Indiana Court Decisions - May 10-23, 2016

June 1, 2016

7th Circuit Court of Appeals

May 10

Civil – Medicaid Waiver

Karla Steimel and Thomas Maertz, et al. v. John J. Wernert, Secretary of the Indiana Family and Social Services Administration; Michael Beckem and Lois Beckem v. Indiana Family and Social Services Administration and John J. Wernert, Secretary of the Indiana Family and Social Services Administration

15-2377, 15-2389

The 7th Circuit Court of Appeals reversed summary judgment for state defendants in a lawsuit brought by Medicaid patients who claimed their move to a new waiver with a cap on expenses violates the Americans with Disabilities Act. The court said patient expenses constitute an issue of material fact, and they may have been able to receive more services had they spent their money differently.

The case combined two appeals from the Southern District of Indiana where Judge Jane Magnus-Stinson granted summary judgment to the defendants on plaintiffs’ claims their transfer from the Indiana Family and Social Services Administration’s Aged and Disabled Medicaid Waiver Program, where there is no limit on services, to the Family Supports Medicaid Waiver Program, where there is a cap, violated the ADA’s integration mandate. That mandate says “shall administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities.”

There are seven people who constitute the plaintiffs in the two cases. They claim that before their transition to the FS waiver they were able to enjoy 40 hours a week in community activities such as eating in restaurants, window shopping and visiting flea markets, but since their transfer that has to be cut to 10 to 12 hours per week due to the cap. Some plaintiffs have been moved back to waivers without a cap, but others remain.

Chief Judge Diane Wood wrote that the plaintiffs’ claims fall within the scope of the integration mandate under the Department of Justice’s interpretation. The FSSA’s action to switch waivers separates disabled and non-disabled persons and is a violation. The state argued the mandate only applies to people who have actually been institutionalized, but the 7th Circuit said that interpretation is too narrow. The state also argued that availability of another waiver is a safeguard against gaps in the care the patients now receive, but since the patients are ineligible for those other waivers, it makes no difference, the 7th Circuit ruled.

The plaintiffs argued for changes in the requirements for the A&D waiver and the Community Integration and Habilitation Medicaid Waiver to allow them to be placed on either of those, since those have no caps. The 7th Circuit said Indiana offered no evidence that changing these requirements would fundamentally alter their programs. “The state has made no showing that its criteria are ‘necessary for the provision’ of the relevant services in this case,” Wood wrote. “It cannot avoid the integration mandate by binding its hands in its own red tape.”

However, Wood wrote that patients do have a choice in how they spend their money under the waivers, and this creates a genuine issue of fact as to whether the policy has caused their isolation from the community.

The plaintiffs also were seeking class certification for all people who were moved from the A&D waiver to the FS waiver and are not on the other capless waiver who also require more services than the FS waiver provides. However, the 7th Circuit agreed with the District Court that this definition was too vague, despite “serious reservations.” Wood wrote the court did not know what the word “require” meant: if that was for medical purposes, community interaction or some other purpose.

The 7th Circuit remanded the case for further proceedings to determine if the waiver move violated the mandate.

Indiana Supreme Court

May 18

Disbarment – Incompetent Representation/Conversion

In the Matter of: Elton D. Johnson


Indiana Court of Appeals

May 12

Criminal – Motion to Suppress

Mary Osborne v. State of Indiana


A police officer was not within his community caretaker function when he pulled over a woman who left a gas station after she escaped from getting stuck under car, the Indiana Court of Appeals ruled. The public safety issue did not outweigh her right to privacy.

Officer James Arnold arrived on a scene at a gas station just after Mary Osborne had managed to get herself free after she had gotten stuck under her car. Arnold saw her drive away and though she did not commit any traffic violations stopped her because he said he wanted to make sure she did not need any medical attention. As he was talking to her he noticed her slurred speech, the odor of alcohol on her breath and red, watery eyes. He conducted sobriety tests on her and tested her blood alcohol, which was at 0.12. She was charged with misdemeanors operating a vehicle while intoxicated in a manner that endangers a person, and operating a vehicle with an alcohol concentration equivalent to at least .08 grams of alcohol.

