Haley v. Commissioner of Public Welfare

• Decision Date: 09 April 1985
• Citation: 394 Mass. 466,476 N.E.2d 572
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: , Medicare & Medicaid Guide P 34,585 James E. HALEY v. COMMISSIONER OF PUBLIC WELFARE (and three companion cases 1 ).

Page 572

476 N.E.2d 572

394 Mass. 466, Medicare & Medicaid Guide P 34,585

James E. HALEY v. COMMISSIONER OF PUBLIC WELFARE (and three companion cases ¹ ).

Supreme Judicial Court of Massachusetts,

Suffolk.

Argued Jan. 9, 1985.

Decided April 9, 1985.

David Norris, Boston (Stephen G. Carreiro, Boston, with him), for Leon moreau.

Peter V. Kent, Danvers, for Beth Israel Hosp. (Gerald A. Hamelburg, Boston, for James E. Haley, with him).

Kim E. Murdock, Asst. Atty. Gen., for Commissioner of Public Welfare.

Before HENNESSEY, C.J., and WILKINS, LIACOS, NOLAN and O'CONNOR, JJ. NOLAN, Justice.

The plaintiffs in this consolidated appeal seek relief from adverse judgments entered in the Superior Court. ² Each plaintiff applied to the Department of Public Welfare (department) for retroactive medical assistance (MA) benefits. The department denied the plaintiffs' requests because it determined that each plaintiff had access to resources in excess of $2,000, the allowable resource limitation for individuals seeking MA benefits. 106 Code Mass.Regs. § 505.110 (1983). Pursuant to G.L. c. 30A, § 14, the plaintiffs sought judicial review of the department's actions. The Superior Court affirmed the department's determinations. The plaintiffs filed a notice of appeal to the Appeals Court. We transferred these cases to this court on our own motion. We reverse and remand the cases.

Medical assistance is a cooperative Federal and State program which provides payment for medical services to eligible individuals and families. See 106 Code Mass.Regs. § 501.200 (1983). Title XIX of the Social Security Act authorizes the MA program. 42 U.S.C. §§ 1396-1396p (1982). In order to receive Federal funding, the State program must be approved and meet all the requirements of Title XIX and the implementing regulations. 42 U.S.C. § 1396. See Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 2680, 65 L.Ed.2d 784 (1980); Sargeant v. Commissioner of Pub. Welfare, 383 Mass. 808, 809, 815, 423 N.E.2d 755 (1981). The State may elect to provide benefits to medically needy individuals. See Tinkham v. Department of Pub. Welfare, 11 Mass.App. 505, 506-507, 417 N.E.2d 452 (1981). Such individuals may have sufficient income and resources for their basic maintenance but not for medical care costs. S.Rep. No. 404, 89th Cong., 1st Sess., reprinted in 1965 U.S.Code Cong. & Ad.News 1943, 2014. Massachusetts has chosen to provide such benefits. G.L. c. 118E, § 1. The department administers the program in the Commonwealth. G.L. c. 118E. Eligibility is based on an individual's available income and resources. G.L. c. 118E, §§ 5 and 10. 106 Code Mass.Regs. §§ 505.000-505.470 (1983). An individual may have available resources of $2,000 and remain eligible for MA benefits. G.L. c. 118E, § 10(3). 106 Code Mass.Regs. § 505.110. An eligible individual is entitled to payment of care and services furnished "during the three months immediately prior to the month in which he filed his application," if the individual would have been eligible during that period had he applied. G.L. c. 118E, § 14, as appearing in St.1973, c. 1210, § 28.

The major issue which controls resolution of this dispute is whether a "resource spend down" should be used to calculate available resources. ³ Utilization of a resource spend down would require the department to offset an individual's incurred medical expenses against any resources in excess of the eligibility limits. The statutes and regulations provide for application of the spend down principle to income eligibility determinations. G.L. c. 118E, § 10. 106 Code Mass.Regs. § 338.080. See 42 U.S.C. § 1396a(a)(17); 42 C.F.R. § 435.831 (1984). On appeal, the plaintiffs argue that the State statutes require and the Federal statutes allow for a resource spend down. Furthermore, the plaintiffs assert that neither the Federal nor State regulations prohibit a resource spend down. Therefore, the plaintiffs claim that the department erroneously denied them benefits by determining their accessible resources without utilizing a spend down. The department argues that the MA program in G.L. c. 118E must comply with Federal interpretations of Title XIX. The Health Care Financing Administration (HCFA) of the United States Department of Health and Human Services (HHS) is responsible for administering the program for the Federal government. The HCFA issued in August of 1980 a medicaid action transmittal which interpreted Title XIX and applicable regulations as precluding a resource spend down. Therefore, the department argues, it is precluded from determining available resources through utilization of spend down principles. For the reasons stated below, we conclude that a resource spend down is the proper method of calculating available resources in determining an individual's eligibility for MA benefits.

