, “demand[, ] and sue for” any interests, monies, or sums which may become due to Bedat; “execute and perform all and every other act or acts” in furtherance of the “full and complete power to handle any of [Bedat's] business or to deal with any and all of [his] property of any kind”; “make health care decisions for” Bedat; have access to his medical records; admit Bedat to hospitals, nursing homes, and hospice; and “do any and all things which, in the opinion of [Bedat's] attorney, will be in [Bedat's] best interests.” (Id. ...

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