J.P v. P. G.P
| Decision Date | 21 September 2010 |
| Docket Number | No. WD 70994.,WD 70994. |
| Citation | 318 S.W.3d 140 |
| Parties | J.P. and H.P., by J.P., His Attorney in Fact; D.S. and R.S., by D.S., His Attorney in Fact; V.P. and G.P., by V.P., Her Attorney in Fact; S.M. and V.M., by S.M., Her Attorney in Fact, Appellants,v.MISSOURI STATE FAMILY SUPPORT DIVISION AND ITS DIRECTOR, Janel Luck, Respondents. |
| Court | Missouri Court of Appeals |
Barbara J. Gilchrist, John J. Ammann, St. Louis, MO, Mary R. McCormick, Liberty, MO, Dianne M. Hansen, Springfield, MO, Michael C. Week, St. Charles, MO, for Appellants.
Thais A. Folta, Sarah E. Ledgerwood, Jonathan M. Hensley, Jefferson City, MO, for Respondents.
Before: Thomas H. Newton, C.J., James M. Smart, Jr., and Cynthia L. Martin, JJ.
The Missouri State Family Support Division (the Division) denied J.P., H.P.; D.S., R.S.; V.P., G.P.; and S.M., V.M. (the Couples) eligibility for long-term care benefits under Missouri's Medicaid program because of the ownership of certain annuities. The Couples sought declaratory and injunctive relief in a lawsuit, alleging that the policy applied by the Division was in violation of state and federal law. The trial court denied their claims. At issue is whether a community spouse's income from a commercial annuity may be considered an available resource in determining an institutionalized spouse's eligibility for Medicaid assistance. We reverse and remand.
Medicaid is a cooperative federal-state program assisting low-income individuals in meeting the costs of their medical care. State v. Knight, 280 S.W.3d 647, 650 (Mo.App. W.D.2009). A state choosing to participate in the program receives reimbursement from the federal government for a portion of the cost of providing medical assistance. In re Estate of Shuh, 248 S.W.3d 82, 84 (Mo.App. E.D.2008). Participation requires the state to comply with federal statutes and regulations and to “ ‘develop[ ] a plan containing reasonable standards ... for determining eligibility for ... medical assistance’ within boundaries set by the Medicaid statute and the Secretary of Health and Human Services.” Wis. Dep't of Health & Family Servs. v. Blumer, 534 U.S. 473, 479, 122 S.Ct. 962, 151 L.Ed.2d 935 (2002) (quoting Schweiker v. Gray Panthers, 453 U.S. 34, 36-37, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981)); see also Knight, 280 S.W.3d at 650. Missouri's state Medicaid program is codified at section 208.001, et. seq. Knight, 280 S.W.3d at 650. In 2007, Missouri's program was renamed “MO HealthNet.” Oanh Thile Huynh v. King, 269 S.W.3d 540, 542 n. 2 (Mo.App. W.D.2008).
In order to qualify for Medicaid assistance, a person's available income and assets must be below certain limits. Shuh, 248 S.W.3d at 84. When a married person enters a nursing home (the “institutionalized spouse”), the finances of both the institutionalized spouse and the non-institutionalized spouse (“community spouse”) are considered in determining if the institutionalized spouse is eligible for Medicaid assistance for the costs of long-term care. N.M. v. Div. of Med. Assistance & Health Servs., 405 N.J.Super. 353, 964 A.2d 822, 823 (N.J.Super.Ct.App.Div.2009) (citing 42 U.S.C. § 1396r-5(c)(2)). Consequently, a couple may have to dispose of their assets to reduce them below federal and state limits-also known as “spending down”-before the institutionalized spouse can become eligible for assistance. Shuh, 248 S.W.3d at 84. These “spend down” requirements can pose a hardship on a community spouse, “who face[s] 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.” Id.
In 1988, Congress enacted the Medicare Catastrophic Coverage Act (MCCA), which contains provisions allowing the community spouse to shelter income and a degree of assets from being considered available for the institutionalized spouse's long-term medical care.1 Id. In enacting the MCCA, Congress sought to protect the community spouse from poverty, but it also wanted to protect the Medicaid system from abuse. Id. at 86. Thus, because Medicaid's purpose is to provide medical assistance to needy persons, the MCCA also contained provisions to prevent Medicaid applicants from artificially impoverishing themselves to obtain benefits. McKenzie v. State, Dep't of Soc. Servs., Div. of Family Servs., 983 S.W.2d 196, 198 (Mo.App. E.D.1998).
