Artac v. DHFS

• Decision Date: 30 March 2000
• Docket Number: No. 99-1523.,99-1523.
• Citation: 610 N.W.2d 115,234 Wis.2d 480,2000 WI App 88
• Parties: Josephine ARTAC, Petitioner-Appellant, v. WISCONSIN DEPARTMENT OF HEALTH AND FAMILY SERVICES, Respondent-Respondent.
• Court: Wisconsin Court of Appeals

234 Wis.2d 480

2000 WI App 88

610 N.W.2d 115

Josephine ARTAC, Petitioner-Appellant, v. WISCONSIN DEPARTMENT OF HEALTH AND FAMILY SERVICES, Respondent-Respondent.¹

No. 99-1523.

Court of Appeals of Wisconsin.

Submitted on briefs December 6, 1999.

Decided March 30, 2000.

On behalf of the petitioner-appellant, the cause was submitted on the briefs of Mitchell Hagopian of Elder Law Center of the Coalition of Wisconsin Aging Groups of Madison.

On behalf of the respondent-respondent, the cause was submitted on the brief of James E. Doyle, attorney general, and Maureen McGlynn Flanagan, assistant attorney general.

Before Dykman, P.J., Roggensack and Deininger, JJ.

¶ 1. DYKMAN, P.J.

Josephine Artac appeals from a circuit court order affirming the determination of a hearing examiner in the Division of Hearings and Appeals (DHA) that Artac was ineligible for Medical Assistance (MA) benefits because she had divested assets when property she placed in trust was distributed to the beneficiary. We conclude that Artac did not divest assets because the trustee did not act on Artac's behalf when she distributed the trust property. Accordingly, we reverse.

I. Background

¶ 2. On May 23, 1992, Artac deeded her home and property to an irrevocable trust and named Freida Adams as trustee. Patricia Sixel, Artac's daughter, was the beneficiary of the trust. The trust provided, in part:

2. Reserved Rights.

(a) Subject to subparagraphs 2(c)-(e) below, the Grantor expressly reserves and retains the right to live on and use the real property described above during the Grantor's lifetime. During such time, Grantor shall be responsible for all real estate taxes and assessments against said property, and for all costs of insurance, maintenance and upkeep of the same.

....

(d) During any period the Grantor is declared incompetent by her treating physician, the Trustee shall manage the property described above pursuant to the Trustee's powers below. The Trustee shall have the right to request payment of expenses which are the responsibility of the Grantor under subparagraph 2(a) above from the Grantor's attorney-in-fact. If the Grantor does not have sufficient funds to cover such expenses and there are no assets in this trust other than the property described above, the Trustee may, in the Trustee's discretion, terminate this trust and distribute its assets pursuant to the terms of this trust.

(e) If the period of incompetence referred to in subparagraph 2(d) above is determined to be permanent by the written statement of two physicians, including the Grantor's treating physician, the Trustee may, in the Trustee's discretion, terminate this trust and distribute its assets pursuant to the terms of this trust.

¶ 3. On December 10 and 11, 1997, two doctors found Artac to be incompetent. On January 9, 1998, Adams deeded the trust property to Sixel. On January 13, 1998, Sixel applied to the Clark County Department of Social Services for MA benefits for her mother.² The county denied the application because it concluded that Artac had divested assets when Adams transferred the trust property to Sixel. Artac requested a fair hearing before the DHA regarding the denial of her application.³ ¶ 4. The DHA hearing examiner concluded that Artac was "ineligible for medical assistance because a person acting on her behalf divested the equivalent of a life interest in property that she was entitled to receive." The hearing examiner explained that an applicant cannot divest assets in order to become eligible for MA benefits. He acknowledged that the trust itself was not subject to the divestment rules because it was created before the "look-back period" for Artac's MA application. However, he concluded that the right Artac had reserved under the trust to live on the property met the divestment statute's definition of an asset because it was a resource that Artac "was entitled to but did not receive because of action of a person with legal authority to act on her behalf." The hearing examiner determined that because Artac lost her remaining interest in the trust property when Adams transferred the property to Sixel in January 1998, Artac had divested an asset within the applicable look-back period. DHA denied Artac's request for a rehearing and the circuit court affirmed the hearing examiner's decision. Artac appeals.

II. Analysis

¶ 5. WISCONSIN STAT. § 49.453 (1997-98)⁴ prohibits a person from divesting assets so as to become eligible for MA benefits. Section 49.453 provides, in pertinent part:

(1) DEFINITIONS. In this section and in s. 49.454:

(a) "Assets" has the meaning given in 42 USC 1396p(e)(1).

