701 F.2d 91 (9th Cir. 1983), 82-5207, Beltran v. Myers

Docket Nº:82-5207.
Citation:701 F.2d 91
Party Name:Antonia BELTRAN, et al., Plaintiffs-Appellees, v. Beverlee A. MYERS, individually and in her capacity as Director of the California State Department of Health; and Elizabeth Lyman, individually and in her official capacity as Deputy Director of the California State Department of Health, Defendants-Appellants.
Case Date:March 08, 1983
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 91

701 F.2d 91 (9th Cir. 1983)

Antonia BELTRAN, et al., Plaintiffs-Appellees,

v.

Beverlee A. MYERS, individually and in her capacity as

Director of the California State Department of Health; and

Elizabeth Lyman, individually and in her official capacity

as Deputy Director of the California State Department of

Health, Defendants-Appellants.

No. 82-5207.

United States Court of Appeals, Ninth Circuit

March 8, 1983

Argued and Submitted Nov. 2, 1982.

Page 92

Richard J. Magasin, Deputy Atty. Gen., Los Angeles, Cal., for defendants-appellants.

Gill Deford, Los Angeles, Cal., for plaintiffs-appellees.

Appeal from the United States District Court for the Central District of California.

Before FLETCHER, NELSON, and REINHARDT, Circuit Judges.

PER CURIAM:

This is an appeal from a judgment of the district court that California's "transfer of assets" rule as it applied to "medically needy" applicants for Medicaid benefits prior to July, 1981, was in conflict with federal Social Security (Medicaid) laws. We affirm.

FACTS AND PROCEDURAL CONTEXT

In 1965, Congress established the Medicaid program under Title XIX of the Social Security Act (42 U.S.C. Secs. 1396-1396k (1976)) as a cooperative federal-state program to provide medical assistance to the needy. To be eligible for federal financial assistance, participating states must administer their programs in accordance with federal guidelines. 42 U.S.C. Sec. 1396a (1976). California provides Medicaid benefits (Medi-Cal in California) automatically to the categorically needy, those who receive cash welfare payments under Aid to Families with Dependent Children (AFDC) and Supplemental Security Income (SSI) programs. See 42 U.S.C. Sec. 1396a(a)(10)(A) (1976). California also has elected to provide benefits to the medically needy, those whose income and resources are sufficient to meet their needs apart from medical expenses. The medically needy become eligible for assistance when they incur medical expenses which reduce their income and assets below established levels. 42 U.S.C. Sec. 1396a(a)(10)(C) (1976); 42 C.F.R. Sec. 435.4, .301 (1980).

In 1965, California adopted Welfare and Institutions Code section 14015, referred to as "the transfer of assets rule." The rule created a rebuttable presumption that any transfer of assets by medically needy applicants for less than adequate consideration within two years prior to their applying for benefits was made with the intent to qualify for assistance. Applicants who failed to rebut this presumption were disqualified for specified periods from receiving medical assistance. No such rule applied to the categorically needy.

Appellees constitute the class of aged, blind, and disabled medically needy individuals who as of June 19, 1978, were denied Medicaid benefits under California's transfer of assets rule. Plaintiffs' complaint alleged that the transfer of assets rule was inconsistent with applicable portions of the Social Security Act and therefore violated the supremacy clause, and further that the rule violated the equal protection and due process clauses of the fourteenth amendment. The district court granted defendant's motion for summary judgment, finding that the rule violated neither the supremacy clause nor the fourteenth amendment. On appeal, this court affirmed, Dawson v. Myers, 622 F.2d 1304 (9th Cir.1980).

Page 93

On December 28, 1980, the Boren-Long Amendment (Pub.L. 96-611 Sec. 5, 94 Stat. 3567) was signed into law amending section 1613 of the Social Security Act, 42 U.S.C. Sec. 1382b. The amendment, effective March 1, 1981, permits states to deny SSI assistance to individuals who are eligible only because they have disposed of resources for less than fair market value. Pub.L. No. 96-611, Sec. 5, 94 Stat. 3567-68 (1980), to be codified at 42 U.S.C. Secs. 1382b(c), 1396a(j). The states may apply similar rules to Medicaid recipients in both the categorically needy and medically needy programs. Pub.L. 96-611 Sec. 5(b), 94 Stat. 3568 (1980) (amending section 1902 of the Social Security Act, 42 U.S.C. Sec. 1396a).

The Supreme Court granted certiorari on the sole issue of the supremacy clause violations. In its per curiam decision, the Supreme Court vacated our earlier decision and remanded the case for our reconsideration in light of the recent statutory change. Beltran v. Myers 1 451 U.S. 625, 101 S.Ct. 1961, 68 L.Ed.2d 495 (1981). Four members of the Court, in a concurrence authored by Justice Stevens, agreed that the then existing federal law prohibited the transfer of assets rule and that this court on remand should determine appropriate relief for past violations. Id. at 629, 101 S.Ct. at 1963. This court remanded the case to the district court with instructions that it determine the impact of the Boren-Long Amendment on the parties' rights and to make the necessary modifications in its original judgment.

The district court entered an order vacating its earlier judgment and issuing findings of fact and conclusions of law. The court concluded that California's transfer of assets rule violated the Medicaid comparability requirement of 42 U.S.C. Sec. 1396a(a)(10)(C)(i), (17)(1976), and 42 C.F.R. Sec. 435.401(c)(1980); and was thus invalid under existing law. The court ordered defendants to identify and notify individual...

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