Conrad v. Hackett

• Citation: 562 N.Y.S.2d 331,149 Misc.2d 56
• Parties: Kenneth and Caroline CONRAD, on Behalf of Themselves and others Similarly Situated, Petitioners, v. Ronald B. HACKETT, as Commissioner of the Cattaraugus County Department of Social Services, and Cesar A. Perales, as Commissioner of the New York State Department of Social Services, Respondents.
• Decision Date: 28 September 1990
• Court: United States State Supreme Court (New York)

Page 331

562 N.Y.S.2d 331

149 Misc.2d 56

Kenneth and Caroline CONRAD, on Behalf of Themselves and others Similarly Situated, Petitioners, v. Ronald B. HACKETT, as Commissioner of the Cattaraugus County Department of Social Services, and Cesar A Perales, as Commissioner of the New York State Department of Social Services, Respondents.

Supreme Court, Genesee County.

Sept. 28, 1990.

William W. Berry, for petitioners.

Robert Abrams, Atty. Gen., Shirley Troutman Howard, Asst. Atty. Gen., for respondent Perales.

Mary M. Sullivan, for respondent Hackett.

GLENN R. MORTON, Justice.

Petitioners have originated this CPLR Article 78 proceeding, as a class action, to review respondents' determination to deny allocation of the income of an institutionalized medicaid recipient to the maintenance needs of his non-institutionalized spouse, based upon the latter's available resources. The matter was initially heard at the March 19, 1990 Special Term of this Court, and thereafter held in abeyance pending petitioners' related motion for class certification. Petitioners' motion for class certification was thereafter argued at the June 11, 1990, Special Term of this Court, at which time all issues were deemed finally submitted.

The underlying facts are not in dispute. Petitioner Kenneth Conrad is 79 years old and a permanent resident of a residential health care facility. His wife, petitioner Caroline Conrad, remains in the marital residence. Mr. Conrad entered the residential health care facility in October of 1988 as a private pay patient, but became eligible for medicaid as of March 1989. Consequently, effective April 1, 1990, the local Department of Social Services determined that Mr. Conrad must apply his entire net income of $645.81 per month toward the cost of his residential care. On the other hand, Mrs. Conrad's minimum maintenance needs under the associated regulatory standards are $479.00 per month, which would appear to meet her actual regular expenses. However, her only income is $246.00 per month as a Social Security benefit. Nonetheless, the respondents have denied the administrative application and appeal to set aside to her "the amount needed to bring the income of the spouse ... up to the" regulatory standards, as provided by the department regulations at 18 NYCRR § 360-4.9(c). The basis of respondent's determination was the availability of Mrs. Conrad's lone bank account of approximately $10,000.00 as a resource for her maintenance. In this regard, the Commissioner relies upon § 360-4.3(f)(1)(iii)(e) of the department regulations, which states that "(i)f the spouse ... of a person whose institutionalization places him/her in permanent absent status ... does not have enough income and resources to meet their own needs, an amount will be deducted from the person's income in accordance with § 360-4.9". Resources, as opposed to income, would encompass Mrs. Conrad's bank account (18 NYCRR § 360-4.4[a][1, 2].

Petitioners assert three causes of action. First, that respondents were required under the regulations to make their determination solely on the basis of Mrs. Conrad's income, without regard to resources, as previously construed by this court in the case of Antinore v. Perales (Supreme Court, Genesee County, Index No. 37201); second, to the extent those regulations have been recodified, that the department's construction is arbitrary and capricious as applied; and, third, that in so doing the respondents are liable for depriving petitioners their civil rights under the laws of the United States. In point of law, respondents objected that the non-institutionalized spouse's resources may now be considered pursuant to regulations enacted after the Antinore decision, and that class certification is not warranted. That the determination herein was arbitrary and capricious or in violation of petitioners' Federal civil rights is generally denied.

As submitted by petitioners, this court previously construed former § 360.5(e)(1) of the department regulations, on its face and despite broader federal regulations, to permit consideration only of the non-institutionalized spouse's income in determining those maintenance needs for which the income of an institutionalized medicaid recipient could be utilized. That decision, in Antinore v. Perales (supra), was rendered July 6, 1987. Subsequently, without substantially amending former § 360.5(e)(1) itself, the state commissioner added a new § 360.7(b)(4) to the department regulations in order to conform with federal regulations. The new section specifically conditioned that "if the spouse or family in the community does not have sufficient income or resources to meet their own needs, an amount will be deducted from the patient's income, if any, to bring the income of the spouse or family in the community up to the higher of the medical assistance standard or the public assistance level" (emphasis added). Thereafter, Part 360 of the department regulations was recodified in its current configuration, effective March 1, 1989, specifically integrating the utilization formula now contained in § 360-4.9(c), with the condition now contained in § 360-4.3(f)(1)(iii)(e) that the spouse of an institutionalized recipient "does not have enough income and resources to meet their own needs" (emphasis added).

