Knori v. STATE EX REL. DEPT. OF HEALTH

• Decision Date: 14 April 2005
• Docket Number: No. 04-189.,04-189.
• Citation: 109 P.3d 905,2005 WY 48
• Parties: Richard D. KNORI, Personal Representative of the Estate of Pansy Knori, deceased, Appellant (Defendant), v. STATE of Wyoming, ex rel., DEPARTMENT OF HEALTH, OFFICE OF MEDICAID, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

109 P.3d 905

2005 WY 48

Richard D. KNORI, Personal Representative of the Estate of Pansy Knori, deceased, Appellant (Defendant), v. STATE of Wyoming, ex rel., DEPARTMENT OF HEALTH, OFFICE OF MEDICAID, Appellee (Plaintiff).

No. 04-189.

Supreme Court of Wyoming.

April 14, 2005.

Representing Appellant: Lawrence B. Hartnett, Law Offices of Lawrence B. Hartnett, Jackson, Wyoming.

Representing Appellee: Patrick J. Crank, Attorney General; Robin Sessions Cooley, Deputy Attorney General; and James P. Espy, Special Assistant Attorney General, Cheyenne, Wyoming. Argument by Mr. Espy.

Before HILL, C.J., and GOLDEN, KITE, and BURKE, JJ., and DONNELL, D.J.

DONNELL, District Judge.

[¶ 1] This case concerns the availability of the defense of equitable estoppel against a governmental agency seeking to collect a judgment on a creditor's claim. The District Court granted the agency's motion for summary judgment. For the reasons stated herein, we affirm.

ISSUE

[¶ 2] Appellant states the issue as follows:

[I]s equitable estoppel against a governmental agency allowed and an appropriate remedy under Wyoming law when an employee of the Wyoming Department of Family Services, employed as a Medicaid Eligibility Technician, negligently informs and advises an applicant for Medicaid assistance for nursing home care that her family home is permanently exempt from estate recovery under the provisions of W.S. § 42-4-206, and the applicant acts on that advice to her substantial prejudice.

The State addresses the issue somewhat differently:

Whether the District Court correctly ruled that, under the Doctrine of Equitable Estoppel, a governmental employee did not bind the State of Wyoming by making an erroneous, unauthorized oral statement, which was contrary to both federal and state law.

FACTS

[¶ 3] In late January or early February of 1995, Richard D. Knori (Knori), in his capacity as guardian and conservator of his grandmother, Pansy B. Knori (Pansy), sought advice from Hazel Staley (Staley), a "Medicaid Eligibility Technician," employed by the Wyoming Department of Family Services (the Department). Specifically, Knori inquired as to Pansy's eligibility for Medicaid assistance for nursing home care and as to the long-term liability, if any, of Pansy's estate for reimbursement for the costs of the Medicaid assistance.

[¶ 4] Staley advised Knori that, if Pansy wished to preserve her family home, she need only apply for Medicaid assistance for the nursing home care with the "intent to return home." Staley informed Knori that, once Pansy exhausted her cash assets to the limits for eligibility, Medicaid would pay the costs of the nursing home care. Further, Staley advised that Pansy's real property would be exempt from Medicaid reimbursement recovery, both before and after her death.

[¶ 5] In fact, Staley was incorrect. In 1993, Congress passed the Omnibus Budget Reconciliation Act of 1993 (OBRA), effective July 1, 1993. This Act mandated recovery of Medicaid costs from the estate of a deceased recipient by those states participating in the Medicaid program, of which Wyoming was one. Under OBRA, Wyoming was given one year to bring its laws into compliance with the mandatory estate recovery. Effective July 1, 1994, Wyoming passed Wyo. Stat. Ann. § 42-4-206 (LexisNexis 2003) to conform to OBRA requirements. The intent of the statute was:

[To] implement changes to the Wyoming Medical Assistance and Services Act required by the Federal Omnibus Budget Reconciliation Act of 1993. This act is intended to authorize changes to the state plan for medical assistance and services under chapter 4 of title 42, which are required or authorized by the provisions of the Federal Omnibus Budget Reconciliation Act of 1993, and which are in accordance with the provisions of this act. It is the intent of the legislature that the provisions of this act be interpreted in accordance with construction of that federal act and rules promulgated pursuant to that act.

1994 Wyo. Sess. Laws, ch. 73, § 4. Further, under the provisions of Wyo. Stat. Ann. § 42-2-103(b)(xiii), the state administering department was required to adopt rules necessary to carry out the provisions of § 42-4-206 for "Medicaid Benefit Recovery." Such rules were adopted, effective June 30, 1995. At the time Staley advised Knori, she advised him under the "old" Medicaid rules but not the rules mandating estate recovery that went into effect on June 30, 1995.

[¶ 6] Knori, relying on Staley's representations, assisted Pansy with her Medicaid application. Pansy was approved for Medicaid eligibility beginning April 1, 1995. She received Medicaid benefits, totaling $259,446.38, for medical and nursing home care from 1995 until her death in 2001. After her death, the Department of Health, Office of Medicaid (the Office) filed a claim against Pansy's estate seeking reimbursement for these Medicaid benefits.

