Estate of Krueger by Krueger v. Richland County Social Services, 940128

• Decision Date: 20 December 1994
• Docket Number: No. 940128,940128
• Parties: , Medicare & Medicaid Guide P 43,057 The ESTATE OF Roland KRUEGER, by Leontina KRUEGER, personal representative, Appellee, v. RICHLAND COUNTY SOCIAL SERVICES, Richland County Social Service Board, and North Dakota Department of Human Services, Appellants. Civ.
• Court: North Dakota Supreme Court

Page 456

526 N.W.2d 456

46 Soc.Sec.Rep.Ser. 622, Medicare & Medicaid Guide

P 43,057

The ESTATE OF Roland KRUEGER, by Leontina KRUEGER, personal representative, Appellee, v. RICHLAND COUNTY SOCIAL SERVICES, Richland County Social Service Board, and North Dakota Department of Human Services, Appellants.

Civ. No. 940128.

Supreme Court of North Dakota.

Dec. 20, 1994.

Duane Houdek (argued), Legal Assistance of North Dakota, Bismarck, for appellee.

Jean R. Mullen (argued), Asst. Atty. Gen., Atty. General's Office, Bismarck, for appellants.

NEUMANN, Justice.

Richland County Social Services and the Department of Human Services (collectively "Department") appeal from a judgment reversing the Department's decision that Roland Krueger could not transfer a Veterans Administration aid and attendance allowance to his community spouse, but instead had to apply the allowance to his nursing home costs. ¹ We reverse the judgment and affirm the Department's decision.

Krueger, an 80-year old military veteran, resided in a Richland County nursing home while his wife, Leontina, continued to reside in their marital residence in Jamestown. Krueger qualified for medical assistance ("Medicaid") to pay for his nursing home care. In addition to his Veterans Administration pension and social security payments, Krueger also received an aid and attendance allowance from the Veterans Administration. In December 1992, the Department informed Krueger that his monthly Medicaid recipient liability had increased to $336. This figure was arrived at by deducting his $45 personal allowance from an increased aid and attendance allowance of $381. In effect, when Krueger's aid and attendance allowance increased, the Department increased the amount Krueger had to pay to the nursing home before Medicaid would pay the remainder of the cost.

Krueger sought to transfer to Leontina for her maintenance as a community spouse the aid and attendance allowance, rather than apply it to the cost of his nursing home care. The Department denied his request. Krueger appealed to the district court, arguing the applicable administrative regulation, N.D.Adm.Code Sec. 75-02-02.1-34(5)(a), was contrary to federal law and that he should be able to preserve the aid and attendance allowance for maintenance of his spouse.

The court, ruling that the Department's regulation conflicted with federal law, held that the Veterans Administration aid and attendance allowance could not be counted as income during the post-eligibility phase of determining the extent of Medicaid assistance, and that the aid and attendance allowance could be applied to maintenance of Leontina because it was "his to spend as he pleases, ..." The Department appealed.

When an appeal from an administrative agency involves a legal question, as is the case here, we will affirm the agency's decision unless it is not in accordance with the law. Hettich v. Moore, 514 N.W.2d 378, 379 (N.D.1994); N.D.C.C. Secs. 28-32-21 and 28-32-19.

I

The Medicaid program, enacted in 1965 as Title XIX of the Social Security Act, 42 U.S.C. Secs. 1396-1396u, is a cooperative federal-state venture designed to afford medical assistance to persons whose income and resources are insufficient to meet the financial demands of necessary care and services. Atkins v. Rivera, 477 U.S. 154, 156, 106 S.Ct. 2456, 2458, 91 L.Ed.2d 131 (1986). Once a state elects to participate, the federal government shares the costs if the state's plan complies with the requirements of the Act and the related regulations of the Secretary of Health and Human Services. Atkins, 477 U.S. at 154-55, 106 S.Ct. at 2457; 42 U.S.C. Sec. 1396a.

The Medicaid program mandates coverage for the "categorically needy," 42 U.S.C. Sec. 1396a(a)(10)(A), who are already eligible to receive Aid to Families with Dependent Children ("AFDC") or Supplemental Security Income ("SSI"). Atkins, 477 U.S. at 156, 106 S.Ct. at 2458. States may elect to determine eligibility for the categorically needy by using either SSI standards or their pre-1972 Medicaid eligibility standards. Schweiker v. Gray Panthers, 453 U.S. 34, 38-39, 101 S.Ct. 2633, 2637-2638, 69 L.Ed.2d 460 (1981); 42 U.S.C. Sec. 1396a(f). A state that bases its coverage on its pre-1972 standards is referred to as a "Sec. 209(b) state" and is not required to provide coverage to SSI recipients who do not meet the generally more restrictive pre-1972 eligibility requirements. 1 J. Krauskopf, R. Brown, K. Tokarz, and A. Bogutz, Elderlaw: Advocacy for the Aging Sec. 11.1 (2d ed. 1993) ("Elderlaw" ). North Dakota is one of twelve Sec. 209(b) states. Id. at n. 4.

