Estate of Atkinson v. Minnesota Dept. of Human Services, C9-96-335

• Citation: 564 N.W.2d 209
• Decision Date: 29 May 1997
• Docket Number: No. C9-96-335,C9-96-335
• Court: Supreme Court of Minnesota (US)
• Parties: Medicare & Medicaid Guide P 45,260 ESTATE OF Marion ATKINSON, Respondent, v. MINNESOTA DEPARTMENT OF HUMAN SERVICES, and Otter Tail County Department of Human Services, Respondent.

Page 209

564 N.W.2d 209

Medicare & Medicaid Guide P 45,260

ESTATE OF Marion ATKINSON, Respondent, v. MINNESOTA DEPARTMENT OF HUMAN SERVICES, and Otter Tail County Department of Human Services, Respondent.

No. C9-96-335.

Supreme Court of Minnesota.

May 29, 1997.

Syllabus by the Court

For purposes of determining eligibility for medical assistance, all assets owned by a married couple at the time of application for medical assistance, less the statutory spousal share calculated at the time of institutionalization, are deemed available to the institutionalized spouse pursuant to Minn.Stat. § 256B.059 and 42 U.S.C. § 1396r-5.

Hubert H. Humphrey, III, Minnesota Attorney General, St. Paul, for Appellant.

Pemberton, Sorlie, Sefkow, Rufer & Kershner, P.L.L.P., Oscar J. Sorlie, Jr., Fergus Falls, for Respondent Estate of Marion Atkinson.

Waldemar B. Senyk, Otter Tail County Attorney, Kurt A. Mortenson, Assistant County Attorney, Fergus Falls, for Respondent Otter Tail County Dept. of Human Services.

Heard, considered and decided by the court en banc.

OPINION

STRINGER, Justice.

We consider here the issue of at what point in time the assets of a married couple, one institutionalized, must be evaluated for purposes of determining eligibility under Minnesota's medical assistance program.

The Otter Tail County Department of Human Services ("the County") denied respondent Marion Atkinson's ("Marion") 1994 application for medical assistance ("MA") on the ground that, due to appreciation of her husband Merle's ("Merle") assets since the time of Marion's institutionalization in 1991, Merle's assets exceeded the maximum spousal share of $72,660 allowed under Minn.Stat. § 256B.059. On appeal, the State Commissioner for the Department of Human Services ("DHS") affirmed. On further review by the Otter Tail County District Court however, the court reversed, holding that a couple's assets may only be evaluated as of the time of the initial institutionalization of the spouse and, therefore, any appreciation in the community spouse's ¹ assets after the date of institutionalization should not be taken into account in determining eligibility for MA. The court of appeals affirmed. We conclude that the applicable statutes require that all assets owned by a couple at the time of application for MA, less the spousal share determined at the time of institutionalization, are deemed available to the institutionalized spouse for purposes of determining eligibility. We therefore reverse.

A brief background of Minnesota's MA program will provide a context for our review. Medicaid, which is known as medical assistance in Minnesota, was enacted in 1965 as Title XIX of the Social Security Act and is designed to provide medical assistance to individuals whose income and resources are not sufficient to meet the costs of their necessary care and services. Atkins v. Rivera, 477 U.S. 154, 156, 106 S.Ct. 2456, 2458, 91 L.Ed.2d 131 (1986). The federal government shares the cost of Medicaid with the states that elect to participate in the program and, in return, the states are required to administer their programs in a way that complies with the federal statutes and regulations. Id. at 156-57, 106 S.Ct. at 2458-59.

MA is a needs-based program available to individuals who fit into one of two categories. The "categorically needy" receive MA by virtue of the fact that they are eligible for cash assistance under the Supplemental Security for the Aged, Blind, and Disabled (SSI) or Aid to Families with Dependent Children (AFDC) programs. Id. at 157, 106 S.Ct. at 2458-59. The "medically needy" are those people who, while not otherwise eligible for SSI or AFDC benefits, incur medical expenses in an amount that effectively reduces their income to roughly the same position as those who are eligible for those programs. Id. at 158, 106 S.Ct. at 2459. To be deemed medically needy, and therefore eligible for MA in Minnesota, an individual must own no more than $3,000 in assets as an individual or $6,000 in assets as a household, not including household goods and other excluded items, ² and have an income not exceeding 120 percent of the eligibility threshold for AFDC benefits. Minn.Stat. §§ 256B.055, subd. 7 and 256B.056, subds. 3-4. Those whose assets exceed this eligibility standard are required to "spend down" their assets until they are at or below the threshold amount. Atkins, 477 U.S. at 158, 106 S.Ct. at 2459.