We briefly summarize the relevant facts concerning each plaintiff as found in the record.

1. James E. Haley. Haley was a single fifty-year old disabled man who resided with his mother. Carney Hospital admitted him on January 24, 1981. Haley applied for MA benefits on March 24, 1981, requesting payments retroactive to January 24, 1981. At the time of application, Haley had a bank account balance of $3,045.72. His mother's name also appeared on the account. His hospital bills then exceeded $11,000. On April 17, 1981, Haley withdrew $2,000 in assets from his account which he used in part payment of medical expenses. The department established Haley's eligibility for MA benefits as of May 7, 1981. ⁴ On appeal, the department's division of hearings and the Superior Court upheld the department's action.

2. Leon Moreau, Guardian of the Estate of Mary Verona. The Probate and Family Court for Bristol County appointed Leon Moreau as the temporary guardian of Mary Verona on March 23, 1981, effective retroactively to March 6, 1981. ⁵ Mary Verona, eighty-five years of age, received social security income (SSI) and MA benefits until November 30, 1980. These benefits were then terminated due to an SSI overpayment of $819.40. Verona was admitted to the hospital on January 31, 1981. Verona's hospital expenses from January 31, 1981, through June 15, 1981, totaled $17,517.31.

On July 3, 1981, Moreau applied to the department for retroactive MA benefits for Verona. At the time, Verona owned assets totalling $2,497.12. Moreau transferred an amount of Verona's assets to meet her obligations on June 28, 1981. This transfer reduced her assets below $2,000. On July 29, 1981, the department denied the July 3, 1981, application for retroactive MA benefits on the basis that Verona's assets exceeded the $2,000 eligibility limit. The department approved MA benefits for Verona effective June 28, 1981, the date on which the assets were reduced below the eligibility limit.

Moreau appealed the department's determination. In a decision dated October 16, 1981, an appeals referee of the department determined that Verona's liabilities of $18,337.83 (hospital expenses plus the $819.40 SSI overpayment) canceled out her $497.12 excess assets. The referee's decision approved Verona's application for retroactive MA benefits. The Commissioner of the department (Commissioner) authorized a rehearing of this case on October 27, 1981. The director of the division of hearings (director), after rehearing, issued an order denying Verona retroactive MA benefits because Verona had excess assets until June 28, 1981. The director ruled that the referee erroneously had applied a resource spend down to determine eligibility.

3. Beth Israel Hospital. ⁶

a. Mildred Harriman. On December 23, 1980, the Brookline health department evicted Mildred Harriman and the other residents of a rooming house at 1415 Beacon Street. Initially, the health department placed Harriman in Longwood Hospital. She was transferred to Beth Israel Hospital (hospital) on December 30, 1980. At the time, Harriman was confused and unable to provide adequate information. Sometime after December 24, 1980, and prior to February 3, 1981, the health department discovered thirteen uncashed social security checks dating back over three years amongst Harriman's belongings. The health department had difficulty cashing these checks. The checks totaled $2,300. Harriman had $912.49 in a bank account. On February 3, 1981, the uncashed checks were deposited into her bank account. Concurrently, Harriman authorized a check to be made out to the hospital for $1,400.

On April 2, 1981, the hospital filed an application with the department for retroactive MA benefits on behalf of Harriman. The department had denied a previous application filed January 6, 1980, due to Harriman's excess resources. The April application requested MA benefits retroactive to January 20, 1981. The department approved the application retroactive to February 3, 1981. This was the date that Harriman's excess resources were spent down to below the eligibility limit. The hospital filed a timely appeal. The appeals referee approved the department's determination of Harriman's eligibility.

b. Dorothy Hurley. The hospital admitted Dorothy Hurley on August 22, 1980. Hurley suffered from chronic psychosis and dementia. On October 9, 1980, the hospital filed an application for MA benefits with the department on Hurley's behalf. Because of her condition, hospital employees were unable to elicit from Hurley the necessary financial information pertinent to her eligibility. The department also had difficulty confirming any financial eligibility information. On December 31, 1980, the department denied this application because "it was over 60 days old."

Sometime prior to February 13, 1981, the hospital received information that Hurley had a brother living in California. On February 13, 1981, the Probate and Family Court for Suffolk County appointed Edward D. Hurley as his sister's temporary guardian retroactive to December 18, 1980. The hospital filed a timely appeal of the...