SSI eligibility standards are not entirely irrelevant in Sec. 209(b) states. States are also permitted to extend coverage to the "optional categorically needy," that is, those who are qualified for SSI but for some reason do not receive it, or who fail to qualify for SSI only because of their institutionalized status. Herweg v. Ray, 455 U.S. 265, 268-269, 102 S.Ct. 1059, 1062-1063, 71 L.Ed.2d 137 (1982). States can also extend coverage to the "medically needy," who meet nonfinancial eligibility requirements for AFDC or SSI but have income or resources exceeding the financial eligibility standards of those programs. Atkins, 477 U.S. at 157-59, 106 S.Ct. at 2459. North Dakota extends coverage to both the "optional categorically needy" and the "medically needy." See N.D.Adm.Code Sec. 75-02-02.1-05(2) and (3).

There is no dispute that Krueger falls within the "medically needy" group. States electing to assist the medically needy must determine eligibility under standards that are "reasonable" and "comparable for all groups." 42 U.S.C. Sec. 1396a(a)(17). In addition, the state plan must describe "the single standard to be employed in determining income and resource eligibility ..., and the methodology to be employed in determining such eligibility, which shall be no more restrictive than the methodology which would be employed under [SSI or AFDC] ...." 42 U.S.C. Sec. 1396a(a)(10)(C)(i)(III). See also Atkins, 477 U.S. at 157-59, 106 S.Ct. at 2459; 42 C.F.R. Sec. 435.401(c). Thus, eligibility standards can be no more restrictive than those used under the SSI program.

Determining an applicant's participation in the program involves a two-phase process: first, determining medical eligibility and financial eligibility based on the applicant's income and resources; and second, determining the extent of assistance to which the applicant is eligible based on another calculation of income. ² The purpose of the second, post-eligibility phase, calculation of income is to determine the recipient's share of the cost for medical services. See Sherman v. Griepentrog, 775 F.Supp. 1383, 1385 (D.Nev.1991).

II

In 1988, Congress enacted the Medicare Catastrophic Coverage Act, 42 U.S.C. Sec. 1396r-5, which was in part designed "to ameliorate the financial hardship suffered by aging couples faced with the high cost of nursing home care." Ford v. Iowa Dept. of Human Services, 500 N.W.2d 26, 27 (Iowa 1993). See also H.R.Rep. No. 105(II), 100th Cong., 2d Sess. 65-68 (1988), reprinted in 1988 U.S.C.C.A.N. 803, 888-892. The legislation defines an "institutionalized spouse" as an individual who "is in a medical institution or nursing facility" and "is married to a spouse who is not in a medical institution or nursing facility...." 42 U.S.C. Sec. 1396r-5(h)(1). A "community spouse" is "the spouse of an institutionalized spouse." 42 U.S.C. Sec. 1396r-5(h)(2). Under prior law, nearly all of a couple's assets had to be depleted before either one could satisfy Medicaid eligibility requirements, leaving inadequate resources and income to support the community spouse. Ford; 1 Elderlaw Sec. 11.30. To avoid impoverishing the community spouse, the Act clarifies Medicaid income eligibility guidelines and provides a greater community spousal allowance, thus permitting "the community spouse (usually the wife) to retain sufficient income and assets to live in the community without disqualifying the institutionalized spouse from eligibility for Medicaid." 1 Elderlaw Sec. 11.30, at p. 395. See also Ford; Whitehouse v. Ives, 736 F.Supp. 368, 371 (D.Me.1990).

A community spouse is permitted a "resource allowance," generally defined as one-half of the couple's countable total resources, or $60,000, a sum adjusted annually according to the consumer price index, whichever is less. 42 U.S.C. Sec. 1396r-5(c) and (f)(2); N.D.Adm.Code Sec. 75-02-02.1-24(3). A community spouse is also permitted a "monthly income allowance," that depends on the "minimum monthly maintenance needs allowance," a maximum sum of $1,500, inclusive of an excess shelter allowance, which is also subject to annual adjustment. 42 U.S.C. Sec. 1396r-5(d)(1)(B), (d)(2), and (d)(3)(C); N.D.Adm.Code Sec. 75-02-02.1-24(5)(b)(2). ³ An institutionalized spouse is allowed to transfer whatever income the community spouse needs to bring that spouse's monthly income to the minimum monthly maintenance needs allowance. See Ford, 500 N.W.2d at 28; 42 U.S.C. Sec. 1396r-5(d)(1)(B) and (d)(2); N.D.Adm.Code Sec. 75-02-02.1-24(5)(b)(2). If the income of the institutionalized spouse, combined with the income of the community spouse, is insufficient to reach the minimum monthly maintenance needs allowance, the community spouse is not entitled to a cash grant from the state to bring the combined income to that level, 1 Elderlaw Sec. 11.33, but instead may apply for an increase in the community spouse resource allowance to "an amount adequate to provide such a minimum monthly maintenance needs allowance." 42 U.S.C. Sec. 1396r-5(e)(2)(C). See also N.D.Adm.Code Sec. 75-02-02.1-24(7)(e); Ford.

In determining the amount of an institutionalized spouse's income that is to be applied monthly to payment for the costs of institutional care, the institutionalized spouse's monthly income must be reduced by: (1) a personal needs allowance for the institutionalized spouse; (2)...