Osborne filed a motion to suppress the evidence obtained because it was a warrantless seizure and claimed that violated her Fourth Amendment rights as well as Article 1, Section 11 of the Indiana Constitution. The trial court denied her motion, but granted a motion for interlocutory appeal.

The state contended Arnold was exercising his “community caretaker” function when he stopped Osborne, but the COA majority disagreed. In the opinion written by Judge Patricia Riley, she wrote that a valid community caretaker exception has three parts, and this stop fails on the third. There was a seizure when the stop was conducted, and the conduct was bona fide community caretaker activity. However, Riley wrote “the public need and interest did not outweigh the intrusion into Osborne’s privacy.”

When Arnold got the call to check on a person stuck under a car and then that she was leaving, the dispatcher never mentioned Arnold needed additional help, and Arnold did not observe any reason to suspect she would need help. Also, if Osborne needed help, she could have asked for help at the gas station.

“If there had been any articulable facts prior to the stop to support Officer Arnold’s belief that Osborne was in immediate need of assistance — such as more details about the nature of the incident from the individual who called or any indication that Osborne sustained injuries which affected her ability to drive — then our conclusion would likely be different,” Riley wrote. “Instead, based on the facts before this court, we cannot say that Officer Arnold’s traffic stop was justified pursuant to his community caretaking function.”

The COA reversed the trial court’s decision denying Osborne’s motion to suppress and remanded it to the trial court for further proceedings. Judge James Kirsch dissented in the case but did not provide a separate opinion.

Juvenile – DCS Interview

In the Matter of F.S., T.W., M.F., and B.F., and B.S. v. Indiana Department of Child Services for Crawford County


The Indiana Department of Child Services for Crawford County should not have been granted the opportunity to interview two children, the Indiana Court of Appeals ruled, because the order doing so violates their mother’s right to raise her family without undue interference by the state.

The mother has four children. She was on probation for a theft conviction and just had a child in need of services case closed. An unnamed source contacted DCS of Crawford County several times to say the mother and father were doing drugs and there was also domestic violence between the mother and the father. DCS went out to the home a couple of times, once with a police officer, and could not find any evidence of drugs. Also, the children seemed to be well taken care of. Both father and mother eventually completed a drug screen, and both came back clean.

Despite this, DCS filed a motion to control the conduct of mother and father and ordered the family to comply with an interview. The trial court granted an order to interview the two oldest children, and the mother appealed. The trial court stayed the order while the mother appealed.

There was a question of whether this case should be moot, because soon after getting the stay, the mother was arrested after she tested positive for methamphetamine and amphetamine and signed a consent for DCS to interview her children. All the children were adjudicated CHINS. However, the COA said this case can still be decided on the merits because, “Mother’s claims of constitutional infringement on her right to raise her children rests on the premise that Indiana Code section 31-33-8-7 allows the trial court to compel any objecting parent to make his or her child available to DCS for an interview without any evidence that such an interview is necessary.”

In the decision written by Judge Margret Robb, the COA said DCS is required to look into all reports of neglect. However, before an order can be entered overriding a parent’s wishes, DCS must present some evidence beyond a report from an undisclosed source that abuse is occurring. It did not do that in this case.

That state contends that testimony from an officer who investigated the house once during a check was evidence enough as the officer testified the mother had regularly been purchasing the highest legal amount of pseudophedrine. However, those purchases were within the legal limits.

The state also contended it could not show any evidence because it was not able to interview the children. However, the allegations were evidence that should been apparent to the untrained eye, and no one who was in the house during prior investigations noticed anything, the court noted.

The COA reversed the trial court’s decision, finding DCS did not present enough evidence that interviews with the children were needed.

May 23

Criminal – Molestation/Habitual Offender

James E. Saylor v. State of Indiana


The Indiana Court of Appeals found a counsel’s mistake did not constitute judicial admission in a man’s trial when he was found guilty of molesting his stepdaughter. But the appeals court remanded his guilty plea for being a habitual offender, finding he did not waive his right to trial on the issue at court, his attorney did.

