Court Rejects Fee Application, Ruling Medicaid Applicant Who Won Preliminary Injunction Is Not Prevailing Party

Two years ago, in 2013, a federal judge in New Jersey granted a preliminary injunction to Elizabeth Flamini, a Medicaid applicant who successfully sued for an injunction preventing the State of New Jersey from counting an annuity owned by Mrs. Flamini’s husband Angelo as an available resource in determining Medicaid eligibility. Flamini v. Velez  , Civil No. 1:12-cv-07304 (D.N.J. July 19, 2013) Recently, the same federal judge issued an Order denying Mrs. Flamini’s application for attorneys’ fees, ruling that, despite her success in obtaining injunctive relief against New Jersey, Mrs. Flamini was not the prevailing party in the lawsuit, and was therefore not entitled to a fee award. Flamini v. Velez, Civil No. 12-7304 (D.N.J. Jan. 23, 2015).

Elizabeth Flamini entered a skilled nursing care facility in Cherry Hill, NJ. At that time, Mrs. Flamini and her husband owned assets which included two IRAs and a tax-qualified savings account. Mr. Flamini liquidated these accounts and used the proceeds to purchase an individual retirement annuity for $215,256.51. The annuity was issued in Mr. Flamini’s name and called for monthly income payments of $3,596.35 for a term of five years. Thereafter, Mrs. Flamini applied for Medicaid. The agency denied eligibility, stating that when the annuity owned by the applicant’s husband was counted as an available asset, she was ineligible for benefits due to excess resources. After Mrs. Flamini filed a lawsuit in federal district court in Camden seeking a preliminary injunction, the Court granted plaintiff’s application, enjoining the State of New Jersey from considering the annuity in its calculation of countable resources. (I blogged about the first decision in the Flamini case granting the preliminary injunction here.)

After a preliminary injunction was granted, the Medicaid agency issued another denial, finding that Mrs. Flamini was still ineligible for Medicaid even when her husband’s  annuity was not counted. Mrs. Flamini then reapplied for benefits. When Mr. Flamini spent down the couple’s assets, the agency approved the application for Medicaid. Once Mrs. Flamini was found eligible for Medicaid, the federal court dismissed the case as moot. Mrs. Flamini then filed a motion for attorneys’ fees, arguing that she was the prevailing party because of her success in obtaining the preliminary injunction. 

The U.S. District Court for the District of New Jersey denied the application for attorneys’ fees. The Court ruled that Mrs. Flamini failed to prove that she was the “prevailing party” in the lawsuit because there was no judgment on the merits of the case contained in the decision granting the preliminary injunction:

While this Court’s Opinion and Order granting the preliminary injunction with respect to the annuity may have resulted in a finding of Medicaid eligibility once [Mrs. Flamini] spent down her resources, the fact remains that this Court never made a determination on the merits of [Mrs. Flamini]’s claims. Because [she] did not obtain a judgment on the merits of her claim, [Mrs. Flamini] is not entitled to attorney’s fees.

The federal court’s opinion on the fee application is annexed here: Flamini v. Velez

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