Rudow v. Commissioner of Div. of Medical Assistance

• Decision Date: 11 March 1999
• Citation: 429 Mass. 218,707 N.E.2d 339
• Parties: Katherine RUDOW v. COMMISSIONER OF THE DIVISION OF MEDICAL ASSISTANCE 1 (and a companion case 2 ). Supreme Judicial Court of Massachusetts, Barnstable
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 339

707 N.E.2d 339

429 Mass. 218

Katherine RUDOW v. COMMISSIONER OF THE DIVISION OF MEDICAL ASSISTANCE¹ (and a companion case² ) Supreme Judicial Court of Massachusetts Barnstable.

Argued Dec. 7, 1998.

Decided March 11, 1999.

Beth E. Waldman, for the defendant.

John J. Ford, Lynn (Martha T. Ramsey, Hyannis, with him) for the plaintiffs.

Kenneth A. Behar, John D. Stuebing & Rochelle H. Zapol, Boston, for Massachusetts Extended Care Federation, Inc., amicus curiae, submitted a brief.

Present: WILKINS, C.J., ABRAMS, LYNCH, GREANEY, FRIED, MARSHALL, & IRELAND, JJ.

MARSHALL, J.

We are asked once again to decide whether the Division of Medical Assistance (division) has correctly interpreted provisions of Title XIX of the Social Security Act (1965), the Medicaid Act, 42 U.S.C. §§ 1396 et seq., and its implementing Federal and State regulations, in calculating how much an institutionalized Medicaid recipient must contribute to the cost of her long-term care (the "patient paid amount" or PPA). ³ Cf. Tarin v. Commissioner of the Div. of Medical Assistance, 424 Mass. 743, 678 N.E.2d 146 (1997). At issue in this case is whether, in calculating her "patient paid amount," a nursing home resident who has been adjudicated incompetent and for whom a legal guardian has been appointed, may deduct from her monthly income judicially approved guardianship expenses (attorney's fees and costs) as an allowance for "necessary ... medical or remedial care recognized under state law." 130 Code Mass. Regs. § 506.220(E)(2)(a) (1993). ⁴ See 42 U.S.C. § 1396a(r)(1)(A)(i) (1994); 42 C.F.R. § 435.725(c)(4)(ii). The fees were incurred in connection with a physician-certified guardianship proceeding, a prerequisite to the Massachusetts resident gaining access to the long-term care facility suitable to provide the medical and related care services she needed, and to implementing an appropriate physician-approved treatment plan for her.

I

Katherine Rudow, an elderly woman, was faced with eviction from the nursing home in which she resided because she lacked the mental capacity to pay her bill or to apply for Medicaid. The nursing home notified Rudow and her family that she would be discharged. Rudow's medical condition required that she reside in a skilled nursing facility. Her physician certified that she was not mentally capable of consenting to medical care. On February 25, 1992, a judge in the Probate Court adjudicated Rudow to be incompetent and in need of a guardian. Attorney Martha T. Ramsey was appointed as her guardian. G.L. c. 201, § 6. Subsequently, a judge in the Probate Court ordered that Ramsey's fees be paid from Rudow's income. ⁵ G.L. c. 201, § 16. Ramsey notified the division of the order and requested authorization to deduct guardianship expenses from Rudow's income in calculating Rudow's PPA. The division denied the request.

The physician of Mary L. Perry, 95 years old at the time this action commenced in 1993, and hospitalized as a patient at Cape Cod Hospital in Hyannis, determined she required care in a long-term care facility. She was not, however, mentally capable of consenting to her discharge from the hospital, or of signing an admission contract at a long-term care facility. In addition she was mentally incapable of completing an application for Medicaid benefits essential to pay for her care. ⁶ To obtain the medical care her physician ordered, it was necessary to appoint a guardian for Perry, and her physician so certified. On November 15, 1991, a judge in the Probate Court adjudicated Perry to be incompetent, and appointed her niece, Eileen Lopez, as her guardian. G.L. c. 201, § 6. Lopez, who lives in New York, retained Ramsey to represent Lopez and Perry in guardianship matters. Lopez did not seek payment of guardianship expenses for herself; she obtained an order from a judge in the Probate Court that Ramsey's fees be paid from Perry'sincome. ^{7 7} G.L. c. 201, § 16. Ramsey notified the division of the order and requested authorization to deduct guardianship expenses from Perry's income in calculating Perry's PPA. The division denied the request.