Prior to 1988, when a married person became institutionalized, all of the couple's assets were deemed available to the institutionalized spouse and were required to be spent down to the SSI eligibility limits--then approximately $1,800--before the institutionalized spouse would be deemed eligible for MA. H.R.Rep. No. 100-105(II), at 65 (1988), reprinted in 1988 U.S.C.C.A.N. 857, 888 (hereinafter U.S.S.C.A.N.). This policy had the effect of forcing the community spouse to spend down virtually all of the marital assets before the institutionalized spouse could be deemed eligible for assistance and had resulted in community spouses being forced to sue the institutionalized spouse for support or become prematurely institutionalized themselves. Id. at 892. To prevent community spouses from having to impoverish themselves in this manner, Congress enacted the "spousal impoverishment" provisions of the Medicare Catastrophic Coverage Act of 1988 ("MCCA"), 42 U.S.C. § 1396r-5 (1996), which Minnesota codified as Minn.Stat. § 256B.059. These provisions were designed to end the pauperization of community spouses by allowing them to protect a sufficient, but not excessive, "spousal share" of the marital assets to meet their own needs while the institutionalized spouse was in a nursing home at Medicaid expense. U.S.S.C.A.N. at 888. At the time of Marion's institutionalization and asset assessments, ³ section 256B.059 read, in relevant part:

Subd. 1. Definitions. * * *

(c) "Spousal share" means one-half the total of all assets, to the extent that either the institutionalized spouse or the community spouse had an ownership interest at the time of institutionalization. * * *

Subd. 2. Assessment of spousal share. At the beginning of a continuous period of institutionalization of a person, at the request of either the institutionalized spouse or the community spouse, or upon application for medical assistance, the total value of assets in which either the institutionalized spouse or the community spouse had an interest at the time of the first period of institutionalization of 30 days or more shall be assessed and documented and the spousal share shall be assessed and documented. * * *

Subd. 5. Asset availability. (a) At the time of application for medical assistance benefits, assets considered available to the institutionalized spouse shall be the total value of all assets in which either spouse has an ownership interest, reduced by the greater of:

(1) $12,000; or (2) the lesser of the spousal share or $60,000; ⁴ * * *

(c) After the month in which the institutionalized spouse is determined eligible for medical assistance, during the continuous period of institutionalization, no assets of the community spouse are considered available to the institutionalized spouse * * *.

(1990) (footnote added).

Marion entered the Pioneer Home nursing home in Fergus Falls on April 17, 1991 and immediately began receiving long-term care. An asset assessment completed by the Atkinsons on August 3, 1993 indicated that, as of the date of her institutionalization, Marion and her husband Merle had assets totaling $175,533, excluding their homestead and other excluded items. Marion, the institutionalized spouse, was deemed to have assets equal to the total value of all assets in which either spouse had an ownership interest, reduced by a "spousal share" equal to one-half of the total of all their assets up to a set maximum--in this case $72,660--which was allocated to Merle, the community spouse. Minn.Stat. § 256B.059. Therefore, pursuant to Minn.Stat. § 256B.059, subd. 3, $72,660 of the Atkinson's assets was allocated to Merle and the remaining $102,873 was deemed available to Marion for the purpose of determining whether she was eligible for MA. The computations are as follows:

                      Total assets as of April 17, 1991 (date of                  $  175,533
                        institutionalization)
                      Spousal share allocated to each spouse (one half total    - $   87,766.50
                        assets)
                      Less the statutory maximum allowed Merle                    $   72,660
                                                                                     ----------
                      Excess                                                      $   15,106.50
                      Spousal share allocated to Marion                           $   87,766.50
                      Plus Merle's excess                                       k $   15,106.50
                                                                                     ----------
                      Assets deemed "available" for institutionalization          $  102,873
                        expenses
                

Over the next three years Marion spent down the excess assets and, when Merle applied for MA on behalf of Marion on November 3, 1994, her available assets based on the April 17, 1991 computation had shrunk from $102,873 to $1,537--clearly within the statutory eligibility limits. In that same time period however, Merle's assets had increased from $72,660 to $149,684--well beyond the statutory maximum. On January 24, 1995 therefore, the county denied the application for MA on the basis that Merle's assets were $77,024 above the $72,660 maximum allowable for a community spouse. The county thereupon informed Merle that $77,024 needed to be spent down before Marion would qualify for MA.

The Atkinson's appealed the county's decision to the State Commissioner of DHS, arguing that the county and state agencies had misapplied the applicable statutes. The Atkinsons argued that it is the asset allocation made at the time of institutionalization that...