In this context, the court discerns no practical difference in the distinction between "income or resources" as opposed to "income and resources". The fact that the set aside is ultimately determined under § 360-4.9(c) according to the non-institutionalized spouse's income is not logically inconsistent with the initial determination of need based upon both income and resources. Further, the commissioner's pronouncements that the subsequent amendments change no existing medicaid requirements or policies is simply not persuasive as a matter of regulatory construction in the face of the clear language of the regulations.

As advanced by respondents, it appears from the foregoing that, as a matter of regulatory construction, this court's decision in Antinore v. Perales had been implicitly overruled and was no longer controlling at the time of petitioners' application herein. Petitioners' first cause of action is therefore denied.

Petitioners' second cause of action, insofar as it attributes respondent's error in relation to Antinore v. Perales is, by virtue of the foregoing, insufficient on its face. Nonetheless, for the purposes of a summary determination (CPLR 409[b], petitioners' pleading may be construed liberally as supported by the record (People ex. rel. Brooklyn Union Gas Company v. Miller, 253 A.D. 162, 1 N.Y.S.2d 246; Litemore Electric Company, Inc. v. Kawecki, 48 Misc.2d 347, 265 N.Y.S.2d 29) in order to preserve an inartfully pleaded but potentially meritorious claim (see generally, Rovello v. Orofino Realty Company, 40 N.Y.2d 633, 389 N.Y.S.2d 314, 357 N.E.2d 970).

In substance, the regulatory scheme, on its face, requires only a finding that the income and resources of the non-institutionalized spouse are generally insufficient to meet her maintenance needs as a prerequisite to utilization of the institutionalized spouse's income. Thus, the essential issue before this court is limited to whether the discretionary determination of the respondents to deny utilization of Mr. Conrad's income for the maintenance of Mrs. Conrad was arbitrary and capricious or an abuse of discretion (CPLR 7803[3]; see generally, Diocese of Rochester v. Planning Board, 1 N.Y.2d 508, 154 N.Y.S.2d 849, 136 N.E.2d 827; Adelman v. Bahou, 85 A.D.2d 862, 446 N.Y.S.2d 500; Douglas v. Miller, 55 Misc.2d 303, 285 N.Y.S.2d 174, aff'd. 31 A.D.2d 889, 298 N.Y.S.2d 911.) Specifically, an agency's interpretation of its own rules is to be upheld unless it is irrational or unreasonable and the administrative determination is to be accepted by the courts if it has warrant in the record and a reasonable basis in law (see generally Howard v. Wyman, 28 N.Y.2d 434, 322 N.Y.S.2d 683, 271 N.E.2d 528; Huntington TV Cable Corporation v. State of New York Commission on Cable Television, 94 A.D.2d 816, 463 N.Y.S.2d 314, aff'd. 61 N.Y.2d 926, 474 N.Y.S.2d 718, 463 N.E.2d 34; Watkins v. Toia, 57 A.D.2d 628, 394 N.Y.S.2d 23, aff'd. 46 N.Y.2d 773, 413 N.Y.S.2d 908, 386 N.E.2d 819; Gamble v. Lavine, 82 Misc.2d 444, 369 N.Y.S.2d 917).

Here, it is apparent that the department's interpretation of the regulations would require that the non-institutionalized spouse's resources be reduced to the minimal medical assistance level, e.g., $3,250.00 (Transcript of Conrad Fair Hearing, p. 29; cf. 18 NYCRR § 360-4.7). The respondent's position that the non-institutionalized spouse be required to exhaust her resources, so as to become herself a virtual public charge (cf. 18 NYCRR § 352.23) before she was eligible for support from her institutionalized spouse was irrational and had no basis in law (see, Venezia v. Venezia, 144 A.D.2d 948, 534 N.Y.S.2d 610; Nester v. Nester, 135 A.D.2d 878, 521 N.Y.S.2d 878; Albany County Department of Social Services v. Englehardt, 124 A.D.2d 140, 511 N.Y.S.2d 698). As such, the respondents arbitrarily deviated from the reasonable and humane basis upon which these regulations must be interpreted (see generally, Moffett v. Blum, 74 A.D.2d 625, 424 N.Y.S.2d 923).

In retrospect, it is observed that the respondents' interpretation of the regulations has now been statutorily superseded by § 366-c of the Social Services Law in order to conform with the new Federal standard of 42 U.S.C. § 1396r-5, generally effective September 30, 1989. By virtue thereof, in cases such as that at bar, the value of resources is considered only initially in determining the eligibility of the medical assistance recipient and the allocation of those resources between spouses. Thereafter, the community spouse's monthly allocation from the institutionalized spouse's income is determined without further relation to...