New Mexico Dept. of Human Services v. Department of Health and Human Services Health Care Financing Admin., 92-9552

• Decision Date: 08 September 1993
• Docket Number: No. 92-9552,92-9552
• Citation: 4 F.3d 882
• Parties: NEW MEXICO DEPARTMENT OF HUMAN SERVICES, Petitioner, v. DEPARTMENT OF HEALTH AND HUMAN SERVICES HEALTH CARE FINANCING ADMINISTRATION, Respondent. Willie Ray Jeffries, individually and on behalf of a class of persons similarly situated; Andres Mares, individually and on behalf of a class of persons similarly situated, Intervenors.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 882

4 F.3d 882

42 Soc.Sec.Rep.Ser. 235

NEW MEXICO DEPARTMENT OF HUMAN SERVICES, Petitioner, v. DEPARTMENT OF HEALTH AND HUMAN SERVICES HEALTH CARE

FINANCING ADMINISTRATION, Respondent.

Willie Ray Jeffries, individually and on behalf of a class

of persons similarly situated; Andres Mares,

individually and on behalf of a class of

persons similarly situated, Intervenors.

No. 92-9552.

United States Court of Appeals, Tenth Circuit.

Sept. 8, 1993.

Judith C. Hutchison, Asst. Gen. Counsel, New Mexico Human Services Dept., Office of Gen. Counsel, Santa Fe, NM, for petitioner.

Don J. Svet, U.S. Atty., D. of N.M., Gayla Fuller, Chief Counsel, Region VI, Joel Lerner, Principal Regional Counsel, Charlene M. Seifert, Supervisory Asst. Regional Counsel, Marguerite Lokey, Asst. Regional Counsel, Office of the Gen. Counsel, Dept. of Health

and Human Services, Dallas, TX, for respondent.

Ellen Leitzer, Sr. Citizens Law Office, Inc., Albuquerque, NM, and Jeanne Finberg and Gill Deford, National Sr. Citizens Law Center, Los Angeles, CA, for intervenors.

Before BALDOCK and KELLY, Circuit Judges, and CAUTHRON, ^* District Judge.

PAUL KELLY, Jr., Circuit Judge.

The New Mexico Department of Human Services (NMDHS) petitions for review ¹ of a final decision of the Secretary of Health and Human Services affirming the disapproval, by the Health Care Financing Administration (HCFA), of a Medicaid plan amendment submitted by NMDHS. By the amendment, designated SPA No. 90-13, NMDHS sought authorization to calculate the financial eligibility of certain married Medicaid applicants using New Mexico community property principles, under which the applicant would be attributed one-half the couple's combined income, instead of the "name-on-the-check" rule prescribed by the Secretary, under which each spouse is attributed the income received in his or her own name. We exercise jurisdiction pursuant to 42 U.S.C. Sec. 1316(a)(3), and reverse the Secretary's decision for the reasons that follow.

I.

The Medicaid program, enacted in 1965 as Title XIX of the Social Security Act, 42 U.S.C. Secs. 1396-1396u, is a cooperative federal-state venture designed to afford medical assistance to persons whose income and resources are insufficient to meet the financial demands of necessary care and services. Atkins v. Rivera, 477 U.S. 154, 156, 106 S.Ct. 2456, 2457, 91 L.Ed.2d 131 (1986). Once a state elects to participate, the federal government shares the costs so long as the state's plan complies with the requirements of the Act and the regulations validly imposed thereunder by the Secretary. See id. at 156-57, 106 S.Ct. at 2457; see also Dillon Family & Youth Servs., Inc. v. Department of Human Servs., 965 F.2d 932, 933 n. 1 (10th Cir.1992). Thus, disapproval of SPA No. 90-13 as noncompliant exposes NMDHS to the loss of federal financial participation if it adheres to the proposal. See, e.g., Illinois ex rel. Illinois Dep't of Pub. Aid v. United States Dep't of Health & Human Servs., 772 F.2d 329 (7th Cir.1985).

The Medicaid program mandates coverage for the "categorically needy," who are already eligible to receive Aid to Families with Dependent Children (AFDC), 42 U.S.C. Secs. 601-617, or Supplemental Security Income (SSI), 42 U.S.C. Secs. 1381-1383d. Additionally, states are permitted to extend coverage to the "medically needy," who meet nonfinancial eligibility requirements for AFDC or SSI but have income or resources over applicable limits, and the "optional categorically needy," who either qualify for but for some reason do not receive SSI or would qualify for SSI but for their institutionalized status. See Herweg v. Ray, 455 U.S. 265, 268-69, 102 S.Ct. 1059, 1062-63, 71 L.Ed.2d 137 (1982); Lamore v. Ives, 977 F.2d 713, 718-19 (1st Cir.1992); see also Atkins, 477 U.S. at 157-58, 106 S.Ct. at 2457-59. We are concerned here with the last group, particularly institutionalized married persons, to whom New Mexico has for some time extended Medicaid coverage. The controlling statutory provisions impose an income cap on these individuals--they are ineligible if their income exceeds a state standard based on a multiple of the SSI benefit rate. See 42 U.S.C. Secs. 1396a(a)(10)(A)(ii)(V), 1396b(f)(4)(C). While the Medicaid statute provides a detailed definition of income for purposes of this cap, it does not specify rules for determining ownership of that income, particularly as between spouses. See Purser v. Rahm, 104 Wash.2d 159, 702 P.2d 1196, 1200-01 (1985) (en banc), cert. dismissed, 478 U.S. 1029, 107 S.Ct. 8, 92 L.Ed.2d 763 (1986); see also Washington v. Bowen, 815 F.2d 549, 553 (9th Cir.1987) (name-on-the-check rule for determining ownership of income has no explicit basis in either Medicaid statute or regulations). That omission lies at the heart of the present dispute.

