Cook v. Bottesch

• Decision Date: 26 March 2013
• Docket Number: A13A0006.,A12A2269,Nos. A12A2268,A12A2506,s. A12A2268
• Citation: 740 S.E.2d 752,320 Ga.App. 796
• Parties: COOK et al. v. BOTTESCH. Cook et al. v. Shorey. Glover v. Cook et al. Cook et al. v. Robertson.
• Court: Georgia Court of Appeals

320 Ga.App. 796

740 S.E.2d 752

COOK et al.

v.BOTTESCH.

Cook et al.

v.Shorey.

Glover

v.Cook et al.

Cook et al.

v.Robertson.

Nos. A12A2268, A12A2269, A12A2506, A13A0006.

Court of Appeals of Georgia.

March 26, 2013.

Samuel S. Olens, Atty. Gen., Shalen S. Nelson, Sr. Asst. Atty. Gen., Michelle Townes, Penny Hannah, Jason Samuel Naunas, Michelle Townes, Asst. Attys. Gen., for Cook et al.

Joel Kevin Tharpe, Gainesville, for Bottesch, Shorey, Glover, and Robertson.

BRANCH, Judge.

These cases require us to determine whether Georgia has properly implemented a certain asset transfer penalty dictated by the federal Medicaid statute in connection with coverage for long-term care. The difficulty is that there appear to be conflicting provisions of the statute pertaining to the penalty, specifically, the circumstances under which the penalty applies to annuities purchased by the Medicaid applicant or his or her spouse. One provision imposes a penalty on couples who, in a five-year, look-back period, purchase an annuity without naming the State as a remainder beneficiary. The other provision excludes certain annuities from the asset transfer penalty. In the four cases before us, the Georgia Department of Community Health (DCH) imposed an asset transfer penalty on the applicants for Medicaid benefits because either they or their spouses refused to name the State as the remainder beneficiary on an annuity. For the reasons explained herein, we rule in favor of DCH on three cases but against DCH on one case with distinguishing facts. ¹

The parties do not dispute the essential facts found by the superior courts. John Bottesch, Carol Shorey, Boyce Robertson, and Jerry Glover (the “applicants”) are elderly persons who reside, or did reside before death ², in nursing homes and who sought Medicaid benefits for that care. Near in time to Bottesch, Shorey, and Robertson applying for Medicaid benefits, their respective spouses purchased one or more irrevocable, non-assignable, and actuarially sound annuities, which provide monthly benefits to the “community spouse” (i.e., not the institutionalized spouse). Glover purchased such an annuity for himself.

In connection with processing the applicants' Medicaid benefits applications, DCH asked the purchasers of the annuities to verify that they had named the State of Georgia as the remainder beneficiary as required by § 2339 of DCH's Economic Support Services Manual (the “State Medicaid Manual”). The purchasers refused and claimed that § 2339 was inapplicable and in contravention of other provisions of federal law. In each case, DCH approved the applications for benefits but also imposed a multi-month penalty in light of the purchasers' refusal. The penalty had an adverse effect on the applicants by precluding benefit payments to the nursing homes during the penalty period. The applicants thereafter sought a hearing and review before the Office of State Administrative Hearings (OSAH).

With regard to Bottesch, Shorey, and Robertson, OSAH determined that the penalty was inapplicable but that the applicants were not eligible for Medicaid benefits until they submitted a statement that they had designated the State as a remainder beneficiary. After an unsuccessful attempt at additional agency review,³ Bottesch and Shorey petitioned for review in the Superior Court of Union County; Robertson petitioned for review in the Superior Court of Towns County. The same judge from the Enotah Judicial Circuit was assigned to all three cases. On March 29, 2012, that judge signed orders in all three cases reversing the administrative rulings. The judge held that the State Medicaid Manual's § 2339 requirement that the community spouse name the State as a remainder beneficiary violates federal Medicaid law, both because the annuities were not “assets” for purposes of imposing a transfer of assets penalty and because the § 2339 requirement contravened separate spousal impoverishment protection provisions of the Medicaid statute. In May 2012, this Court granted DCH's applications for discretionary review in each of these three cases.

With regard to Glover, OSAH reversed the penalty and concluded that § 2339 of the State Medicaid Manual violated federal law because the annuity did not fall within the definition of an asset for purposes of imposing the penalty. DCH sought review by the Appeals Reviewer, which reinstituted DCH's decision; this final decision held that Glover was subject to the penalty. Glover petitioned for review in the Superior Court of Hall County. On May 7, 2012, the superior court affirmed the final agency decision. We granted Glover's application for discretionary review.