James Saylor was convicted of numerous counts for molesting his stepdaughter and sentenced to 138 years in prison. However, during the closing argument, Saylor’s defense attorney argued the state’s medical evidence did not prove Saylor molested her because Saylor had sex with other people and inadvertently said “Mr. Saylor was not the only person having sex with” his stepdaughter. However, the state did not do anything with this alleged admission and found Saylor guilty of the molesting charge.

During a separate trial for Saylor’s habitual offender charge, defense counsel told the court that Saylor wanted to plead guilty, but Saylor did not say that himself. Saylor filed for post-conviction relief in 2014, seven years after his adjudication. He argued ineffective assistance of counsel for the admission of guilt during the trial and that the waiver of his trial on the habitual offender charge was not knowing or voluntary because he did not personally waive it.

Saylor claimed his counsel was ineffective in other ways as well, including when he did not object to the trial court not giving his victim an oath before testifying in trial court. Chief Judge Nancy Vaidik, writing for the panel, disagreed. She wrote the court examined her to determine simultaneously whether she could testify and give an oath, so this claim falls short.

Defense counsel also was not ineffective for not objecting to the prosecutor’s impermissible vouching during closing arguments. Vaidik wrote any arguments the prosecutor made were proper because they were based on reasons arising from evidence presented at trial, so counsel was not ineffective.

Saylor’s counsel’s statement during closing argument that “he was not the only person having sex with B.D.,” did not constitute judicial admission, Vaidik wrote. Counsel did not remembering making this statement, and the state did not capitalize on it during closing argument. Also, there was more than enough evidence to convict Saylor of the crime without the statement.

Finally, the COA ruled a new trial must be conducted on Saylor’s habitual offender charge because he did not waive the right to trial on that charge in court. His attorney told the court he was pleading guilty, but Saylor never spoke. Vaidik cited the recent Indiana Supreme Court decision Horton v. State, in which a man never personally spoke to waive his right to trial.

“Because the right to a jury trial is a bedrock of our criminal-justice system, the same protection should be afforded to defendants who plead guilty — and not just to those who proceed to a bench trial. Accordingly, when a defendant pleads guilty, he must personally waive his right to a jury trial,” Vaidik wrote.

Civil Plenary – Consumer Lawsuit/Foreclosures

Consumer Attorney Services, P.A., et al. v. State of Indiana


An effectively disbarred Florida attorney whose company hired Indiana lawyers to represent people in foreclosures must face a consumer lawsuit brought by the Indiana Attorney General’s Office, but her company is largely exempted, the Indiana Court of Appeals ruled.

The Indiana Attorney General’s Office began receiving numerous complaints about McCann Law Group LLP and Consumer Attorney Services, P.A., in 2012. Residents said they executed foreclosure agreements with MLG/CAS but had little communication with any Indiana attorney and in some cases were never told who their Indiana lawyer was. MLG/CAS owner and one-time Florida attorney Brenda McCann was never licensed to practice in Indiana, but her company was registered to do business here.

McCann in 2014 filed a petition for disciplinary revocation without leave to reapply to the Florida Bar as she faced 34 disciplinary charges, according to Florida Supreme Court records.

Customers who used the company’s services agreed to have sums deducted monthly from their bank accounts, and the payments increased if a customer’s mortgage company initiated foreclosure proceedings. The company entered into arrangements with five Indiana lawyers — Jonathan Albright, Jeffrey Branstetter, Eric Jackson, Kimberly Vereb and Justin Wall. None are named in the litigation.

The AG’s office sued McCann, MLG and CAS, alleging violations of Indiana Credit Services Organization Act, I.C.24-5-15; the Mortgage Rescue Protection Fraud Act, I.C. 24-5.5; the Home Loan Practices Act, I.C. 24-9, and the Deceptive Consumer Sales Act, I.C. 24-5-0.5. The suit alleged the defendants violated the CSOA by receiving payment for services before they were completed and by failing to post and file a surety bond of $25,000 before conducting business in Indiana. Deceptive acts alleged included “representing to consumers that the Defendants had the characteristics of experienced consultants with in-depth industry knowledge on how to avoid and stop foreclosure.”

A trial court denied summary judgment in favor of the CAS parties, prompting this interlocutory appeal. They argue the CSOA and MRPFA expressly do not apply to lawyers and that lawyers are exempt from the HLPA and DCSA.

