Makedonsky v. Dept. of Human Services

• Decision Date: 20 March 2008
• Docket Number: No. 20070183.,20070183.
• Citation: 2008 ND 49,746 N.W.2d 185
• Parties: Minnie MAKEDONSKY, Appellant v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, Appellee.
• Court: North Dakota Supreme Court

746 N.W.2d 185

2008 ND 49

Minnie MAKEDONSKY, Appellant v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, Appellee.

No. 20070183.

Supreme Court of North Dakota.

March 20, 2008.

Damian J. Huettl, Larson, Latham and Huettl, L.L.P., Bismarck, N.D., for appellant.

Jean R. Mullen, Assistant Attorney General, Office of Attorney General, Bismarck, N.D., for appellee.

CROTHERS, Justice.

[¶ 1] Minnie Makedonsky appeals from a district court judgment affirming a North Dakota Department of Human Services' decision denying her application for Medicaid benefits. She argues the Department erred in deciding assets transferred to her daughters by her attorney-in-fact were available to her for purposes of determining her Medicaid eligibility. We hold a preponderance of evidence supports the Department's findings that a presumption of undue influence regarding the transfers was not rebutted and that assets transferred to Makedonsky's daughters by her attorney-in-fact were available to her for purposes of determining her Medicaid eligibility. We affirm.

I

[¶ 2] Minnie Makedonsky entered a nursing home in Kidder County in August 2002, and the parties stipulated that at all times relevant to her claim for Medicaid benefits, she was mentally competent and capable of understanding her business affairs, but she had physical deficiencies requiring nursing home care. On August 22, 2002, after entering the nursing home, Minnie Makedonsky executed a durable power of attorney, appointing her daughter, JoAnn Makedonsky, as her attorney-in-fact. Between November 2002 and September 2005 JoAnn Makedonsky, as her mother's attorney-in-fact, gifted more than $159,000 in assets to Minnie Makedonsky's four daughters, JoAnn Makedonsky, Carol Schwindt, Rose Mack, and Donita Endrud. On September 8, 2005, Minnie Makedonsky executed a "statement of intention to gift," stating she had freely and voluntarily made those gifts to her daughters and she was not influenced by anyone, including JoAnn Makedonsky, in making those gifts.

[¶ 3] In February 2006, Minnie Makedonsky applied for Medicaid benefits with Kidder County Social Services. The county denied her application, concluding she had made disqualifying transfers of assets. Minnie Makedonsky appealed to the Department of Human Services.

[¶ 4] After an administrative hearing, an administrative law judge ("ALJ") recommended affirming the county's decision. The ALJ said JoAnn Makedonsky was a trustee for Minnie Makedonsky under N.D.C.C. § 59-01-08. The ALJ further said any transaction by which a trustee obtains any advantage from a beneficiary is presumed to be entered into without sufficient consideration and is a result of undue influence under N.D.C.C. § 59-01-16. The Department adopted the ALJ's recommendation and found JoAnn Makedonsky had not rebutted the presumption of undue influence because Minnie Makedonsky had not testified at the administrative hearing to substantiate Minnie's intent to gift her assets or to explain how she intended to pay for her nursing home costs. The Department concluded Minnie Makedonsky's testimony would have been the best evidence to rebut the presumption of undue influence and JoAnn Makedonsky's hearsay testimony about her mother's intent was not credible. The Department was not convinced by Minnie Makedonsky's claim that, before she signed the statement of intention to gift, she had intended to gift her assets to her daughters. The Department recognized an applicant for Medicaid benefits must make a good-faith effort to pursue available legal actions to have assets made available for purposes of Medicaid eligibility. The Department determined Minnie Makedonsky had a cause of action to have the gifted assets returned to her until she signed the statement of intention to gift on September 8, 2005, because under N.D. Admin. Code § 75-02-02.1-33.1(8), "a transfer is complete when the individual . . . making the transfer has no lawful means of undoing the transfer or requiring a restoration of ownership." It decided Minnie Makedonsky made a disqualifying transfer when she executed the statement of intention to gift on September 8, 2005, which was within the thirty-six month look-back period of her February 2006 application for Medicaid benefits. Based on the value of the disqualifying transfer, the ALJ recommended that Minnie Makedonsky's period of ineligibility for Medicaid benefits was from September 2, 2005, through July 15, 2008. The Department adopted the ALJ's recommendation, and the district court affirmed the Department's decision.

II

[¶ 5] "`When a decision of an administrative agency is appealed from the district court to this Court, we review the decision of the agency.'" Martin v. Stutsman County Soc. Servs., 2005 ND 117, ¶ 8, 698 N.W.2d 278 (quoting Steen v. North Dakota Dep't of Human Servs., 1997 ND 52, ¶ 7, 562 N.W.2d 83). Under N.D.C.C. § 28-32-49, we review an administrative agency's decision in the same manner as the district court, and we must affirm the agency's decision unless:

"1. The order is not in accordance with the law.

