Arkansas Dept. Health Human Serv. V. Smith

• Decision Date: 13 September 2007
• Docket Number: No. 06-6.,06-6.
• Citation: 370 Ark. 490,262 S.W.3d 167
• Parties: ARKANSAS DEPARTMENT OF HEALTH AND HUMAN SERVICES, Petitioner, v. Honorable Vann SMITH., Respondent.
• Court: Arkansas Supreme Court

262 S.W.3d 167

370 Ark. 490

ARKANSAS DEPARTMENT OF HEALTH AND HUMAN SERVICES, Petitioner, v. Honorable Vann SMITH., Respondent.

No. 06-6.

Supreme Court of Arkansas.

September 13, 2007.

Richard B. Dahlgren, Office of Chief Counsel, Little Rock, AR, for appellant.

Dustin McDaniel, Att'y Gen., by: Patricia V. Bell, Ass't Att'y Gen., Little Rock, AR, for appellee.

Miller & Schrader, P.A., by: Rebecca Winburn, Little Rock, AR, for Karen Blaylock, applicant.

TOM GLAZE, Justice.

The Arkansas Department of Health and Human Services (DHHS), petitions this court for a writ of prohibition instructing the Circuit Court of Pulaski County that it is without jurisdiction to grant Karen Blaylock's request for an increase of her Medicaid Community Spouse Monthly Income Allowance (CSMIA) and Medicaid Community Spouse Resource Allowance (CSRA) until her husband applies for Medicaid.

Karen Blaylock's husband, Alan Blaylock, became disabled in 1986; he suffered further injuries when he was beaten during a home-invasion robbery in 2005. As a result of the 2005 injuries, Alan required twenty-four-hour care and supervision to meet his daily needs, and he was institutionalized at Timber Ridge Ranch in early 2005.

On July 15, 2005, Karen filed an amended petition in the Pulaski County Circuit Court, seeking an order of support prior to applying for Medicaid benefits to help cover Alan's long-term care costs. DHHS, as the entity responsible for administering the Arkansas Medicaid program, was granted permission to intervene in the Blaylocks' suit. After being allowed to intervene, DHHS filed a motion for summary judgment, contending that, because Alan had not applied for Medicaid and DHHS had made no determination of his eligibility for benefits, Karen and Alan had failed to exhaust their administrative remedies. Accordingly, DHHS argued that the circuit court lacked jurisdiction over the matter.

On November 22, 2005, the circuit court denied DHHS's motion for summary judgment. In that order, the court determined that it had jurisdiction, finding that the Medicare Catastrophic Coverage Act (MCCA), 42 U.S.C. § 1396r-5, and the Arkansas Medical Services Manual provided implied authority for the court to allocate property outside an action for divorce or separate maintenance. In addition, the court found that the Blaylocks did not need to exhaust their administrative remedies prior to seeking a court order, because cases from other jurisdictions had found that Congress provided two alternative means by which a community spouse might obtain a higher resource or income allowance calculated under the MCCA-1) through an administrative hearing under 42 U.S.C. § 1396r5-(e), or 2) by judicial order. Given these two alternative routes, the court found that it was within Karen's discretion to choose which method she wanted to use to obtain a higher allowance.

Following the circuit court's denial of DHHS's motion for summary judgment, DHHS sought a writ of prohibition from our court on January 4, 2006.¹ Prohibition is an extraordinary writ that is appropriate only when the trial court is wholly without jurisdiction. Manila Sch. Dist. No. 15 v. Wagner, 357 Ark. 20, 159 S.W.3d 285 (2004). The writ is appropriate only when there is no other remedy, such as an appeal, available. Id. Prohibition is a proper remedy when the jurisdiction of the trial court depends upon a legal rather than a factual question. Id. However, prohibition is never issued to prohibit a trial court from erroneously exercising its jurisdiction. Id.

In its first point, DHHS argues that the circuit court lacked jurisdiction to consider Karen's petition because of a failure to exhaust her administrative remedies. Generally, the doctrine of exhaustion of administrative remedies provides that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed statutory administrative remedy has been exhausted. See Centerpoint Energy Resources Corp. v. Circuit Court of Miller County, 370 Ark. 190, 258 S.W.3d 336 (2007); Austin v. Centerpoint Energy Arkla, 365 Ark. 138, 226 S.W.3d 814 (2006). A basic rule of administrative procedure requires that an agency be given the opportunity to address a question before a complainant resorts to the courts. Austin, supra; Dixie Downs, Inc. v. Arkansas Racing Comm'n, 219 Ark. 356, 242 S.W.2d 132 (1951). Where a party has failed to exhaust his or her administrative remedies, the trial court lacks jurisdiction over the suit. See Staton v. American Mfrs. Mut. Ins. Co., 362 Ark. 96, 207 S.W.3d 456 (2005).