[¶ 7] Knori rejected the claim, and the Office filed an action to obtain a judgment on the claim. Although Knori conceded that § 42-4-206 allowed the Office to recover its claim, he argued that the doctrine of equitable estoppel should be applied to prevent any recovery.

STANDARD OF REVIEW

[¶ 8] The standard for summary judgment under W.R.C.P. 56 is well established in Wyoming:

Summary judgment is appropriate when no genuine issue as to any material fact exists and the prevailing party is entitled to have a judgment as a matter of law. Eklund v. PRI Environmental, Inc., 2001 WY 55 ¶ 10, 25 P.3d 511, ¶ 10 (Wyo.2001). A genuine issue of material fact exists when a disputed fact, if it were proven, would have the effect of establishing or refuting an essential element of the cause of action or defense that has been asserted by the parties. Williams Gas Processing-Wamsutter Co. v. Union Pacific Resources Co., 2001 WY 57, ¶ 11, 25 P.3d 1064, ¶ 11 (Wyo.2001). We examine the record from the vantage point most favorable to the party who opposed the motion, and we give that party the benefit of all reasonable inferences that may fairly be drawn from the record. Id.

NuHome Investments, LLC v. Weller, 2003 WY 171 ¶ 7, 81 P.3d 940,

¶ 7 (Wyo.2003) (quoting Trabing v. Kinko's, Inc., 2002 WY 171, ¶ 8, 57 P.3d 1248, ¶ 8 (Wyo.2002)). See Davis v. State, 910 P.2d 555, 558 (Wyo.1996); and Smith v. Throckmartin, 893 P.2d 712, 714 (Wyo.1995).

[¶ 9] Where summary judgment has been granted, this Court will review a grant of summary judgment deciding a question of law de novo and uphold the trial court's decision "on the basis of any proper legal theory appearing in the record." Bitker v. First National Bank in Evanston, 2004 WY 114, ¶ 8, 98 P.3d 853, ¶ 8 (Wyo.2004) (citations omitted).

DISCUSSION

[¶ 10] The parties agree there are no genuine issues of material fact: Staley incorrectly advised Knori as to the Office's ability to seek reimbursement by making a claim against Pansy's estate after her death. That said, Knori urges the application of the doctrine of equitable estoppel, which has the effect of precluding an individual from asserting his rights against another person who relied, to his detriment, on the voluntary conduct of the former. See DeWitt v. Balben, 718 P.2d 854, 861-62 (Wyo.1986)

. As traditionally viewed, equitable estoppel is embodied by the following concept:

[O]ne who by his acts or representations intentionally or through culpable negligence induces another to believe certain facts to exist, and the latter, not knowing the facts, acts on such belief to his substantial prejudice, the former is, in equity, estopped to deny the existence of such fact.

Department of Family Services v. Peterson, 957 P.2d 1307, 1311 (quoting Seaman v. Big Horn Canal Association, 29 Wyo. 391, 398, 218 P. 938 (1923)). In its current form, equitable estoppel requires "some misrepresentation and is generally applied to prevent fraud, either constructive or actual." Id. at 1311-12 (citations omitted). [¶ 11] With respect to governmental agencies functioning in their governmental capacities, the standard for equitable estoppel is higher, requiring "even more egregious conduct." Peterson, 957 P.2d at 1312.¹ Namely, for equitable estoppel to operate against the government, the movant must demonstrate that the inducement was made by "authorized affirmative misconduct." In addition to the "authorized affirmative misconduct" requirement, equitable estoppel is applied against the government only in rare and unusual circumstances, where its application would not serve to defeat public policy. See Big Piney Oil & Gas Company v. Wyoming Oil and Gas Conservation Commission, 715 P.2d 557, 560 (Wyo.1986)

. Accordingly, for Knori to succeed under his claim of equitable estoppel against the Office, he must demonstrate: (1) authorized affirmative misconduct; (2) reliance; (3) substantial prejudice; (4) rare and unusual circumstances; and (5) a situation that will not defeat public policy. We find it necessary to address only two: "authorized affirmative misconduct" and "rare and unusual circumstances."

"Affirmative Misconduct"

[¶ 12] As to the first requirement of invoking the doctrine of equitable estoppel against a governmental agency acting in its governmental capacity, we have previously stated:

In order to invoke the doctrine against a government or public agency functioning in its official capacity, there must be a showing of affirmative misconduct. [Citation omitted.] Affirmative misconduct exists where a person, by his acts, representations, or admissions, intentionally or through culpable negligence induces another to believe that certain facts exist and the other person rightfully relies and acts on such belief and will be prejudiced if the former is permitted to deny the existence of such facts.

Thompson v. Board of County Commissioners of the County of Sublette, 2001 WY 108, ¶ 11, 34 P.3d 278, ¶ 11 (Wyo.2001). See In re General Adjudication of All Rights to Use Water in the Big Horn River System, 753 P.2d 76,...