Eldridge v. D.C. Dep't of Human Servs.

• Decision Date: 08 April 2021
• Docket Number: No. 18-AA-664,18-AA-664
• Citation: 248 A.3d 146
• Parties: Richard ELDRIDGE, Rosa Lee, and Eva Freeman, Petitioners, v. DISTRICT OF COLUMBIA DEPARTMENT OF HUMAN SERVICES and District of Columbia Department of Health Care Finance, Respondents.
• Court: D.C. Court of Appeals

248 A.3d 146

Richard ELDRIDGE, Rosa Lee, and Eva Freeman, Petitioners,

v.DISTRICT OF COLUMBIA DEPARTMENT OF HUMAN SERVICES and District of Columbia Department of Health Care Finance, Respondents.

No. 18-AA-664

District of Columbia Court of Appeals.

Argued January 21, 2020

Decided April 8, 2021

Bradley E. Oppenheimer with whom Jacob E. Hartman and Geoffrey M. Klineberg, Washington, were on the brief, for petitioners.

Graham E. Phillips, Assistant Attorney General, with whom Karl A. Racine, Attorney General for the District of Columbia, Loren L. AliKhan, Solicitor General, and Caroline S. Van Zile, Deputy Solicitor General, were on the brief, for respondents.

Before Glickman and Easterly, Associate Judges, and Fisher, Senior Judge.^*

Glickman, Associate Judge:

Petitioners ask us to review an order of the Office of Administrative Hearings (OAH) affirming the termination of their Medicaid benefits as participants in the District's home and community-based services program for persons who are elderly and individuals with physical disabilities. The Administrative Law Judge (ALJ) upheld determinations by the Department of Human Services (DHS) in 2016 and 2017 that petitioners did not meet applicable income requirements for continuing to receive those benefits because (1) petitioners’ incomes exceeded the eligibility ceiling for "categorically needy" beneficiaries, and (2) petitioners did not show they had incurred sufficient medical costs to bring their remaining income below the considerably lower eligibility ceiling for "medically needy" beneficiaries (a requirement commonly referred to as "spending down"). The material facts supporting those determinations are not at issue; the dispute before us concerns the proper interpretation of federal and District of Columbia law and regulations governing petitioners’ continuing Medicaid eligibility.

Petitioners present three claims of legal error. First, they argue that the ALJ accorded undue deference to respondents’ interpretation of ambiguous provisions of federal law. Second, petitioners argue that respondents have misapplied federal law by promulgating different income eligibility levels for categorically and medically needy Medicaid applicants in such a way as to create a "benefit cliff," whereby someone whose monthly income does not exceed the eligibility ceiling can receive full Medicaid coverage of their medical costs, but someone whose monthly income exceeds that ceiling, by however small an amount, can get no coverage at all until they have spent a substantial portion of their own modest income on medical costs. Third, petitioners argue that, instead of rescinding their eligibility for Medicaid when their incomes rose above the eligibility ceiling, respondents were required by "post-eligibility treatment of income" regulations to adjust the financial contributions petitioners were expected to make to the cost of their care in light of their higher incomes.

We conclude that petitioners are not entitled to relief. The ALJ did not accord undue deference to respondents’ interpretation of federal law, but even if the ALJ had done so, a remand would be unnecessary because we construe the law ourselves de novo . On the merits, we hold that respondents did not misinterpret or misapply the law. Federal law permits jurisdictions to establish different income eligibility ceilings for categorically and medically needy Medicaid beneficiaries, and the post-eligibility treatment of income regulations do not apply to beneficiaries whose incomes rise above the applicable eligibility ceiling. We therefore affirm the termination of petitioners’ benefits.

I. Medicaid Law and Regulations

The District of Columbia, at its option, participates in the federal Medicaid program, which provides "financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons."¹ In order to receive that assistance, the District must comply with the Medicaid Act and federal regulations implementing and interpreting it.² The Act prescribes, among other things, the treatments and services the federal government will subsidize and the eligibility requirements beneficiaries must meet in order for the District to receive federal Medicaid funds.³

As pertinent here, the Medicaid program describes three classes of potential beneficiaries to whom an acceptable State Medicaid program must or may provide benefits with federal backing: the "mandatory categorically needy," the "optional categorically needy," and the "medically needy."⁴

States (including the District) participating in Medicaid are required to provide benefits to "mandatory categorically needy" individuals.⁵ This category comprises certain groups of low-income people who "are receiving or deemed to be receiving cash assistance,"⁶ including those who qualify for Supplemental Security Income for the Aged, Blind, and Disabled (SSI).⁷ To qualify for SSI and be considered mandatory categorically needy, a person's "countable income" — their total income minus certain deductions — must be less than the SSI benefit rate. In 2017, the SSI benefit rate was $735 per month for an individual.⁸ None of the petitioners before us was in the "mandatory categorically needy" category.

