Reinholdt v. North Dakota Department of Human Services

• Decision Date: 03 February 2009
• Docket Number: No. 20080210.,20080210.
• Citation: 2009 ND 17,760 N.W.2d 101
• Parties: Michelle REINHOLDT, Plaintiff and Appellee v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, Defendant and Appellant.
• Court: North Dakota Supreme Court

760 N.W.2d 101

2009 ND 17

Michelle REINHOLDT, Plaintiff and Appellee v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, Defendant and Appellant.

No. 20080210.

Supreme Court of North Dakota.

February 3, 2009.

Edward B. Reinhardt, Jr. (argued) and Richard R. LeMay (appeared), Legal Services of North Dakota, Minot, ND, for plaintiff and appellee.

Jean R. Mullen (argued), Special Assistant Attorney General and Jeanne Steiner (appeared), Assistant Attorney General, Office of Attorney General, Bismarck, ND, for defendant and appellant.

KAPSNER, Justice.

[¶ 1] The North Dakota Department of Human Services ("Department") appeals a district court judgment reversing the Department's determination that Michelle Reinholdt ("Reinholdt") has assets in excess of the $3,000 limit for Medicaid eligibility. We conclude the Department correctly determined Reinholdt's available assets exceed the limit for Medicaid eligibility. We reverse the district court judgment and reinstate the Department's decision.

I.

[¶ 2] Doctors diagnosed Reinholdt with Huntington's Disease in 1997. At the time, Reinholdt and Loren Reinholdt were married. By December 2004, Huntington's Disease incapacitated Reinholdt. On December 15, 2004, Reinholdt's sister and brother, Kristi Hager ("Hager") and Jody Schroeder ("Schroeder"), were appointed to be Reinholdt's co-guardians and co-conservators. They were granted full authority over decisions relating to: residential, medical, legal, financial decision making, change in marital status, and driving.

[¶ 3] On May 18, 2006, Reinholdt was admitted to Tioga Medical Center. On May 23, 2006, she was transferred to a nursing home. Schroeder contacted Williams County on May 25, 2006 on behalf of Reinholdt to discuss Medicaid eligibility. Williams County requested that Loren Reinholdt complete an asset assessment to determine Reinholdt's asset eligibility as required by the Medicaid spousal provisions. Loren Reinholdt complied with Williams County's request.

[¶ 4] Hager and Schroeder signed a settlement agreement detailing a divorce between Reinholdt and Loren Reinholdt on May 24, 2006. The district court entered a divorce judgment on May 31, 2006 incorporating the terms of the settlement agreement. The judgment provided Loren Reinholdt shall have full custody of the minor children and be entitled to claim the children as dependents for income tax purposes. Because Reinholdt was totally disabled, neither party had an obligation to the other for child support. Loren Reinholdt was granted all automobiles, their home, and the debts associated with these assets. Loren Reinholdt was ordered to pay off all credit cards and debts in the parties' names and pay for all expenses and costs associated with the children. Each party received his or her own personal property, checking and saving accounts, and retirement accounts. On June 15, 2006, the asset assessment was completed for the Department, and it stated Loren Reinholdt owned a 401K retirement account valued at $142,026.12.

[¶ 5] On December 27, 2006, Williams County received a Medicaid application for Reinholdt. Williams County denied the application on February 15, 2007. The denial was described by the Department during the appeal process:

The denial notice is lengthy and confusing. It states two reasons for the denial, one being that the transfer of Reinholdt's assets in the divorce constituted a disqualifying transfer, and the other being that the transfer by her guardians of her assets in the divorce was a breach of fiduciary duty and the transferred assets are considered available assets.

[¶ 6] Reinholdt's guardians filed a Motion for Clarification on April 16, 2007 regarding the divorce judgment with the district court. The district court entered an Order of Clarification, explaining the distribution of the parties' assets and debts. The district court also clarified the terms of the judgment pertaining to the parties' minor children.

[¶ 7] Reinholdt's guardians appealed Williams County's denial of Medicaid benefits and received a hearing before an administrative law judge ("ALJ"). The issue before the ALJ was whether Reinholdt had available assets in excess of $3,000, the maximum allowed for Medicaid eligibility, considering N.D. Admin. Code § 75-02-02.1-26. Section 75-02-02.1-26(1)(a), N.D. Admin. Code, provides a one-person unit with a disability is not eligible for Medicaid if the fair market value of his or her assets exceeds $3,000.

[¶ 8] The ALJ made the following conclusion of law: "Reinholdt has the lawful right to attempt to make available the assets she should have received in the divorce settlement through an action against her guardians and the legal responsibility to prove she would be unsuccessful in pursuing such an action." In addition, the ALJ also stated the conclusion of law: "Reinholdt has failed to show that she does not have assets in excess of the maximum asset limit of $3,000." The ALJ recommended the Executive Director of the Department affirm Williams County's decision to deny Reinholdt's application for Medicaid benefits, and the Department affirmed Williams County's decision.

