Twyla Leach d/b/a Home Care Staffing v. Minnesota Department of Human Services…

Background

Plaintiff Twyla Leach (Martin), doing business as Home Care Staffing, is enrolled as a Minnesota Health Care Programs provider approved to deliver housing stabilization services under Minnesota law. Defendant Minnesota Department of Human Services (DHS) is the state agency responsible for administering Medicaid in Minnesota. In summer 2025, DHS determined there was a credible allegation of fraud — specifically overbilling — against the plaintiff and began an investigation. DHS also referred the matter to law enforcement. On August 1, 2025, DHS issued a Notice of Payment Withhold, and the organizations that contract with DHS to administer payments subsequently suspended payments to the plaintiff.

The plaintiff, proceeding without a lawyer (pro se), filed this federal lawsuit asserting claims for unjust enrichment, unspecified illegal retaliation, and violations of the Constitution and federal Medicaid laws.

Legal Standards

Eleventh Amendment Immunity

The Eleventh Amendment to the U.S. Constitution generally prohibits federal courts from hearing suits brought against a state or its agencies without the state's consent. A court must dismiss such a lawsuit for lack of subject-matter jurisdiction — meaning the court has no legal authority to hear it at all. Official-capacity suits against state officials are treated as suits against the state itself and are equally barred absent waiver or consent.

Rule 12(b)(1) — Lack of Subject-Matter Jurisdiction

A Rule 12(b)(1) motion challenges whether the court has the threshold power to hear a case. On a facial challenge (one that looks only at what the complaint alleges, not outside facts), the court takes the plaintiff's factual allegations as true but will dismiss if an essential element for jurisdiction is missing.

Rule 11 — Sanctions

Rule 11 of the Federal Rules of Civil Procedure allows a court to sanction any party — including a pro se (self-represented) litigant — who submits filings containing unwarranted legal contentions or insupportable factual assertions.

Ruling on the Motion to Dismiss

Eleventh Amendment Bars Claims Against DHS

The court held that DHS, as a state agency, is immune from suit under the Eleventh Amendment. The plaintiff provided no evidence that Congress or the State of Minnesota waived that immunity. The court therefore lacked subject-matter jurisdiction over the claims against DHS.

Eleventh Amendment Bars Claims Against Ellison in His Official Capacity

The plaintiff sued Ellison in his official capacity only; she did not allege any individual-capacity claims. The court applied the established rule that a suit against a state official in his official capacity is the same as a suit against the state itself. Because Minnesota has not waived immunity or consented to suit, the claims against Ellison were equally barred. The court also noted that neither the State of Minnesota nor Ellison in his official capacity qualifies as a "person" subject to suit under 42 U.S.C. § 1983, the federal civil rights statute.

The court granted the motion to dismiss for lack of subject-matter jurisdiction and dismissed the case with prejudice.

Sanctions and Filing Restrictions

The court found that the plaintiff's opposition memorandum contained two serious misrepresentations:

1. Distorted regulation: The plaintiff claimed that 42 C.F.R. § 455.23(a)(1) requires a state to conduct a careful, case-by-case review before deeming an allegation credible. The actual regulation states that a state agency must suspend Medicaid payments after determining there is a credible allegation of fraud for which an investigation is pending, unless the agency has good cause not to do so. The plaintiff's characterization does not reflect what the regulation says.

2. Fabricated citation: The plaintiff cited a "CMS State Medicaid Director Letter (SMD #11-004, Mar. 25, 2011)" and attributed content to it about data mining and fraud evidence. The defendants acknowledged that a letter identified as "SMD #11-004" exists, but it is dated May 18, 2011, and addresses a different subject entirely — the use of administrative funds in a Medicaid incentive program. The court found the letter is silent on data mining.

The court noted it had previously warned the plaintiff, in its order denying her motion for a preliminary injunction, that it would strike submissions containing what appeared to be hallucinated (artificially generated but nonexistent) citations and might take further action. The plaintiff did not comply with that warning. The court struck the plaintiff's opposition memorandum.

Invoking its authority under Rule 11(c), and expressly declining to impose monetary sanctions, the court instead imposed a pre-filing review restriction: any new lawsuit the plaintiff seeks to file in the District of Minnesota will be reviewed by the court before it is accepted. If the court finds the citations are fabricated or grossly misrepresent the cited source, the plaintiff will be barred from proceeding with that lawsuit. This restriction applies unless the plaintiff is represented by counsel or obtains advance permission from a judicial officer of the district.

Plaintiff's Other Motions

- Motion for Leave to File Supplemental Declaration and Supplemental Reply (Docket No. 97): The plaintiff sought to add information about DHS terminating the Housing Stabilization Services program, which the court construed as a request to amend the pleadings. The court found the termination of the program irrelevant to the dismissed claims and denied the motion.

- Motion for Court Clarification (Docket No. 103): The plaintiff asked the court to advise her on how to prosecute her case. The court denied this motion, reiterating that pro se status does not exempt a litigant from following the Federal Rules of Civil Procedure, the District's Local Rules, and the Minnesota Rules of Professional Conduct.

Disposition