Thus the Bottesch, Shorey, and Robertson cases require us to determine whether the Department correctly assessed the asset transfer penalty on annuities purchased with marital assets for the benefit of the community spouse, whereas the Glover case requires us to answer the same question for an annuity purchased for the benefit of the institutionalized spouse. In all four cases, however, DCH's final decision held that the applicants were eligible for medical assistance but that they were subject to the asset transfer penalty because they failed to name the State as a remainder beneficiary.

1. “Judicial review of an administrative decision requires the court to determine that the findings of fact are supported by ‘any evidence’ and to examine the soundness of the conclusions of law that are based upon the findings of fact. OCGA § 50–13–19(h).” Pruitt Corp. v. Ga. Dept. of Community Health, 284 Ga. 158, 160(3), 664 S.E.2d 223 (2008). This scope of judicial review is narrow, and in a case where the facts are not in dispute, such as here, the court

may reverse or modify the agency decision if substantial rights of the appellant have been prejudiced because the administrative decision is: (1) in violation of constitutional or statutory provisions; (2) in excess of the statutory authority of the agency; (3) made upon unlawful procedure; (4) affected by other error of law. OCGA § 50–13–19(h).

(Punctuation omitted.) Id. at 161(3), 664 S.E.2d 223; see also Ga. Dept. of Community Health v. Medders, 292 Ga.App. 439, 440, 664 S.E.2d 832 (2008). The primary issue in this case is whether § 2339 of DCH's Medicaid Manual is in violation of the Medicaid statute. Thus, we begin by interpreting that statute.

2. When construing a federal statute, “the starting point must be the language employed by Congress, and courts must assume that the legislative purpose is expressed by the ordinary meaning of the words used.” (Punctuation omitted.) A Fast Sign Co. v. American Home Svcs., 291 Ga. 844, 846, 734 S.E.2d 31 (2012), quoting American Tobacco Co. v. Patterson, 456 U.S. 63, 68(II), 102 S.Ct. 1534, 71 L.Ed.2d 748 (1982). And “judicial construction is necessary only when a statute is ambiguous; in fact, when the language of a statute is plain and unequivocal, judicial construction is not only unnecessary but forbidden.” (Citation omitted.) Fleming v. State, 271 Ga. 587, 589, 523 S.E.2d 315 (1999).

(a) The Plain Language of the Statutory Asset Transfer Penalty. Federal law requires that a state plan for medical assistance comply with the provisions of 42 USC § 1396p with respect to transfers of assets. 42 U.S.C. § 1396a(a)(18). Subsection 1396p(c) requires that the state plan provide a penalty for disposal of assets for less than fair market value during a five-year, look-back period:

[I]f an institutionalized individual or the spouse of such an individual ... disposes of assets for less than fair market value on or after the look-back date ..., the individual is ineligible for medical assistance for [inter alia, nursing facility services] during the period beginning on the [lookback] date [for a period of time related to the uncompensated value of assets transferred on or after the look-back date].

The remainder of subsection (c), including the provisions relevant here, provides additional rules regarding the assessment of penalties for transfers of various types of assets, as well as rules protecting certain transfers from the penalty.

Subsection (c)(1)(F) contains the requirement that the purchase of an annuity will be treated as the disposal of an asset for less than fair market value unless the State is named as a remainder beneficiary:

(F) For purposes of this paragraph, the purchase of an annuity shall be treated as the disposal of an asset for less than fair market value unless—(i) the State is named as the remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the institutionalized individual under this [subchapter]; or (ii) the State is named as such a beneficiary in the second position after the community spouse or minor or disabled child and is named in the first position if such spouse or a representative of such child disposes of any such remainder for less than fair market value.

42 USC § 1396p(c)(1)(F). Standing alone, the plain language of subsection (c)(1)(F) is unrestricted; it applies to the “purchase of an annuity.” Thus, under a plain reading of this subsection, unless the State is named as the remainder beneficiary as provided, the purchase of any annuity during the look-back period is automatically considered the disposal of an asset for less than fair market value, thereby triggering the asset transfer penalty.

The relevant portion of subsection (c)(1)(G), however, states that although in general the purchases of annuities are considered transfers of assets subject to the penalty, the purchases of certain defined annuities are not considered transfers of assets subject to the penalty:

(G) For purposes of this paragraph with respect to a transfer of assets, the term “assets” includes an annuity purchased by or on behalf of an annuitant who has applied for medical assistance with respect to nursing facility services or other long-term care services under this ...