## Facts

- Dawn Simonsen, a 57-year-old quadriplegic requiring ventilator care, resided in a long-term care facility in Connecticut.
- Simonsen was the beneficiary of Florida-law third-party trusts created and funded by her mother at her death; the trusts held assets valued at just over $1 million.
- In July 2014, Simonsen applied for Connecticut Medicaid benefits.
- In August 2014, the trustee sought Florida probate-court approval to “decant” the assets from the original trusts into newly created third-party special-needs trusts; the court approved the decanting in September 2014.
- The Connecticut Department of Social Services (DSS) treated the decanting as a transfer of assets for less than fair market value and imposed a Medicaid ineligibility penalty period running from September 2014 through September 2021.
- After an administrative fair hearing, a hearing officer upheld DSS’s determination, including its treatment of the original trusts as available resources.
- Simonsen sued under 42 U.S.C. § 1983, alleging DSS used an eligibility methodology that was more restrictive than Supplemental Security Income (SSI) methodology, contrary to federal Medicaid requirements.
- The district court issued a preliminary injunction barring DSS from enforcing the penalty; DSS appealed, disputing only the likelihood-of-success element.

## Issues

1. Whether Simonsen showed a likelihood of success that DSS used a Medicaid eligibility methodology “more restrictive” than SSI methodology when it treated the original third-party trusts as available resources.
2. Whether Simonsen showed a likelihood of success that DSS’s transfer-penalty decision—based on trust-to-trust decanting—was invalid because it rested on an impermissibly restrictive resource-availability methodology.

## Decision

- The Second Circuit affirmed the preliminary injunction.
- The court held the district court did not abuse its discretion in finding Simonsen likely to succeed on the merits of her claim that DSS employed a methodology more restrictive than SSI.
- The court allowed the injunction to stand, preventing DSS from enforcing the transfer-penalty period that would render Simonsen ineligible for Medicaid pending further proceedings.

## Legal Principles

- For certain Medicaid eligibility groups, federal law requires state methodologies for determining income and resources to be no more restrictive than SSI methodologies. (42 U.S.C. §§ 1396a(a)(10)(C)(i), 1396a(r)(2)(A)(i))
- A preliminary injunction is reviewed for abuse of discretion; abuse exists where the decision rests on an error of law, a clearly erroneous factual finding, or falls outside the permissible range of decisions.
- At the preliminary-injunction stage, a showing that a state agency likely applied a “more restrictive” resource-availability approach than SSI can support injunctive relief against a Medicaid ineligibility determination and related penalties.

## Conclusion

The Second Circuit upheld preliminary injunctive relief blocking Connecticut’s Medicaid transfer penalty because the district court reasonably found that DSS likely applied a resource and transfer methodology more restrictive than SSI, contrary to federal Medicaid “no more restrictive” requirements.


Simonsen v. Bremby, 679 F. App’x 57 (2d Cir. 2017)