Mattingly by Mattingly v. Heckler

• Decision Date: 21 February 1986
• Docket Number: No. 85-1205,85-1205
• Citation: 784 F.2d 258
• Parties: , Medicare&Medicaid Gu 35,311 James R. MATTINGLY, by his next friend, Mary Ann MATTINGLY, and Mary Ann Mattingly, Leroy Jones and Mary Jones, Plaintiffs-Appellants, v. Margaret HECKLER, in her official capacity as Secretary of Health and Human Services, and Donald Blinzinger, in his official capacity as Administrator of the Indiana Department of Public Welfare, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 258

784 F.2d 258

12 Soc.Sec.Rep.Ser. 298, Medicare&Medicaid Gu 35,311

James R. MATTINGLY, by his next friend, Mary Ann MATTINGLY and Mary Ann Mattingly, Leroy Jones and Mary Jones, Plaintiffs-Appellants, v. Margaret HECKLER, in her official capacity as Secretary of Health and Human Services, and Donald Blinzinger, in his official capacity as Administrator of the Indiana Department of Public Welfare, Defendants-Appellees.

No. 85-1205.

United States Court of Appeals Seventh Circuit.

Argued Oct. 23, 1985.

Decided Feb. 21, 1986.

William R. Leahy, Legal Services Organization, Indianapolis, Ind., for plaintiffs-appellants.

Gary L. Shaw, Office of Atty. Gen., Indianapolis, Ind., Daniel E. Bensing, U.S. Dept. of Justice, Washington, D.C., for defendants-appellees.

Before CUDAHY, ESCHBACH and COFFEY, Circuit Judges.

COFFEY, Circuit Judge.

Plaintiffs-appellants, James R. and Mary Ann Mattingly and Leroy and Mary Jones, appeal the judgment of the district court finding that the maintenance allowance established by the State of Indiana Department of Public Welfare ("IDPW") for a dependant spouse of an institutionalized Medicaid recipient is not in violation of 42 U.S.C. Sec. 1396a(a)(17) nor the Fifth and Fourteenth Amendments of the United States Constitution. We affirm.

I

James Mattingly, the husband of Mary Ann Mattingly, has been a nursing home resident since 1979 and became eligible for and began receiving Medicaid assistance in July 1980. Mary Ann lives at home and is without an independent income; the Mattinglys' sole support is derived from James' pension from the Eli Lilly Company and his Social Security retirement benefits, which together provided a monthly income of $743.97 as of July 1980. When James began to receive Medicaid benefits in July 1980, the Indiana Department of Public Welfare instructed Mary Ann to pay $477.00 of their monthly income to the nursing home for James' care and informed her that she would be permitted to retain $28.50 as an allowance for James' clothing and personal needs and $238.00 as a maintenance allowance for her personal living expenses. ¹ In June 1981, James and Mary Ann individually filed suit and also sought to be certified as class representatives for all other similarly situated individuals in their action against the United States Secretary of the Department of Health and Human Services ("HHS") and the Administrator of the Indiana Department of Public Welfare. The Mattinglys alleged that an HHS regulation, 42 C.F.R. Sec. 435.733, placing a ceiling on the amount the State of Indiana may deduct from an institutionalized Medicaid recipient's income as a maintenance allowance for the support of a spouse at home, and the IDPW regulation establishing a flat maintenance allowance of $238.00 for the non-institutionalized spouse violated 42 U.S.C. Sec. 1396a(a)(17). The Mattinglys further alleged that the HHS and IDPW regulations violated the Due Process Clause of the Fifth and Fourteenth Amendments of the United States Constitution in establishing an irrebuttable presumption that the income of the Medicaid recipient is available to pay for the recipient's medical care without making an individual factual determination that the Medicaid recipient has an income sufficient to defray the recipient's medical expenses. The Mattinglys finally alleged that Ind.Code 12-1-7-18.6 entitled the dependent spouse of an institutionalized Medicaid recipient to $5,000 per year as a maintenance allowance. The Mattinglys sought a declaratory judgment finding the HHS and IDPW regulations to be in violation of 42 U.S.C. Sec. 1396a(a)(17) and the Due Process Clause of the United States Constitution and further requested the court to enjoin the enforcement of the regulations and order the defendants to determine the Mattinglys' available income in accordance with Ind.Code 12-1-7-18.6 for each month from July 1980 to the present.

