Hines v. Department of Public Aid

• Decision Date: 18 May 2006
• Docket Number: No. 100841.,100841.
• Citation: 850 N.E.2d 148,221 Ill.2d 222
• Parties: Betty J. HINES, as Ex'r of the Estate of Beverly Tutinas, Appellee, v. The DEPARTMENT OF PUBLIC AID, Appellant.
• Court: Illinois Supreme Court

850 N.E.2d 148

221 Ill.2d 222

Betty J. HINES, as Ex'r of the Estate of Beverly Tutinas, Appellee, v. The DEPARTMENT OF PUBLIC AID, Appellant.

No. 100841.

Supreme Court of Illinois.

May 18, 2006.

Lisa Madigan, Attorney General, Springfield (Gary Feinerman, Solicitor General, Jan E. Hughes, Assistant Attorney General, Chicago, of counsel), for appellant.

Steven C. Perlis, Tonya Z. Gabbard, Helen Mesoloras, Arlington Heights, for appellee.

Justice KARMEIER delivered the judgment of the court, with opinion:

This appeal arises from the administration of the estate of Beverly J. Tutinas, who died in 2001 leaving a home valued at $69,641.89 and an automobile worth $2,000. A single issue is presented for our review: May the Department of Public Aid¹ assert a claim against Beverly's estate to obtain reimbursement of $61,154.48 in Medicaid payments made on behalf of her husband, who predeceased her? The circuit court of Rock Island County determined that such a claim was permissible under state and federal law. The appellate court reversed and remanded, with one justice dissenting. 358 Ill.App.3d 225, 294 Ill.Dec. 691, 831 N.E.2d 641. We granted the Department's petition for leave to appeal. 177 Ill.2d R. 315. For the reasons that follow, we now affirm the judgment of the appellate court.

The relevant facts are not in dispute. Beverly and Julius Tutinas were married for more than 48 years. They resided together in Moline in a home to which they held joint title. The couple also held joint title to an automobile. They had no children.

In 1994, Julius' declining health required that he be cared for in a nursing home. On July 7 of that year, the Department of Public Aid approved Julius for medical assistance pursuant to Title XIX of the Social Security Act, commonly known as the Medicaid Act (42 U.S.C. § 1396 et seq. (2000)).

Julius began receiving Medicaid payments in August of 1994. Those payments continued until he died in 1997 at the age of 66. The payments totaled $61,154.48.

No probate estate was created for Julius following his death. Because Julius and his wife, Beverly, held the marital home and their automobile in joint title, full ownership of the home and car passed to Beverly when Julius died. Beverly lived on for several more years, eventually passing away in May of 2001. Unlike Julius, Beverly neither applied for nor received Medicaid payments.

Beverly left a will when she died naming her sisters, Shirley A. Nelson and Betty J. Hines, as coexecutors. Beverly's will was admitted to probate by the circuit court of Rock Island County on May 25, 2001, and letters of office were issued to Betty Hines as independent executor (see 755 ILCS 5/28-2 (West 2002)).

Beverly's estate consisted of only two items, her home and the automobile she had once held in joint title with Julius. Both items were liquidated during the administration of her estate. The home was sold for $69,641.89, the car for $2,000.

In July of 2001, the Department of Public Aid filed a claim against the estate to recover the $61,154.48 in Medicaid payments it had made on behalf of Julius between 1994 and 1997. Betty Hines, acting in her capacity as executor, filed a notice that the claim was being disallowed. The Department of Public Aid challenged the rejection of its claim on the grounds that it was contrary to the applicable provisions of the Probate Act of 1975 (755 ILCS 5/1-1 et seq. (West 2002)). Faced with that challenge, Hines, as executor, petitioned the circuit court pursuant to section 28-5 of the Probate Act (755 ILCS 5/28-5 (West 2002)) for instructions regarding the claim.

Following briefing and a hearing, the circuit court entered a detailed order, recounting the pertinent facts of the case and reviewing the governing law. In the circuit court's view, section 5-13 of the Public Aid Code (305 ILCS 5/5-13 (West 2002)) and 89 Ill. Adm.Code § 102.200, an administrative regulation based on that statute, permitted the Department to seek reimbursement from Beverly's estate for the Medicaid payments it had made on Julius' behalf. The circuit court further concluded that the aforementioned provisions of Illinois law do not conflict with and are not preempted by 42 U.S.C. § 1396p(b), the section of the Medicaid Act pertaining to adjustment or recovery of Medicaid payments.

Hines appealed. After determining that it had jurisdiction to hear the appeal pursuant to Supreme Court Rule 304(b)(1) (155 Ill.2d R. 304(b)(1)),² the appellate court concluded that 42 U.S.C. § 1396p(b) does not permit the Department to seek recovery from the estate of a Medicaid recipient's surviving spouse under the facts present here and that the provisions of Illinois law invoked by the Department in this proceeding exceed the authority granted by the Medicaid Act. It therefore held that the Department's claim against Beverly's estate must be dismissed. Accordingly, it reversed the judgment of the circuit court and remanded for further proceedings. 358 Ill.App.3d at 233, 294 Ill.Dec. 691, 831 N.E.2d 641. One justice dissented.

