Gray Panthers v. Administrator, Health Care Financing Administration, Dept. of Health and Human Services

• Decision Date: 03 September 1980
• Docket Number: No. 79-1334,79-1334
• Citation: 629 F.2d 180,203 U.S.App.D.C. 146
• Parties: GRAY PANTHERS v. ADMINISTRATOR, HEALTH CARE FINANCING ADMINISTRATION, DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 180

629 F.2d 180

203 U.S.App.D.C. 146

GRAY PANTHERS v. ADMINISTRATOR, HEALTH CARE FINANCING ADMINISTRATION, DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Appellants.

No. 79-1334.

United States Court of Appeals, District of Columbia Circuit.

Argued Jan. 15, 1980.

Decided July 29, 1980.

As Amended Sept. 3, 1980.

Edith S. Marshall, Atty., Dept. of Health and Human Services, Washington, D.C., with whom Robert P. Jaye, Deputy Asst. Gen. Counsel, Dept. of Health and Human Services, Washington, D.C., on brief, for appellants.

Gill DeFord, Los Angeles, Cal., a member of the bar of the Supreme Court of California, pro hac vice, by special leave of court, with whom Toby Edelman, Washington, D.C., was on brief, for appellee.

Before J. SKELLY WRIGHT, Chief Judge, MacKINNON, Circuit Judge, and MARKEY, ^* Chief Judge, United States Court of Customs and Patent Appeals.

Opinion for the court filed by Chief Judge J. SKELLY WRIGHT.

J. SKELLY WRIGHT, Chief Judge:

This appeal is from a successful challenge to regulations of the Department of Health and Human Services ¹ which implement the Medicaid program and which involve the financial eligibility criteria for institutionalized individuals and their spouses. Plaintiff-appellee is Gray Panthers, a voluntary organization dedicated to improving the treatment accorded our nation's elderly. The regulations in question permit, among other things, a certain amount of a spouse's funds to be "deemed" available for use by the institutionalized individual, whether or not such funds are in fact provided. Because "deeming" applies "an arbitrary formula, unrelated to the expenses of a particular couple's needs," the District Court held the practice to be forbidden by a statutory requirement that only income available in fact be taken into account for Medicaid eligibility purposes. It therefore vacated the regulations and remanded them to the Secretary for reconsideration. See Gray Panthers v. Secretary, Dep't of Health, Educ. & Welfare, 461 F.Supp. 319, 323 (D.D.C.1978). We agree with the result reached by the District Court but not for its assigned reasons. We believe the Secretary has failed to consider all the relevant factors in determining whether "deeming" is proper in this context. We therefore affirm the judgment of the District Court which vacated the regulations as invalid, but order the case remanded to the Secretary for reconsideration consistent with this opinion.

I

Medicaid is a cooperative federal-state program established pursuant to Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. (1976). Regulations promulgated in accordance with the Act supplement the statutes in providing a framework within which the states must operate their Medicaid programs. A state is not required to establish a Medicaid program, but should it do so the program must conform to federal requirements. 42 U.S.C. § 1396a. A "State plan" must be submitted to and approved by the Secretary. 42 U.S.C. § 1396a(b). The state then becomes entitled to federal funds which partially reimburse expenditures made to provide specific types of medical assistance. Section 1902 of the Social Security Act, 42 U.S.C. § 1396a, provides the statutory guideline to which state medicaid eligibility criteria must conform:

(a) Contents

A State plan for medical assistance must

(17) include reasonable standards * * * for determining eligibility for and the extent of medical assistance under the plan which (A) are consistent with the objectives of this subchapter, (B) provide for taking into account only such income and resources as are, as determined in accordance with standards prescribed by the Secretary, available to the applicant or recipient * * *, (C) provide for reasonable evaluation of any such income or resources, and (D) do not take into account the financial responsibility of any individual for any applicant or recipient of assistance under the plan unless such applicant or recipient is such individual's spouse or such individual's child * * * (.)

In addition to providing this general framework for Medicaid eligibility criteria, the statute places limits on the specific provisions that the states may adopt. States may choose to be governed by one of two rules in this regard. First, 42 U.S.C. § 1396a(a) provides that Medicaid assistance must be made available to all individuals who qualify for cash benefits under the Supplemental Security Income (SSI) program, Title XVI of the Social Security Act, 42 U.S.C. § 1381 et seq. (1976). In these "SSI states" Medicaid eligibility is determined by statute in accordance with uniform federal standards.