[¶ 9] Reinholdt appealed the Department's decision to the district court. The district court determined if Reinholdt had a money judgment against her guardians then it might be an asset, but since it is only a potential cause of action, it cannot be considered an asset. The district court also held: "The Department seeks to put [Reinholdt] in the position of hiring an attorney to file an action that would on its face be without merit. [Reinholdt] has attempted to comply, and no attorney would take the case." The district court held there was no asset; therefore, it reversed the Department's decision. The Department appeals.

II.

[¶ 10] When the decision of an administrative agency is appealed from a district court to this Court, we review the agency's decision and the record compiled before the agency. Roberts v. North Dakota Dep't of Human Servs., 2005 ND 50, ¶ 6, 692 N.W.2d 922 (citing Gross v. North Dakota Dep't of Human Servs., 2004 ND 24, ¶ 6, 673 N.W.2d 910). When an administrative decision is appealed, questions of law are fully reviewable on appeal. Oyloe v. North Dakota Dep't of Human Servs., 2008 ND 67, ¶ 7, 747 N.W.2d 106 (citing Tedford v. Workforce Safety & Ins., 2007 ND 142, ¶ 7, 738 N.W.2d 29). The Department made the following conclusion of law: "Reinholdt has the lawful right to attempt to make available the assets she should have received in the divorce settlement through an action against her guardians and the legal responsibility to prove she would be unsuccessful in pursuing such an action." The issue before this Court pertains to this conclusion of law; therefore, the Department's determination is fully reviewable by this Court.

A.

[¶ 11] "Medicaid is a cooperative federal-state program designed to furnish financial assistance to needy persons for their medically necessary care." Oyloe, 2008 ND 67, ¶ 8, 747 N.W.2d 106 (quoting Kryzsko v. Ramsey County Soc. Servs., 2000 ND 43, ¶ 6, 607 N.W.2d 237). North Dakota has elected to participate in the Medicaid program. Id. (citing Kryzsko, 2000 ND 43, ¶ 6, 607 N.W.2d 237).

[¶ 12] To be eligible for Medicaid benefits, a person must lack sufficient assets to pay costs of necessary medical care and services. Id. (citing Estate of Pladson v. Traill County Soc. Servs., 2005 ND 213, ¶ 10, 707 N.W.2d 473). "The Medicaid program is intended to be a payor of last resort, and other available resources must be exhausted before [M]edicaid will pay for an individual's care." Roberts, 2005 ND 50, ¶ 7, 692 N.W.2d 922 (citing Wahl v. Morton County Soc. Servs., 1998 ND 48, ¶ 18, 574 N.W.2d 859). The Department adopted rules in N.D. Admin. Code ch. 75-02-02.1 to determine eligibility for Medicaid benefits. Oyloe, 2008 ND 67, ¶ 8, 747 N.W.2d 106 (citing Kryzsko, 2000 ND 43, ¶ 6, 607 N.W.2d 237). A one-person unit is eligible for Medicaid benefits if the value of that person's assets does not exceed $3,000. N.D. Admin. Code § 75-02-02.1-26(1)(a).

[¶ 13] 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). Assets that are "actually available" must be considered in establishing a person's eligibility for Medicaid benefits. N.D. Admin. Code § 75-02-02.1-25(1). Section 75-02-02.1-25(1), N.D. Admin. Code, states:

Assets are actually available when at the disposal of an applicant, recipient, or responsible relative; when the applicant, recipient, or responsible relative has a legal interest in a liquidated sum and has the legal ability to make the sum available for support, maintenance, or medical care; or when the applicant, recipient, or responsible relative has the lawful power to make the asset available, or to cause the asset to be made available.

[¶ 14] "Determining whether an asset is `actually available' for purposes of Medicaid eligibility is largely a fact-specific inquiry depending on the circumstances of each case." Estate of Pladson, 2005 ND 213, ¶ 11, 707 N.W.2d 473 (quoting Linser v. Office of Attorney General, 2003 ND 195, ¶ 11, 672 N.W.2d 643). "[A]n asset to which an applicant has a legal entitlement is not unavailable simply because the applicant must initiate legal proceedings to access the asset." Opp v. Ward County Soc. Servs. Bd., 2002 ND 45, ¶ 11, 640 N.W.2d 704 (citing Schmidt v. Ward County Soc. Servs. Bd., 2001 ND 169, ¶ 14, 634 N.W.2d 506; Post v. Cass County Soc. Servs., 556 N.W.2d 661, 664 (N.D.1996)). Rather, "[i]f an applicant has a colorable legal action to obtain assets through reasonable legal means, the assets are available[.]" Makedonsky v. North Dakota Dep't of Human Servs., 2008 ND 49, ¶ 10, 746 N.W.2d 185 (citing Linser, 2003 ND 195, ¶ 11, 672 N.W.2d 643; Opp, 2002 ND 45, ¶¶ 22-23, 640 N.W.2d...