The Department petitioned for leave to appeal. 177 Ill.2d R. 315. That petition was allowed, and the matter is now before us for a decision on the merits. As indicated at the outset of this opinion, the sole question before us is whether the Department's claim against Beverly's estate was permissible under the Medicaid Act and the state statutes and regulations implemented pursuant to that Act. This issue presents a question of law, which we review de novo. Bowman v. American River Transportation Co., 217 Ill.2d 75, 80, 298 Ill.Dec. 56, 838 N.E.2d 949 (2005).

In undertaking our review, we begin with a brief discussion of the purposes and operation of the Medicaid Act. The Act, which originated in the 1960s, created a cooperative program under which the federal government reimburses state governments for a portion of the costs of providing medical assistance to low income groups. Gillmore v. Illinois Department of Human Services, 218 Ill.2d 302, 304-05, 300 Ill.Dec. 78, 843 N.E.2d 336 (2006). States are not required to participate in the Medicaid program. Once they elect to do so, however, they must design their own plans and set reasonable standards for eligibility and assistance. See 42 U.S.C. § 1396(a)(17) (2000). Such plans and standards must comport with the Medicaid Act and the regulations promulgated thereunder by the United States Department of Health and Human Services. See Cohen v. Quern, 608 F.Supp. 1324, 1326 (N.D.Ill.1984); Smith v. Miller, 665 F.2d 172, 175 (7th Cir.1981).

The Act provides that participating states must designate an agency to administer their Medicaid plans. See 42 U.S.C. § 1396(a)(5) (2000); 42 C.F.R. § 431.10(a) (2003). The agency designated by Illinois to administer its Medicaid plan is the Department of Public Aid. See 305 ILCS 5/2-12(3) (West 2002); American Society of Consultant Pharmacists v. Garner, 180 F.Supp.2d 953, 958 (N.D.Ill.2001).

Under the Act, two types of low income groups are eligible for medical assistance: the categorically needy and the medically needy. Categorically needy persons are those who are automatically eligible to receive cash grants under one of the general welfare programs — the Aid to Families with Dependent Children program (AFDC) (42 U.S.C. § 601 et seq. (2000)) or the Supplemental Security Income for the Aged, Blind, or Disabled program (SSI) (42 U.S.C. § 1381 et seq. (2000)). See 305 ILCS 5/5-2(1) (West 2002); 42 C.F.R § 435.100 et seq. (2003). The medically needy are persons who are ineligible to receive cash grants under AFDC or SSI because their resources exceed the eligibility threshold for those programs, but who still lack the ability to pay for medical assistance. See 305 ILCS 5/5-2(2) (West 2002); 42 C.F.R. § 435.300 et seq. (2003). People who fall into the second category are called MANG (Medical Assistance — No Grant) recipients. See 89 Ill. Adm.Code § 120.10(a) (Conway-Greene CD-ROM March 2002). Gillmore v. Illinois Department of Human Services, 218 Ill.2d at 304-05, 300 Ill.Dec. 78, 843 N.E.2d 336. Julius was a MANG recipient.

To qualify for Medicaid as a MANG recipient, a person must have low income and low assets, and the person must "spend down" any resources over the statutory and regulatory limits. See 89 Ill. Adm.Code § 120.10(d) (amended at 24 Ill. Reg. 7361, eff. May 1, 2000). "Spend down" requirements pose an obvious hardship to the spouses of medical assistance recipients, who face the prospect of being left with virtually nothing to live on once the couple's income and resources are reduced to the level necessary to qualify for Medicaid. To ameliorate that hardship, Congress enacted the Medicare Catastrophic Coverage Act of 1988 (MCCA) (Pub.L. No. 100-360), which includes provisions to protect, financially, the spouse who was not receiving medical assistance. These provisions, commonly called the spousal impoverishment provisions, allow the spouse to retain a certain level of resources and income and protect those amounts from use as payment for an institutionalized spouse's nursing home care. See 42 U.S.C. § 1396r-5 (2000); Cleary v. Waldman, 167 F.3d 801, 805 (3d Cir.1999).

The Medicaid Act affords an additional element of financial protection to the families of Medicaid recipients by limiting the circumstances in which a state may seek reimbursement for the payments it made on the recipient's behalf. The Act, as amended by the Omnibus Budget Reconciliation Act of 1993 (OBRA) (Pub.L. No. 103-66, § 13612(a)), expressly provides that "[n]o adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan may be made," except in three specified circumstances. 42 U.S.C. § 1396p(b) (2000). Only one of those exceptions is relevant here. It is set forth in subsection (1)(B) of the statute, which provides:

"In the case of an individual who was 55 years of age or older when the individual...