2. The order is in violation of the constitutional rights of the appellant.

3. The provisions of [N.D.C.C. ch. 28-32] have not been complied with in the proceedings before the agency.

4. The rules or procedure of the agency have not afforded the appellant a fair hearing.

5. The findings of fact made by the agency are not supported by a preponderance of the evidence.

6. The conclusions of law and order of the agency are not supported by its findings of fact.

7. The findings of fact made by the agency do not sufficiently address the evidence presented to the agency by the appellant.

8. The conclusions of law and order of the agency do not sufficiently explain the agency's rationale for not adopting any contrary recommendations by a hearing officer or an administrative law judge."

N.D.C.C. § 28-32-46.

[¶ 6] "Our review of an agency's decision is limited; we will not make independent findings of fact or substitute our judgment for that of the agency," and we will not reverse an agency's decision unless its findings are not supported by a preponderance of the evidence. J.P. v. Stark County Soc. Servs. Bd., 2007 ND 140, ¶ 9, 737 N.W.2d 627. In considering whether an agency's findings of fact are supported by a preponderance of the evidence, we decide "only whether a reasoning mind reasonably could have determined that the factual conclusions reached were proved by the weight of the evidence from the entire record." Power Fuels, Inc. v. Elkin, 283 N.W.2d 214, 220 (N.D.1979). "Questions of law are fully reviewable." Gustafson v. North Dakota Dep't of Human Servs., 2006 ND 75, ¶ 6, 712 N.W.2d 599.

III

[¶ 7] Minnie Makedonsky argues the Department erred in counting assets she gifted to her four daughters through her attorney-in-fact before the applicable lookback period. She asserts the gifts were effective on the date the transfers occurred and not in September 2005, when she signed the statement of intention to ratify the gifts because the ratification related back to the actual date of the transfers. She contends JoAnn Makedonsky was authorized to gift the assets under N.D.C.C. § 30.1-30-06, which allows an attorney-in-fact to make gifts if the attorney-in-fact has authority to perform any act the principal may perform. She claims the Department erred in counting the assets gifted by JoAnn Makedonsky to the other three daughters because Minnie Makedonsky had a confidential relationship with only JoAnn Makedonsky and not with the other three daughters. She argues the evidence establishes the presumption of undue influence was successfully rebutted and the assets were not available to her for purposes of her Medicaid eligibility.

[¶ 8] The Department counters that a Medicaid applicant must take affirmative steps showing an asset cannot be made available and that the date Minnie Makedonsky signed the statement of intention to gift, September 8, 2005, was the date she relinquished her legal right to sue for the return of assets gifted by her attorney-in-fact. The Department argues that evidence supports its findings that Minnie Makedonsky made a disqualifying transfer when she signed the statement of intention to gift and that she did not rebut the presumption of undue influence that arose when her attorney-in-fact gained an advantage from her. The Department contends the assets were available to Minnie Makedonsky for purposes of her Medicaid eligibility.

[¶ 9] In Estate of Pladson v. Traill County Soc. Servs., 2005 ND 213, ¶¶ 10-11, 707 N.W.2d 473, we outlined the legal framework for assessing an applicant's eligibility for Medicaid benefits:

"Generally, a person without sufficient assets to meet the cost of necessary medical care and services is eligible for Medicaid benefits. Schmidt v. Ward County Soc. Servs. Bd., 2001 ND 169, ¶ 9, 634 N.W.2d 506. The Medicaid program is intended to be a payor of last resort, and available resources must be exhausted before Medicaid will pay for an individual's care. Wahl v. Morton County Soc. Servs., 1998 ND 48, ¶ 18, 574 N.W.2d 859. An applicant for Medicaid benefits must prove eligibility. Roberts [v. North Dakota Dep't of Human Servs.], 2005 ND 50, ¶ 7, 692 N.W.2d 922. Under the Department's rules for determining Medicaid eligibility, a one-person unit is eligible for Medicaid benefits if the total value of that person's assets does not exceed $3,000. N.D. Admin. Code § 75-02-02.1-26(1)(a); Linser v. Office of Attorney General, 2003 ND 195, ¶ 7, 672 N.W.2d 643. An `asset' is defined as `any kind of property or property interest, whether real, personal, or mixed, whether liquid or illiquid, and whether or not presently vested with possessory rights.' N.D. Admin. Code § 75-02-02.1-01(2). Although certain assets are exempt or excluded from consideration, see N.D. Admin. Code §§ 75-02-02.1-27 and 75-02-02.1-28, other assets that are `actually available' must be considered in...