Ark. Dep't of Human Servs. v. Pierce

• Decision Date: 29 May 2014
• Docket Number: No. CV–13–870.,CV–13–870.
• Citation: 435 S.W.3d 469,2014 Ark. 251
• Parties: ARKANSAS DEPARTMENT OF HUMAN SERVICES, Appellant v. Gordon PIERCE, Appellee.
• Court: Arkansas Supreme Court

2014 Ark. 251

435 S.W.3d 469

ARKANSAS DEPARTMENT OF HUMAN SERVICES, Appellant

v.Gordon PIERCE, Appellee.

No. CV–13–870.

Supreme Court of Arkansas.

May 29, 2014.

Erasmo J. Reyes, Office of Policy and Legal Services, for appellant.

Taylor & Taylor Law Firm, P.A., by: Andrew M. Taylor and Tasha C. Taylor, for appellee.

JIM HANNAH, Chief Justice.

Appellant, the Arkansas Department of Human Services (“DHS”), appeals from an order of the Arkansas County Circuit Court reversing and remanding DHS's decision that appellee, Gordon Pierce, was ineligible for Medicaid benefits. The circuit court ruled that retirement accounts owned by appellee's spouse, Martha Pierce, should not have counted in the determination of Gordon's eligibility for long-term-care Medicaid benefits. DHS appealed to the Arkansas Court of Appeals, which recommended certification of the appeal to this court because it involves an issue of first impression and substantial public interest. This court accepted certification, and our jurisdiction is proper pursuant to Arkansas Supreme Court Rule 1–2(d)(2) (2013). We hold that a spouses's individual retirement account (“IRA”) and 401(k) may be countable resources under the Medicare Catastrophic Coverage Act of 1988, 42 U.S.C. § 1396r–5. Therefore, we reverse and remand the circuit court's order.

This case requires the court to interpret the “spousal impoverishment” provisions of the Medicare Catastrophic Coverage Act of 1988 (the “MCCA”), 42 U.S.C. § 1396r–5, “a complex set of instructions made part of the federal Medicaid statute.” Wis. Dep't of Health & Family Servs. v. Blumer, 534 U.S. 473, 477, 122 S.Ct. 962, 151 L.Ed.2d 935 (2002). Medicaid was enacted in 1965 as Title XIX of the Social Security Act, and the “federal Medicaid program provides funding to States that reimburse needy persons for the cost of medical care.” Id. at 479, 122 S.Ct. 962.¹ “ ‘Each participating State ² developsa plan containing reasonable standards ... for determining eligibility for and the extent of medical assistance,’ within boundaries set by the Medicaid statute and the Secretary of Health and Human Services.” Id. (quoting Schweiker v. Gray Panthers, 453 U.S. 34, 36, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981)); 42 U.S.C. § 1396a(a)(17). “In formulating those standards, States must ‘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.’ ” Blumer, 534 U.S. at 479, 122 S.Ct. 962 (emphasis in original) (citing § 1396a(a)(17)(B)). “[S]tate methodologies for determining eligibility must be ‘no more restrictive’ than the federal methodology that would be employed under the supplemental security income [SSI] program.” Geston v. Anderson, 729 F.3d 1077, 1079 (8th Cir.2013); 42 U.S.C. § 1396a(a)(10)(C)(i). “A State's methodology is considered ‘no more restrictive’ if ‘additional individuals may be eligible for medical assistance and no individuals who are otherwise eligible are made ineligible for such assistance.’ ” Geston, 729 F.3d at 1079; § 1396a(r)(2)(B).

“Because spouses typically possess assets and income jointly and bear financial responsibility for each other, Medicaid eligibility determinations for married applicants have resisted simple solutions.” Blumer, 534 U.S. at 479, 122 S.Ct. 962. Prior to the enactment of the MCCA, when one spouse entered a nursing home (or other institution) and applied for Medicaid, each spouse was treated as a separate household. SeeH.R.Rep. No. 100–105(11) (1987), reprinted in1988 U.S.C.C.A.N., 1987 WL 61566, at *66. Income, such as Social Security checks, pensions, and interests or dividends from investments, were considered to belong to the spouse whose name was on the instrument conveying the funds. Id. Thus, when the husband, for example, entered a nursing home and the couple's pension check had only the husband's name on it, all of that income was attributed to him when determining Medicaid, leaving the wife destitute. Id. Conversely, if the wife entered the nursing home, because none of the income was considered hers, the husband was under no obligation under federal law to contribute any income toward the cost of her care. Id.