States electing to be governed by the second rule, however, are not required to conform to the explicit SSI criteria. Pursuant to the "209(b) option," ² 42 U.S.C. § 1396a(f), any state may choose to establish more stringent eligibility criteria, so long as the criteria are no more restrictive than those in the state's "categorical assistance" ³ program that was validly in effect on January 1, 1972. Such programs were the precursors to the SSI program. They were enacted and administered by states in cooperation with the federal government, and their eligibility criteria varied from state to state. This case challenged only the HHS regulations permitting "deeming" in the 209(b) jurisdictions ⁴ whose eligibility criteria are not explicitly prescribed by federal statute.

A bit of history is necessary to understand the purpose behind the 209(b) option. Before the option was enacted, creating the SSI and 209(b) classifications, all jurisdictions were treated alike for purposes of establishing Medicaid eligibility criteria. Each state was required to provide Medicaid assistance to any individual who qualified for its categorical assistance program. When Congress brought most of these programs under federal administration through enactment of SSI, this principle of automatic eligibility was retained. But the federal SSI eligibility criteria allowed for broader coverage than that provided by many of the state plans. As a result, states would have been forced to expand their Medicaid programs involuntarily, and in some cases significantly. "(I)n order not to impose a substantial fiscal burden on these States," S.Rep.No. 93-553, 93d Cong., 1st Sess. 56 (1973), and to avoid the threat that some states would withdraw from the Medicaid program entirely rather than fund the expanded coverage, see West v. Cole, 390 F.Supp. 91, 98 (N.D.Miss.1975), Congress enacted the 209(b) option. Electing states could thus prevent extension of Medicaid coverage to any persons not then entitled to benefits. ⁵

"Deeming" is a procedure used in determining an applicant's financial eligibility for Medicaid. A certain amount of the noninstitutionalized individual's funds is conclusively presumed is "deemed" to be available for contribution toward the cost of his or her spouse's institutionalization. In SSI jurisdictions "deeming" is specifically required by statute. The statute provides that the income and resources of two cohabiting spouses are to be pooled for purposes of determining the financial eligibility of either. 42 U.S.C. § 1382(a)(2). In other words, income earned by one spouse is conclusively presumed to be earned jointly by the couple, and all such jointly earned income in excess of the statutorily prescribed maintenance level for the couple is considered to be available to either spouse. Where both spouses are otherwise eligible for Medicaid, ⁶ and one spouse is institutionalized, the pooling of funds continues for six months. The effect of this scheme is thus to "deem" a portion of the noninstitutionalized individual's income and resources to be available for support of his or her spouse. After six months of institutionalization only the income and resources of the institutionalized spouse are considered for determining eligibility, and the "deeming" ceases. 42 U.S.C. § 1382c(b). Where only one of the spouses is otherwise Medicaid-eligible, pooling of income must cease with the first month after institutionalization. 42 U.S.C. § 1382c(f).

By contrast, "deeming" in the 209(b) jurisdictions at issue in this case proceeds in a more direct manner, although actual practices vary considerably. Typically, the state specifies a "maintenance" level of income and resources for the noninstitutionalized spouse. Any funds in excess of this figure are conclusively presumed to be available for contribution toward the costs of institutionalization. In most states direct Medicaid payments to the institution are automatically reduced by this excess amount. Required medical care is thus usually withheld or terminated if the "deemed" amount is not in fact paid by the noninstitutionalized spouse. ⁷ The HHS regulations in question permit this "deeming" to occur in each state to the extent that it was the state's practice on January 1, 1972.

II

A

This court's review of the regulations in question must proceed within narrow bounds. The Medicaid statute provides that "available" income and resources shall be "as determined in accordance with standards prescribed by the Secretary(.)" 42 U.S.C. § 1396a(a)(17)(B). Where, as here, Congress has explicitly entrusted to the agency the primary task of defining statutory language, that definition is "entitled to more than mere deference or weight. It can be set aside only if the Secretary exceeded his statutory authority or if the regulation is 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.' 5 U.S.C. §§ 706(2)(A), (C)." Batterton v. Francis, 432 U.S. 416, 426, 97 S.Ct. 2399, 2406, 53 L.Ed.2d 448 (1977). See Herweg v. Ray, 619 F.2d 1265 (8th Cir. 1980) (equally divided court sitting en banc ) (opinion of McMillian, J.). Although this is a narrow standard, it does not relieve the court of its duty to conduct a searching inquiry. Even where no specific statutory requirements are being enforced, the court "must...