Rudow and Perry appealed, and administrative "fair hearings" were held on January 8, 1993. In each case the welfare appeals referee concluded "that the attorney deserves to be paid for providing her services," but that a deduction from the income of the Medicaid recipient for those services was not allowable. Citing 130 Code Mass. Regs. § 506.220, the referee concluded that payment of the guardianship expenses should be made from the "personal needs allowance" (PNA)--sixty dollars a month--available to Rudow and Perry. 130 Code Mass. Regs. §§ 506.220(A)(1), 506.420. ⁸ Rudow and Perry sought judicial review pursuant to G.L. c. 30A, § 14, on April 21, and April 30, 1993, respectively. Their cases were consolidated. On May 31, 1996, a judge in the Superior Court concluded that the division's decision was erroneous. He ruled that the guardianship costs "must be considered medical or remedial and, subject to reasonable limits, must be allowed as a deduction from the plaintiff [s'] income to determine their PPAs." The judge remanded the case to the division's board of hearings for further proceedings. Final judgment entered for Rudow and Perry on March 20, 1997. On May 7, 1997, the division took an appeal. We transferred the cases here on our own motion. We affirm the judgment of the Superior Court.

II

Medicaid provides medical assistance to low income persons based on financial need. See Tarin v. Commissioner of the Div. of Medical Assistance, 424 Mass. 743, 746, 678 N.E.2d 146 (1997); Massachusetts Hosp. Ass'n v. Department of Pub. Welfare, 419 Mass. 644, 646, 646 N.E.2d 1044 (1995). State participation in this public assistance program is voluntary, and those that choose to participate must submit, for Federal approval, a State Medicaid plan that complies with the Medicaid Act and its implementing regulations. 42 U.S.C. §§ 1396 et seq. In Massachusetts, long-term care services are available to persons eligible for Medicaid, and the costs of institutionalization are met by payments to the facility by the Medicaid recipient (where available) and by Medicaid. See 42 C.F.R. § 435.832(a). The division establishes the amount that the recipient is required to contribute, see note 3, supra, and the concomitant amount that Medicaid will pay on her behalf.

In conformity with Federal requirements, 130 Code Mass. Regs. § 506.220 specifies the allowances that a long-term care Medicaid recipient may deduct from her income in calculating her PPA: (a) personal needs allowance; (b) spousal maintenance needs allowance; (c) a family maintenance needs allowance for qualified family members; (d) a home maintenance allowance; and (e) health-care coverage and incurred expenses. See 42 U.S.C. § 1396a(q), (r); 42 C.F.R. § 435.832(c). This dispute concerns the allowance for "health-care coverage and other incurred expenses." "Incurred expenses," in turn, are defined as those expenses that a Medicaid recipient incurred "for necessary medical and remedial care" that are not payable by a third party. 42 U.S.C. § 1396a(r)(1)(A). The "necessary medical and remedial care expenses" include "medical or remedial care recognized under state law but not covered by the Medical Assistance Program." 130 Code Mass. Regs. § 506.220(E)(2)(a). See 42 U.S.C. § 1396a(r)(1)(A)(ii). The question for decision is whether, as guardian for Rudow and Perry, Ramsey's court-sanctioned fees constitute "necessary ... medical or remedial care recognized under state law." 130 Code Mass. Regs. § 506.220(E)(2)(a).

The judge in the Superior Court answered the question affirmatively. Observing that Rudow's and Perry's guardianship proceedings "were initiated for no other reason than to obtain medical treatment for the plaintiffs at a long-term care facility," he concluded that in the circumstances presented by these two Medicaid recipients, Ramsey's fees are allowable deductions. 130 Code Mass. Regs. § 506.220(E). He reasoned that "the costs of guardianship must be characterized as 'necessary medical expenses' when they are required under the doctrine of informed consent and when needed to furnish medical treatment to a demented nursing home resident.... When legal fees and costs associated with guardianship are necessary in order to authorize any medical treatment for an incompetent person under Massachusetts law, they are medical expenses, and as such are properly deductible from the income of an institutionalized Medicaid recipient pursuant to [division] regulations at 130 [Code Mass. Regs.] 506.220."

III

We review the decision of an administrative agency under G.L. c. 30A, § 14, to determine whether "the substantial rights of any party may have been prejudiced because the agency decision is ... (c ) [b]ased on an error of law" or "(g ) [a]rbitrary or capricious, an abuse of discretion, or otherwise not in accordance with law." G.L. c. 30A, § 14(7). See Tarin v. Commissioner of the Div. of Medical Assistance, supra at 750, 678 N.E.2d 146. In doing so, we "give due weight to the experience, technical competence, and specialized knowledge of the agency, as well as to the discretionary authority conferred upon it." § 14(7). We are not, however, bound to adhere to a position taken by the agency particularly where, as here, there are neither Federal nor State regulations directly addressing the issue. See Haley v. Commissioner of Pub. Welfare, 394 Mass. 466, 473-474, 476, 476 N.E.2d 572 (1985). "Absent a properly promulgated regulation, 'to the extent that an agency determination involves a question of law, it is subject to de novo judicial review.' " Id. at 476, 476 N.E.2d 572, quoting Raytheon Co. v. Director of the Div. of Employment Sec., 364 Mass. 593, 595, 307 N.E.2d 330 (1974).

The doctrine of "informed consent"--the requirement that a medical provider obtain the consent of a fully informed patient...