Indiana Dept. of Public Welfare v. Payne

• Citation: 592 N.E.2d 714
• Decision Date: 26 May 1992
• Docket Number: No. 49A02-9105-CV-230,49A02-9105-CV-230
• Parties: INDIANA DEPARTMENT OF PUBLIC WELFARE, Appellant-Defendant, v. Hazen PAYNE, Appellee-Plaintiff.
• Court: Court of Appeals of Indiana

Page 714

592 N.E.2d 714

37 Soc.Sec.Rep.Ser. 210

INDIANA DEPARTMENT OF PUBLIC WELFARE, Appellant-Defendant, v. Hazen PAYNE, Appellee-Plaintiff.

No. 49A02-9105-CV-230.

Court of Appeals of Indiana,

Second District.

May 26, 1992.

Linley E. Pearson, Atty. Gen., Gary L. Shaw, Wendy Stone Messer, Deputy Attys. Gen., Indianapolis, for appellant-defendant.

Scott R. Severns, Severns & Associates, Indianapolis, for appellee-plaintiff.

BUCHANAN, Judge.

CASE SUMMARY

Defendant-appellee Indiana Department of Public Welfare (the Department) ¹ appeals from the entry of summary judgment in favor of plaintiff-appellee Hazen Payne (Payne), claiming that the trial court erred when it concluded the Department was required to allow Payne to spend down his excess resources ² to become eligible for Medicaid and when it concluded that certain property owned by Payne was exempt from consideration by the Department in determining Payne's Medicaid eligibility.

We affirm in part and reverse in part.

FACTS

The facts most favorable to the trial court's decision reveal that Payne was a construction laborer living in Monroe County, Indiana. Payne was divorced and had custody of his fourteen year old daughter. In July, 1988, Payne became ill and was diagnosed as having leukemia. He was hospitalized at the Indiana University Medical Center in Indianapolis for most of the following five months. Payne had no health insurance and he had insufficient assets to pay the approximately $150,000 in medical expenses which accumulated during his hospitalization.

Payne applied for Medicaid benefits from the Monroe County Welfare Department and was determined to be disabled. The Department concluded that Payne was eligible for Medicaid benefits beginning in December, 1988, but decided that Payne owned resources in excess of the Department's financial eligibility requirements for the months from July through November, 1988, the time during which Payne incurred approximately $150,000 in medical expenses.

Payne requested an administrative hearing to challenge the denial of Medicaid benefits. Payne argued that the Department should not have included the values of a wooden wagon, a buggy, a non-motorized camper and a stock trailer when the Department calculated the value of his non-exempt assets in the determination of his Medicaid eligibility. Payne also asserted that he should have been allowed to spend down his excess resources to become eligible for Medicaid. The Department's hearing officer upheld the denial of benefits and the Department's board sustained the hearing officer's decision.

Payne sought judicial review of the Department's action. Payne moved for summary

judgment, and the trial court entered its findings of fact and conclusions of law on February 5, 1991. The trial court's order provided:

"CONCLUSIONS OF LAW

13. The Medicaid Program was established in 1965 as Title XIX of the Social Security Act to provide federal financial assistance to states that choose to reimburse certain costs of medical treatment for needy persons.

14. States which participate in this Medicaid Program are obligated to abide by the requirement [sic] of Federal Medical Statute [sic] and Regulations.

15. Indiana has chosen to participate in the Medicaid Program.

16. Indiana has chosen to provide Medicaid under the Sec. 209(b) option, which allows states to provide Medicaid assistance only to those individuals who meet the eligibility requirements of the state Medicaid plan which existed on January 1, 1972.

17. Under the Sec. 209(b) option, Indiana's current Medicaid standards cannot be more restrictive than the standards which were in effect in Indiana on January 1, 1972. Also, the current Medicaid standards cannot be more liberal than the standards for the Supplemental Security Income (SSI) Program.

18. Certain kinds of personal property are exempt and are not counted in determining the value of a Medicaid applicant's assets.

19. Plaintiff's wooden wagon, buggy, are exempt household goods. Plaintiff's non-functional Gremlin and Cadillac automobiles were valued at $50 each.

20. Plaintiff's camper and stock trailer are exempt as income-producing property if it is shown, upon remand, that the income produced by such property was at least 6% of the equity value of such property.

21. Indiana's 1972 Medicaid state plan allowed applicants to become eligible for Medicaid by paying the amount by which the applicant's resources exceeded the resource limits for Medicaid towards the applicant's medical bills. Once the applicant so adjusted his or her excess resources, the applicant became eligible for Medicaid to pay the remainder of the medical bills. This is referred to as 'resource spend down.'