States are permitted (but not required) to provide Medicaid benefits to other groups of low-income persons "who, generally, meet the categorical requirements or income or resource requirements that are the same as or less restrictive than those of the cash assistance programs and who are not receiving cash payments."⁹ This is known as the "optional categorically needy" category. Prior to their terminations, petitioners qualified for Medicaid benefits under this category in connection with their participation in a Home and Community-Based Services (HCBS) waiver program established by the District in accordance with Section 1915(c) of the Medicaid Act.¹⁰ The District's program is called the Elderly and Individuals with Physical Disabilities (EPD) Waiver.¹¹ Such "waiver" programs permit States to provide support services (such as home health aides) enabling eligible Medicaid beneficiaries who otherwise would be institutionalized to continue residing in their homes and communities.¹² The Medicaid Act allows States to establish a countable income ceiling for HCBS waiver beneficiaries at the same elevated level as the States set for beneficiaries receiving long-term institutional care. That level, referred to as the Special Income Standard, or "SIS," may be up to 300% of the SSI benefit rate.¹³ The District of Columbia set its Special Income Standard for EPD Waiver beneficiaries at this maximum allowed level.¹⁴ In 2017, the District's SIS was $2,205 per month for individuals.¹⁵

Finally, the Medicaid Act allows States to extend coverage beyond the categorically needy to persons who qualify as "medically needy" because their medical expenses are effectively impoverishing.¹⁶ Persons whose countable incomes exceed the eligibility ceiling for categorical neediness may become eligible to receive Medicaid benefits as medically needy "if they incur [medical costs] in an amount that effectively reduces their income"¹⁷ to a "single income standard," termed the "medically needy income level" (MNIL).¹⁸ This income ceiling is not required to be the same as, or comparable to, the income ceiling for the categorically needy; the MNIL is not linked to the SSI benefit rate. Instead, "Congress explicitly stated ... that federal reimbursement for benefits provided to the medically needy was available only if the income of those persons, after the deduction of incurred medical expenses, was less than 133 1/3 % of the state AFDC [Aid to Families with Dependent Children] payment level."¹⁹ In setting the parameters for the MNIL, "Congress recognized that this amount could be lower than categorical assistance eligibility levels."²⁰ The MNIL in the District in 2017 was $643 per month for an individual.²¹ Thus, the maximum qualifying countable income for receiving the District's EPD Waiver services is significantly lower for the medically needy than for the categorically needy.

To determine whether an applicant for, or an existing beneficiary of, the District's EPD Waiver is within one of the eligibility groups, respondent DHS²² applies an income test, wherein certain deductions (e.g., Child Nutrition Payments, governmental housing assistance, etc.²³ ) are taken from the applicant or beneficiary's gross income to calculate a gross countable income. Applicants and beneficiaries with countable incomes at or below the SIS qualify for categorically needy eligibility²⁴ ; those "who ha[ve] gross countable income exceeding the SIS" are required "to spend down the excess income to the MNIL ... to become financially eligible"²⁵ as medically needy.

Federal regulations also require States to calculate an amount each eligible beneficiary of institutional care or HCBS is expected to contribute to the cost of their care.²⁶ In a process referred to as "post-eligibility treatment of income" (PETI), DHS calculates this financial contribution by applying specified deductions to an eligible beneficiary's gross countable income; the amount of countable income that remains after those deductions is the amount the beneficiary is expected to contribute for their institutional or community care.²⁷ Among the required deductions for HCBS beneficiaries is a "Community Maintenance Needs Allowance" (CMNA) intended to cover their cost of living.²⁸ A State "may set [the CMNA] at any level," provided it is "based on a reasonable assessment of need."²⁹ In the District, the CMNA is equal to the SIS.³⁰ Consequently, because only persons who have countable income at or below the SIS (or persons who spend down to the MNIL) are eligible for the EPD Waiver, their required PETI financial contribution is always zero.³¹

In accordance with federal regulations requiring periodic reassessment of Medicaid eligibility, DHS must...