After the MCCA's enactment, when one spouse enters a long-term care facility and another remains in the community, a division of assets is performed. Gee v. Dep't of Soc. Servs., Family Support Div., 207 S.W.3d 715, 716 (Mo.App. W.D.2006). A portion of the couples' assets is set aside for the benefit of the community spouse and is not used in calculating the institutionalized spouse's Medicaid eligibility.2 Blumer, 534 U.S. at 480-81, 122 S.Ct. 962. This resource allowance is referred to as the “community spouse resource allowance,” or “CSRA.” Id. at 478, 122 S.Ct. 962. “Although the community spouse's resources must be taken into account in determining whether the institutionalized spouse satisfies the resource eligibility limit, the community spouse's income may not be considered in determining whether the institutionalized spouse satisfies the income eligibility limit.” N.M., 964 A.2d at 823 n. 1 (citing 42 U.S.C. § 1396r-5(b)(1)) (emphasis added). The community spouse's income is reserved solely for the benefit of the community spouse. 42 U.S.C. 1396r-5(b)(1); Blumer, 534 U.S. at 480-81, 122 S.Ct. 962.
Congress subsequently enacted the Deficit Reduction Act of 2005(DRA) which “effect[ed] broad changes to the laws governing Medicare and Medicaid coverage.” Vieth v. Ohio Dep't of Job & Family Servs., No. 08AP-635, 2009 WL 2331870, at *4 (Ohio App. July 30, 2009) (internal quotation marks and citation omitted). The Medicaid Program's treatment of annuities was among those changes. Id. Also in 2005, the Missouri Legislature enacted section 208.212, which provided that a pre-eligibility investment in an annuity “shall be limited” to those annuities that were: (1) actuarially sound, (2) provided for roughly equal payments over the life of the annuity and excluded balloon-style final payments, and (3) named Missouri as “secondary or contingent beneficiary ... ensuring payment if the individual predeceases the duration of the annuity” for the payments made by the State on the individual's behalf. § 208.212 RSMo Cum.Supp.2005.
In July 2007, the Missouri Legislature amended section 208.212. The section now provides that the stream of income from an annuity will not be considered an available resource in determining Medicaid eligibility, provided the annuity meets the prior three requirements (actuarially sound, roughly equal payments over the annuity's life, Missouri named as remainder beneficiary) and a new requirement: the annuity must “Name and pay the MO HealthNet claimant as the primary beneficiary.” 3 § 208.212.1(4).
The Division is charged with administering Missouri Medicaid policy. Prior to the July 2007 amendment of section 208.212, the Division treated the income stream from an annuity as excluded from the resources available to an institutionalized spouse, so long as the annuity met section 208.212's three requirements. See Mo. State Family Support Div. Income Maint. Manual § 1030.030.05 (2005). In November 2007, the Division amended the “Income Maintenance Manual” (IMM), which is what its employees rely on in making eligibility determinations.4 The Division interpreted section 208.212.1(4) to require the income stream from an annuity to be paid to the institutionalized spouse in order to exclude the annuity income from the eligibility determination. Mo. State Family Support Div. Income Maint. Manual §§ 1030.030.05-10.10 (2007). As a result of its interpretation, the Division adopted a definition of “primary beneficiary” which equates the term with the “annuitant” or the initial payee of an annuity. Id. at § 1030.030.05. Consequently, the Division now includes annuities that pay income to the community spouse in the calculation of resources available to the institutionalized spouse. See id. at § 1030.030.10.10.
The Couples were denied Mo HealthNet eligibility because the Division determined that the community spouse's ownership of an annuity prevented the institutionalized spouse from qualifying for assistance. The Division determined that the annuities were not excluded from the resource computation because the new subsection 208.212.1(4) required that the institutionalized spouse be the recipient of the income stream. The parties do not dispute whether the annuities at issue otherwise met the requirements for exclusion under section 208.212.1. The Couples sought declaratory and injunctive relief. The trial court determined that the Division's decisions on Medicaid eligibility were consistent with the amended section 208.212 and denied the request for relief. The Couples appeal, raising three points.
In a bench-tried case, we generally affirm the trial court's judgment unless there is no substantial evidence to support the decision, it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law. Knight, 280 S.W.3d at 650 (citing Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976)). However, in questions of law, our review is de novo, and we give no deference to the trial court. Id. Statutory construction is a question of law, as is the issue of whether a state statute conflicts with federal law. See id.; Bechtel ex rel. Bechtel v. State Dep't of Soc. Servs., Family Support Div., 274 S.W.3d 464, 467 (Mo. banc 2009).
In their first point the Couples argue that the Division's interpretation of section 208.212 violates federal Medicaid law. The Division states that its interpretation of Medicaid eligibility requirements is...
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