22. On April 1, 1984 the Indiana Department of Public Welfare rescinded its regulation which provided for eligibility after the spend down of excess resources. Under the regulations in effect since April 1, 1984, an individual is ineligible for Medicaid during any month in which his or her countable resources exceed the resource limit on the first day of the calendar month.

23. Since April 1, 1984 Indiana's eligibility requirements concerning resources have been more restrictive than those eligibility requirements which were in effect on January 1, 1972 insofar as they do not provide eligibility based on the spending down of excess resources.

24. Eligibility based upon the spending down of excess resources is not prohibited by the federal Medicaid statue [sic] and is consistent with the policy of the federal Medicaid Statute. Also, spending down of excess resources is not a provision which is more liberal than SSI.

25. Spending down of excess resources to become eligible for Medicaid is not prohibited by federal law.

26. Since spend down of excess resources was a part of Indiana's 1972 state plan and since such spend down is not prohibited by federal law, Indiana must allow Medicaid eligibility upon the spending down of excess resources.

27. It was contrary to law to deny Mr. Payne eligibility for Medicaid without providing him the opportunity to spend down his excess resources.

. . . . .

SUMMARY JUDGMENT

The Court being duly advised hereby adopts the above findings of fact and conclusions of law and enters the following judgment:

1. The decision of the Indiana Department of Public Welfare denying Hazen 2. This cause is remanded to the Indiana Department of Public Welfare for further proceedings consistent with this opinion."

Payne's application for Medicaid benefits is hereby reversed.

Record at 180-83.

ISSUES

1. Whether the trial court erred when it concluded that the Department was required to allow Medicaid eligibility upon the spending down of excess resources?

2. Whether the trial court erred when it determined that Payne's wooden wagon, buggy, camper and stock trailer were exempt property?

DECISION

ISSUE ONE--Did the trial court err when it decided the Department must allow a resource spend-down?

PARTIES' CONTENTIONS--The Department argues that the trial court impermissibly reweighed the evidence when it concluded the Department's 1972 standards permitted a resource spend-down and also claims that its resource limit has been judicially approved. Payne responds that the issue concerning the 1972 standards is a question of law which the trial court properly decided and asserts that a resource spend-down in Indiana is required by federal law.

CONCLUSION--The Department is required to permit a spend-down of excess resources.

Resolution of this issue requires examination of an intricate tapestry of statutes and regulations woven by the federal government and the State of Indiana. Finding no Indiana authority on point, we turn to other jurisdictions for guidance.

We begin by reviewing the broad Medicaid statutory scheme, focusing on the provisions relevant to the resolution of our inquiry. We then consider Indiana's regulatory structure in light of those provisions, as well as the Department's arguments, and reflect upon decisions from other jurisdictions which have pondered similar questions.

I. Background

Medicaid was established in 1965 as Title XIX of the Social Security Act (the Act), 79 Stat. 343, as amended, 42 U.S.C. Sec. 1396 et seq. (1982). It was enacted to provide medical assistance to needy individuals with income and available resources insufficient to meet the costs of necessary medical care and services. The federal government shares the costs of Medicaid with the states that elect to participate in the program, and the states must comply with the requirements imposed by the Act and by the Secretary of Health and Human Services. See Atkins v. Rivera (1986), 477 U.S. 154, 106 S.Ct. 2456, 91 L.Ed.2d 131; Schweiker v. Gray Panthers (1981), 453 U.S. 34, 101 S.Ct. 2633, 69 L.Ed.2d 460.

When it was initially enacted, Medicaid required participating states to provide medical assistance to "categorically needy" individuals. The categorically needy were those individuals who received payments from any one of four different welfare programs established in the Act, which provided public assistance to the aged, blind, disabled and families with dependent children. ³

The states were also permitted to offer Medicaid benefits to "medically needy" individuals, which included individuals who would have been eligible for aid under one of the programs, who were unable to pay for medical expenses, but whose incomes were too large to qualify for public assistance. Id.

In 1972, the United States Congress replaced three of those four welfare programs with a new program: Supplemental Security Income for the Aged, Blind and Disabled, 42 U.S.C. Sec. 1381 et seq. (1982) [hereinafter referred to as SSI]. Under SSI, the federal government assumed responsibility for the funding and the setting of standards for the new program. In some states the number of individuals eligible for SSI assistance was considerably larger than the number who were eligible under the...