The rule for attribution of resources was basically the same as that for attributing income. Id. Generally, in the month following institutionalization, resources to which a spouse had unrestricted access, such as a joint savings account, were considered available to that spouse for eligibility purposes. Id. On the other hand, assets held solely by the community spouse were, after the first month, considered to belong to her, and she had no obligation under federal law to contribute any amount of such resources toward the costs of care of the institutionalized spouse. Id. at *66–67. Thus, before the enactment of the MCCA, “[m]any community spouses were left destitute by the drain on the couple's assets necessary to qualify the institutionalized spouse for Medicaid and by the diminution of the couple's income posteligibility to reduce the amount payable by Medicaid for institutional care. Conversely, couples with ample means could qualify for assistance when their assets were held solely in the community spouse's name.” Blumer, 534 U.S. at 480, 122 S.Ct. 962 (internal citation omitted).

In the MCCA, Congress sought to end the “pauperization” of the community spouse “by assuring that the community spouse has a sufficient—but not excessive—amount of income and resources available ... while ... [the institutionalized spouse] is in a nursing home at Medicaid expense.” H.R.Rep. No. 100–105(11), at *65. (Emphasis added.) In addition, “Congress intended to close the loophole where a couple could shelter resources in the community spouse's name while the institutionalized spouse received Medicaid.” Johnson v. Guhl, 91 F.Supp.2d 754, 761 (D.N.J.2000).

“To achieve those goals, the MCCA requires that at the time of institutionalization, a ‘snapshot’ of the total value of the couple's resources owned by either the institutionalized or community spouse is inventoried or assessed.” Id.; 42 U.S.C. § 1396r–5(c)(1)(A). The couple's resources are divided into countable and exempt assets and one-half of the total value of the resources “to the extent either the institutionalized spouse or the community spouse has an ownership interest” is considered a spousal share. 42 U.S.C. § 1396r–5(c)(1)(A). To avoid impoverishment of the community spouse, the community spouse is allowed a “community spouse resource allowance” of the couple's assets. 42 U.S.C. § 1396r–5(f)(2).

The Arkansas Department of Human Services Medical Services Policy Manual defines the “community spouse resource allowance” (“CSRA”) as the maximum amount of the institutionalized spouse's resources which may be transferred to the community spouse or to another for the sole benefit of the community spouse. Ark. Admin. Code 016.20.1–3337.1. Arkansas's “community spouse maximum resources” (“CSMR”) is the total amount of resources which may be considered available to the community spouse; this amount includes resources held solely by the community spouse (in which the institutionalized spouse has no ownership interest) and the CSRA. Id. At the time of the application, all resources held by either the institutionalized spouse or the community spouse shall be considered available to the institutionalized spouse to the extent that the resources exceed the CSMR. Ark. Admin. Code 016.20.1–3337.4.

In the instant case, Gordon was admitted to a long-term-care facility on July 29, 2010, at which time he had been married to, and living in the same home with, Martha for forty-six years. Hoping Gordon's medical condition would improve, Martha did not apply for Medicaid assistance until December 29, 2011. As part of the application process, the Pierces indicated that they had, inter alia, two retirement accounts. The retirement accounts consisted of an IRA and a 401(k), and both accounts were in Martha's name only. As of the date of the Medicaid application, Martha's IRA account had a balance of $325,245.92, and her 401(k) had a balance of $27,300.13. When calculating the couple's total available resources, a DHS caseworker included these two retirement accounts and found that the total amount of resources held by Gordon and Martha at the time of the application was $358,550.38, and that the CSMR was $109,560; ³ therefore, the value of countable resources for Gordon's application was $248,990.38. Because the maximum amount of resources the applicant may have and still be eligible for nursing-home-care benefits is $2,000, the caseworker denied Gordon's application.

Gordon appealed the denial of his application. In his brief and in oral arguments before a DHS hearing officer, Gordon's attorney contended that federal law exempted Martha's retirement accounts in calculating Gordon's resources for purposes of Medicaid eligibility. The hearing officer disagreed, finding that DHS had acted correctly when it determined that Martha's IRA and 401(k) accounts were countable resources and not subject to an exclusion. Gordon then filed a petition for judicial review with the circuit court. The circuit court reversed and remanded, concluding that, based on the briefs and arguments of counsel and the holding and discussion in Keip v. Wisconsin Department of Health & Family Services, 232 Wis.2d 380, 606 N.W.2d 543 (1999), DHS should not have counted against Gordon's Medicaid eligibility the retirement accounts owned by Martha.

Review of administrative agency decisions, by both the circuit court and the appellate court, is limited in scope. E.g., Ark. State Highway & Transp. Dep't v. Lamar Advantage Holding Co., 2011 Ark. 195, at 4, 381 S.W.3d 787, 790. The standard of review to be used by both the circuit court and the appellate court is whether there is substantial evidence to support the agency's findings. Id., 381 S.W.3d...