The issue before us is (1) whether Karen was entitled to proceed directly to circuit court to obtain an order of support, or (2) whether she was first required to avail herself of the administrative procedures set out in the Medicaid Catastrophic Coverage Act. DHHS urges this court to adopt the latter approach and conclude that, because Karen did not exhaust her administrative remedies, the circuit court lacked jurisdiction to consider her petition.

Before addressing this specific issue, however, it is necessary to examine the complexities of the MCCA on which Karen's petition was premised.

The federal Medicaid program provides funding to States that reimburse needy persons for the cost of medical care. See Social Security Act, tit. XIX, as added, 79 Stat. 343, and as amended, 42 U.S.C. § 1396 et seq. (1994 ed. and Supp. V) "Each participating State develops a 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. Schweiker v. Gray Panthers, 453 U.S. 34, 101 S.Ct. 2633, 69 L.Ed.2d 460 (internal quotation marks omitted); § 1396a(a)(17) (1994 ed.) [footnote omitted]. 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." § 1396a(a)(17)(B) (emphasis added).

Wisconsin Department of Health & Family Services v. Blumer, 534 U.S. 473, 479, 122 S.Ct. 962, 151 L.Ed.2d 935 (2002).

The objective of the MCCA was to protect married couples when one spouse is institutionalized in a nursing home, so that the spouse who continues to reside in the community (the so-called "community spouse") is not impoverished and has sufficient income and resources to live independently. See, e.g., Chambers v. Ohio Dep't of Human Servs., 145 F.3d 793, 798 (6th Cir.1998) (citing H.R. Rep. No. 100-105(II), 100th Cong., 2d Sess. at 65 (1988), reprinted in 1988 U.S.C.C.A.N. 857, 888). In essence, the MCCA allows a couple to avoid having to spend all of the couple's assets on the institutionalized spouse's long-term medical and custodial care before the institutionalized spouse is eligible for Medicaid benefits.

Under the MCCA, which governs the treatment of income and resources for institutionalized spouses, income is allocated between spouses pursuant to a complex formula. See 42 U.S.C. § 1396r-5(b) & (d). That formula provides that "no income of the community spouse shall be deemed available to the institutionalized spouse." 42 U.S.C. § 1396r-5(b)(1). The effect of the formula is to preserve the community spouse's income for that spouse, thus avoiding "pauperization" of that spouse, and to prevent that spouse's income from affecting the determination of whether the institutionalized spouse qualifies for Medicaid. See Blumer, 534 U.S. at 480, 122 S.Ct. 962. Section 1396r-5(b)(2) then sets out the rules to be used "[i]n determining the income of an institutionalized spouse or community spouse for purposes of the post-eligibility income determination described in subsection (d) of this section." (Emphasis added.)

Subsection (d) then provides a number of exceptions to those rules; those exceptions are "designed to ensure that the community spouse and other dependents have income sufficient to meet basic needs." Blumer, 534 U.S. at 481, 122 S.Ct. 962. Among those exceptions are the "Minimum Monthly Maintenance Needs Allowance" (MMMNA), 42 U.S.C. § 1396r-5(d)(3); the Community Spouse Monthly Income Allowance (CSMIA), 42 U.S.C. § 1396r-5(d)(2); and the Community Spouse Resource Allowance (CSRA), 42 U.S.C. § 1396r-5(f)(2).

These last two allowances are at issue in the instant case, as Karen's petition sought an order increasing her CSMIA and CSRA. Under the MCCA, the CSMIA comes into play when the income of the community spouse is insufficient to yield an income equal to or above the MMMNA. The CSMIA allows the community spouse to deduct the amount of that shortfall from the institutionalized spouse's income; the amount so deducted is then not considered "available" to the institutionalized spouse. As a result, Medicaid will pay a greater portion of the institutionalized spouse's medical expenses than it would absent the CSMIA provision. See Blumer, 534 U.S. at 482, 122 S.Ct. 962.

In addition, for purposes of establishing the institutionalized spouse's Medicaid eligibility, a portion of the couple's assets is reserved for the community spouse. This reserved amount is the CSRA, which is determined by calculating the total of all of a couple's assets, and then allocating half to the community spouse. The CSRA is considered unavailable to the institutionalized spouse in the eligibility determination, but all resources above that amount must be spent before eligibility can be achieved. See Blumer, 534 U.S. at 483, 122 S.Ct. 962.

As just mentioned, Karen sought an order from the circuit court establishing her CSMIA and CSRA; DHHS, however, contended that the circuit court lacked jurisdiction to entertain Karen's petition. The crux of DHHS's argument is that, in enacting the MCCA, Congress did not create an independent, original cause of action in state courts whereby potential Medicaid applicants could get a preemptive court order...