On April 18, 1990, a class of aged, blind, or disabled married persons needing institutional care commenced an action in the United States District Court for the District of New Mexico, Van Gilder v. Valdez, No. CIV 90-0382, seeking to enjoin NMDHS from denying or terminating their Medicaid benefits pursuant to Sec. 1396b(f)(4)(C) on the basis of excessive income levels determined under the name-on-the-check rule. The plaintiffs alleged that, because the bulk of the income supporting them and their respective spouses happened to be paid in their name, the Secretary's rule disqualified them for Medicaid even though their true personal income, according to New Mexico community property law, clearly fell under the cap. See also, e.g., Purser, 702 P.2d at 1197-98 (state class action raising same point with respect to Washington community property law); cf. Washington v. Bowen, 815 F.2d at 552-53 (discussing converse difficulty created for institutionalized applicant's at-home spouse, typically the wife, who may be denied much of her rightful income by combined operation of name-on-the-check rule and income spend-down requirement imposed on institutionalized husband). The plaintiffs' characterization of New Mexico community property law was not, and is not now, a matter subject to dispute. See N.M.Stat.Ann. Sec. 40-3-6 to Sec. 40-3-17; Hodges v. Hodges, 101 N.M. 67, 678 P.2d 695, 697 (1984) (property acquired during marriage by either husband or wife is presumed to be community property); DeTevis v. Aragon, 104 N.M. 793, 727 P.2d 558, 563 (Ct.App.1986) (both spouses have present vested right to one-half of community property).

On May 9, 1990, the district court entered a stipulated judgment directing NMDHS to adhere to the state's community property law when determining the eligibility of married persons seeking Medicaid benefits for institutionalized care. Shortly thereafter, NMDHS submitted SPA No. 90-13 for administrative approval. The Van Gilder plaintiff class, as intervenors, ² now join NMDHS in challenging the Secretary's adverse decision on the plan amendment.

II.

We review the Secretary's disapproval of a state plan under Administrative Procedure Act standards and therefore must affirm unless that decision is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Louisiana v. United States Dep't of Health & Human Servs., 905 F.2d 877, 881 (5th Cir.1990) (quoting 5 U.S.C. Sec. 706(2)(A)); see also Erie County Geriatric Ctr. v. Sullivan, 952 F.2d 71, 77 (3d Cir.1991). Because statutory construction is involved, we must consider the deference due the Secretary's interpretation of the statute she administers. See Webb v. Hodel, 878 F.2d 1252, 1255 (10th Cir.1989); see, e.g., Washington v. Bowen, 815 F.2d at 553-54. When Congress explicitly delegates to an agency the authority to elucidate a specific statutory provision, the agency's interpretation is given controlling weight unless arbitrary, capricious, or manifestly contrary to the statute. Hecla Mining Co. v. United States, 909 F.2d 1371, 1375 (10th Cir.1990) (quoting Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984)). Absent such an explicit delegation, the agency's interpretation generally controls if it is reasonable and consistently applied, id.; Webb, 878 F.2d at 1255, though no deference is warranted if the interpretation is inconsistent with the legislative intent reflected in the language and structure of the statute or if there are other compelling indications that it is wrong, Webb, 878 F.2d at 1255; see, e.g., Trevino-Casares v. United States Parole Comm'n, 992 F.2d 1068, 1073 (10th Cir.1993).

HCFA argues that Congress explicitly directed use of the Secretary's SSI methodology for attributing income between spouses, particularly the name-on-the-check rule, by specifying in Sec. 1396b(f)(4)(C) that, for purposes of the statutory cap, the applicant's income is to be "determined under [42 U.S.C.] Sec. 1382a," which provides a detailed definition of SSI income. Two points undermine this argument. First, these statutes direct the Secretary to make the Medicaid cap determination by following legislatively prescribed standards (which do not include a name-on-the-check rule) for calculating SSI income; they do not, as HCFA appears to assume, authorize wholesale importation of all policies and rules of thumb informally developed by the agency in the SSI context. Second, we have already noted the more fundamental point that the pertinent statutes relating to income definition and computation do not even address--much less expressly authorize the Secretary to resolve--the matter of income ownership at issue in this case. ³ Thus, the Secretary's name-on-the-check rule for determining income ownership is not entitled to controlling weight under the explicit-delegation standard of deferential review.

Nevertheless, if that were the end of the matter, we might still defer to the Secretary's rule under the implicit-delegation standard as a reasonable, if debatable, method for implementing the income...