Leroy Jones, like James Mattingly, is a nursing home patient and has been receiving Medicaid since January 1982. His wife, Mary Jones, does not receive Medicaid, lives at home and suffers from health problems serious enough to prevent her from caring for her husband or from working outside the home. When Leroy was placed in a nursing home, the Jones had a monthly income of $916.15 from their joint Railroad Retirement and their Social Security benefits (consisting of a $692.83 payment to Leroy and a $223.32 payment to Mary per month). In December 1981, Mary Jones applied for Medicaid benefits for Leroy and after a determination was made finding him eligible for Medicaid assistance, she was informed by the IDPW that she could retain a maintenance allowance of $264.70 from Leroy's income in addition to her own retirement benefits of $223.32 per month. Some months thereafter, in August 1982, the IDPW notified Mary Jones that they had made an error at the time of computing her husband's Medicaid benefits and advised her that she was entitled to retain only $41.38 from Leroy's income in addition to her personal retirement benefits for a total maintenance allowance of $264.70 per month. The IDPW directed that the remainder of Leroy's monthly income (less a $28.50 personal allowance for Leroy and a $51.60 deduction for Leroy's Blue Cross Blue Shield insurance coverage) be paid to the nursing home for his care. Mrs. Jones refused to pay the $182.00 increase in monthly payments to the nursing home, contending she was unable to meet her living needs on a maintenance allowance of only $264.70 monthly. In February 1983, Newcastle Health Care Center (where Leroy was confined as a patient) informed Mary that they intended to discharge Leroy due to her refusal to pay the increased amount to the nursing home as directed by the IDPW. At this time, the Jones (Mary and Leroy) moved to intervene in the Mattinglys' lawsuit, and sought the same declarative and injunctive relief, as well as seeking to enjoin the Newcastle Health Care Center from discharging Leroy. The district court granted the Jones' motion to intervene. Following an evidentiary hearing, the district court denied the Mattinglys' motion to certify the class, and dismissed the complaint of the Mattinglys and Jones, concluding that the challenged maintenance allowances for institutionalized Medicaid recipients were not in violation of 42 U.S.C. Sec. 1396a(a)(17) nor Indiana Code Sec. 12-1-7-18.6 and further that they did not violate the Fifth and Fourteenth Amendments of the United States Constitution. On appeal, the Mattinglys and Jones contend that the district court erred in holding that the HHS and IDPW regulations did not violate 42 U.S.C. Sec. 1396a(a)(17) and the Due Process Clause of the United States Constitution. ²

II

A.

The Medicaid program, established in 1965 as Title XIX of the Social Security Act, 79 Stat. 343, as amended, 42 U.S.C. Sec. 1396 et seq., "provide[s] federal financial assistance to states that choose to reimburse certain costs of medical treatment for needy persons." Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 2680, 65 L.Ed.2d 784 (1980). Section 1902(a)(17) of the Act, 42 U.S.C. Sec. 1396a(a)(17) provides in pertinent part:

"A state plan for medical assistance must--

(17) include reasonable standards ... for determining eligibility for and the extent of medical assistance under the plan which (A) are consistent with the objectives of this subchapter, (B) provide for taking into account only such income and resources as are, as determined in accordance with standards prescribed by the Secretary, available to the applicant or recipient and ... as would not be disregarded (or set aside for future needs) in determining his eligibility for such aid, assistance, or benefits, (C) provide for reasonable evaluation of any such income or resources...."

The Secretary of Health and Human Services has promulgated a regulation governing the treatment of the income of institutionalized Medicaid recipients in "209(b) states" ³ such as Indiana. The regulation provides:

"(a) The agency must reduce its payment to an institution, for services provided to an individual specified in paragraph (b) of this section, by the amount that remains after deducting the amounts specified in paragraph (c) of this section, from the individuals' income.

* * *

(c) The agency must deduct the following amounts, in the following order, from the individual's total income including amounts disregarded in determining eligibility:

(1) A personal needs allowance that is reasonable in amount for clothing and personal needs of the individual while in the institution....

(2) For an individual with only a spouse at home, an additional amount for the maintenance needs of the spouse. This amount must be based on a reasonable assessment of need but must not exceed the higher of--

(i) The more restrictive income standard established under Sec. 435.121; or

(ii) The medically needy standard for an individual;"

42 C.F.R. Sec. 435.733. As Indiana does not have a "medically needy" program, ⁴ the spousal maintenance deduction cannot exceed the more restrictive income standard set forth in 42 C.F.R. Sec. 435.121 for 209(b) states such as Indiana:

"(b) If an agency uses more restrictive requirements under this section--

(1) Each requirement may be no more restrictive than that in effect under the State's Medicaid plan on January 1, 1972, and no more liberal than that applied under SSI or an optional State supplement program that meets the conditions of Sec. 435.230;"

42 C.F.R. Sec. 435.121(b)(1).

The IDPW regulation governing the income eligibility of institutionalized Medicaid recipients, 470 IAC 9.1-3-11, currently mandates that the IDPW subtract $28.40 from the Medicaid recipient's monthly income for his personal needs, and if the Medicaid recipient has a non-institutionalized spouse, the IDPW must subtract an amount not to exceed $325.00 ⁵ as a monthly maintenance allowance for the non-institutionalized spouse; the...