In a 27-page opinion, Judge Michael Barnes wrote for the panel that reversed denial of summary judgment for the law firms on all counts except some alleged Deceptive Consumer Sales Act violations. But because McCann was not an attorney, she is not entitled to summary judgment.

‘MLG/CAS is entitled to summary judgment on the Attorney General’s claims against it under the CSOA, the MRPFA, and the HLPA, and as to the claim under the DCSA based upon violations of the CSOA. We reverse the denial of summary judgment with respect to those claims and direct that summary judgment be entered in MLG/CAS’s favor. MLG/CAS is not entitled to summary judgment on the independent DCSA claim for deceptive representations, and we affirm the denial of summary judgment as to MLG/CAS to that extent,” Barnes wrote.

“McCann personally is not entitled to summary judgment on any of the Attorney General’s claims, and we affirm the denial of summary judgment as to her in its entirety.”

Civil Tort – Non-Delegable Contractual Duty

Michael Ryan v. TCI Architects/Engineers/Contractors, Inc. and BMH Enterprises, Inc., d/b/a Craft Mechanical


The Indiana Court of Appeals voted 2-1 to affirm summary judgment in favor of the general contractor of a Lafayette Gander Mountain project where a subcontractor’s employee was injured. The majority concluded the general contractor did not have a non-delegable contractual duty toward the injured worker.

Michael Ryan was a sheet metal worker for B.A. Romines Sheet Metal, which was hired by Craft Mechanical to work on the store. Craft Mechanical was a subcontractor of TCI Architects/Engineers/Contractors Inc., which was the general contractor of the project. Ryan was injured after he lost his balance while standing on the top step of an eight-foot ladder and fell while removing ductwork.

He claimed TCI had a non-delegable contractual duty toward him. TCI moved for summary judgment on duty, breach and proximate cause. The trial court denied Ryan’s motion for partial summary judgment and granted TCI’s.

The Court of Appeals looked at the language in the contracts of TCI and the subcontractors as well as language from contracts in Stumpf v. Hagerman Const. Corp., 863 N.E.2d 871, 876 (Ind. Ct. App. 2007), Perryman v. Huber, Hunt & Nichols Inc., 628 N.E.2d 1240 (Ind. Ct. Appl. 1994) and Harris v. Kettlehut Constr. Inc., 468 N.E.2d 1069, 1076-77 (Ind. Ct. App. 1984).

Those cases contained similar language requiring the contractor to take precautions for the safety of employees on the work site. The TCI contract, however, does not require the company to “take precautions” as the Stumpf contract did. Its safety representative only supervises the implementation and monitoring of safety precautions, Judge Melissa May, writing for the majority, noted.

“That TCI’s representative is charged only with ‘supervising’ suggests the ‘implementation and monitoring’ would be done by someone else; the TCI subcontracts indicate the subcontractors had that responsibility.”

“The TCI contract is more like those in (Helms v. Carmel High Sch. Vocational Bldg, 844 N.E.2d 562, 564 (Ind. Ct. App. 2006)) and (Shawnee Const. & Eng’g Inc. v. Stanley, 962 N.E. 2d 76, 84 (Ind. Ct. App. 2011)), and it does not impose a duty of care toward the employees of TCI’s subcontractors because the contract terms do not ‘go beyond requiring that [TCI] merely supervise the work of its employees and subcontractors’ as they did in (Capitol Const. Servs. Inc. v. Gray, 959 N.E.2d 294 (Ind. Ct. App. 2011)). Rather, as noted above, TCI ‘recognizes the importance of’ safety, and its Safety Representative is obliged to ‘supervise the implementation and monitoring’ of safety matters,” May wrote.

Judge Patricia Riley dissented, claiming the majority elevated form over substance in its interpretation of the contractual provisions regarding safety. She would grant Ryan’s partial summary judgment with respect to TCI.

“By assuming the responsibility of the implementation and monitoring of the safety programs, and the assignment of a Safety Representative, TCI affirmatively evinced an intent to assume a non-delegable duty of care, which placed it directly in line with Stumpf,” she wrote.•


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