....

(2) INELIGIBILITY FOR MEDICAL ASSISTANCE FOR CERTAIN SERVICES. (a) Institutionalized individuals. Except as provided in sub. (8), if an institutionalized individual or his or her spouse, or another person acting on behalf of the institutionalized individual or his or her spouse, transfers assets for less than fair market value on or after the institutionalized individual's look-back date, the institutionalized individual is ineligible for medical assistance for the following services for the period specified under sub. (3):

1. For nursing facility services.

2. For a level of care in a medical institution equivalent to that of a nursing facility.

3. For services under a waiver under 42 USC 1396n.

42 U.S.C. § 1396p(e)(1) (1994) provides:

The term "assets," with respect to an individual, includes all income and resources of the individual and of the individual's spouse, including any income or resources which the individual or such individual's spouse is entitled to but does not receive because of action —

(A) by the individual or such individual's spouse,

(B) by a person, including a court or administrative body, with legal authority to act in place of or on behalf of the individual or such individual's spouse, or

(C) by any person, including any court or administrative body, acting at the direction or upon the request of the individual or such individual's spouse.

¶ 6. An individual must transfer an asset for less than fair market value on or after the "look-back date" for it to be considered a divestment. See WIS. STAT. § 49.453(2)(a). Section 49.453(1)(f) provides that the look-back date applied to divestments is thirty-six months before, or, for trusts, sixty months before, the first date on which a person is both institutionalized and has applied for MA. The look-back dates established in § 49.453(1)(f) were made effective retroactive to October 1, 1993. See 1993 Wis. Act 437 § 9426. In order to ensure that § 49.453 is not applied to divestments made before the statute became effective, Department of Health and Family Services (DHFS) has phased in the look-back period for trusts in its MA Handbook so that they do not extend beyond October 1, 1993. The MA Handbook provides that, for MA applications made in January 1998, the look-back period for trusts is fifty-two months.

¶ 7. Artac argues that the hearing examiner incorrectly concluded that she divested an asset on January 9, 1998, when Adams deeded the trust property to Sixel. Artac contends that she relinquished her entire interest in the property when she created the trust in May 1992, well before the applicable look-back date. Since Artac had no interest in the trust property when it was transferred to Sixel in January 1998, she did not divest herself of any assets at that time. Artac also asserts that, even if she did give up an interest in the trust property when Adams transferred it to Sixel, that did not amount to a divestment of an asset because Adams did not have legal authority to act on her behalf as required by 42 U.S.C. § 1396p(e)(1)(B) (1994).

¶ 8. The DHFS concedes that Artac's placement of her home and property in trust in May 1992 did not affect her January 1998 MA application because it occurred before the look-back date. However, DHFS contends that, by reserving the right to live on the property during her lifetime, Artac retained a life interest in the property under the trust. It argues that Artac's life interest was terminated in January 1998 when Adams transferred the trust property to Sixel. Thus, DHFS argues that Artac divested an asset within the applicable look-back period.

[1, 2]

¶ 9. In an appeal of an administrative agency decision, we review the decision of the agency, not that of the circuit court. See Lilly v. DHSS, 198 Wis. 2d 729, 734, 543 N.W.2d 548 (Ct. App. 1995). The interpretation and application of WIS. STAT. § 49.453 and 42 U.S. C. § 1396p(e)(1) (1994) to undisputed facts are questions of law that we review de novo. See Tannler v. DHSS, 211 Wis. 2d 179, 183, 564 N.W.2d 735 (1997). However, while we are not bound by agency conclusions of law, see id., we generally give agency statutory interpretations one of three levels of deference: "great weight," "due weight" or no deference, see Zignego Co. v. DOR, 211 Wis. 2d 819, 823-24, 565 N.W.2d 590 (Ct. App. 1997).

¶ 10. In order to give an agency statutory interpretation great weight deference, we must conclude that:

(1) the agency was charged by the legislature with the duty of administering the statute; (2) the interpretation of the agency is one of long-standing; (3) the agency employed its specialized knowledge or expertise in forming the interpretation; and (4) the agency's interpretation will provide consistency and uniformity in the application of the statute.

Tannler, 211 Wis. 2d at 184. Due weight deference is appropriate "if the agency decision is `very nearly' one of first impression." Id. Finally, we review the agency's decision de novo "if the case is one of first impression for the agency and the agency lacks any special expertise." Id.

¶ 11. In determining the appropriate level of deference in this case, we must address whether we are reviewing a DHA decision or a DHFS decision. Although Artac petitioned DHFS for a fair hearing regarding the denial of her MA application, the...