State ex rel. Secretary of Social and Rehabilitation Services v. Jackson

• Decision Date: 06 December 1991
• Docket Number: No. 64947,64947
• Parties: , Medicare & Medicaid Guide P 40,756 STATE of Kansas, ex rel. SECRETARY OF SOCIAL AND REHABILITATION SERVICES, Appellant, v. Carrie Conner JACKSON, Appellee.
• Court: Kansas Supreme Court

Page 1033

822 P.2d 1033

249 Kan. 635, Medicare & Medicaid Guide P 40,756

STATE of Kansas, ex rel. SECRETARY OF SOCIAL AND REHABILITATION SERVICES, Appellant, v. Carrie Conner JACKSON, Appellee.

No. 64947.

Supreme Court of Kansas.

Dec. 6, 1991.

Syllabus by the Court

1. The nature, construction, and legal effect of a written instrument are questions of law, and courts are not bound by stipulations as to questions of law.

2. In an action pursuant to K.S.A. 39-719b by the State against a recipient of public assistance to recover benefits paid, the record is examined and it is held: (1) The provisions relative to payment of the income from the trust are not those of a purely discretionary trust; and (2) the net income generated by the trust was an available resource to the defendant beneficiary during the period of time she received public assistance.

Robert R. Hiller, Jr. of Dept. of Social and Rehabilitation Services, argued the cause, and Reid Stacey of the same department, was with him on the briefs for appellant.

Mark D. Calcara of Watkins, Calcara, Rondeau & Friedeman, P.A., Great Bend, argued the cause and was on the briefs for appellee.

McFARLAND, Justice:

This action was brought by the State of Kansas, ex rel. Secretary of Social and Rehabilitation Services (SRS), against Carrie Conner Jackson for reimbursement of public assistance benefits paid during a period in which SRS had determined she was ineligible to receive such benefits. Such an action is authorized by K.S.A. 39-719b. The case was tried in a bench trial upon stipulated facts which incorporated certain depositions and interrogatories. The district court held in favor of the defendant, and the State appealed therefrom. The Court of Appeals affirmed the district court in State ex rel. Secretary of SRS v. Jackson, 15 Kan.App.2d 126, 803 P.2d 1045 (1990). The case is before us on the State's petition for review.

Jackson received benefits comprised of medical assistance, food stamps, and cash public assistance from May 1983 through February 1986 in the total amount of $35,565.11. Her benefits were terminated in February 1986 by SRS on the basis that her interests in two trusts were undisclosed available resources which rendered her ineligible for the benefits she had received. The two trusts, known as the Essmiller Trust and the Carrie Conner Jackson Irrevocable Trust (Jackson Trust), were established by W.D. Essmiller, Jackson's maternal grandfather prior to the time Jackson received SRS benefits herein. By the time the State's appeal was heard by the Court of Appeals, the State was no longer claiming the Essmiller Trust was an available resource to Jackson. We are concerned herewith solely with the Jackson Trust.

Before proceeding further, it is important to further delineate exactly what is and what is not involved in the case before us. The State brings this action under K.S.A. 39-719b, which provides:

"If at any time during the continuance of assistance to any person, the recipient thereof becomes possessed of any property or income in excess of the amount ascertained at the time of granting assistance, or if any of the recipient's circumstances which affect eligibility to receive assistance change from the time of determination of eligibility, it shall be the duty of the recipient to notify the secretary immediately of the receipt or possession of such property, income, or of such change in circumstances affecting eligibility and said secretary may, after investigation, cancel or modify the assistance payment in accordance with the circumstances.

"Any assistance paid shall be recoverable by the secretary as a debt due to the state. If during the life or on the death of any person receiving assistance, it is found that the recipient was possessed of income or property in excess of the amount reported or ascertained at the time of granting assistance, and if it be shown that such assistance was obtained by an ineligible recipient, the total amount of the assistance may be recovered by the secretary as a fourth class claim from the estate of the recipient or in an action brought against the recipient while living."

Thus, in this action, the State is contending Jackson is indebted to it in the amount of $35,565.11, this sum being the amount of assistance received by Jackson when she was an ineligible recipient. The trustees of the Jackson Trust are not parties hereto, and no claim is asserted herein against them. The propriety of the termination by SRS of Jackson from receipt of future benefits is, likewise, not before us as Jackson did not appeal that administrative determination. The claim that Jackson received $35,565.11 in assistance is uncontroverted.

Although the posture of this case does not require us to analyze the particular benefits received, it is appropriate to state, generally, how eligibility is determined. The Court of Appeals explained:

"Eligibility requirements for general assistance, medical assistance, and assistance to families with dependent children (AFDC) are governed by K.S.A.1989 Supp. 39-709. Assistance from programs involving federal funds is governed by K.S.A.1989 Supp. 39-709(a), which provides in part that assistance 'may be granted to any needy person who: (1) Has insufficient income or resources to provide a reasonable subsistence compatible with decency and health.' The provision also permits SRS to establish income and resource exemptions as permitted by federal legislation.

"Eligibility for the AFDC program is governed by K.S.A.1989 Supp. 39-709(b), which provides that assistance 'may be granted' to any dependent child or relative meeting the requirements of K.S.A.1989 Supp. 39-709(a).

"Eligibility for general assistance programs not involving federal funds is governed by K.S.A.1989 Supp. 39-709(d)(1), which provides in part:

'(A) To qualify for general assistance in any form a needy person must have insufficient income or resources to provide a reasonable subsistence compatible with decency and health and, except as provided for transitional assistance, be a member of a family in which a minor child or a pregnant woman resides or be unable to engage in employment.'

"Eligibility for medical assistance is governed by K.S.A.1989 Supp. 39-709(e), which provides in part:

'[M]edical assistance in accordance with such plan shall be granted to any person ... whose resources and income do not exceed the levels prescribed by the secretary. In determining the need of an individual, the secretary may provide for income and resource exemptions and protected income and resource levels.'

"K.S.A. 39-719b authorizes an action for reimbursement of public assistance benefits and provides in part:

'Any assistance paid shall be recoverable by the secretary as a debt due to the state. If during the life or on the death of any person receiving assistance, it is found that the recipient was possessed of income or property in excess of the amount reported or ascertained at the time of granting assistance, and if it be shown that such assistance was obtained by an ineligible recipient, the total amount of the assistance may be recovered by the secretary as a fourth class claim from the estate of the recipient or in an action brought against the recipient while living.'

"Pursuant to the authority granted by K.S.A. 39-708c, the Secretary of SRS has issued a number of regulations concerning eligibility for public assistance benefits. K.A.R. 30-4-34 et seq. contain the eligibility requirements for most public assistance programs. Eligibility requirements for medical assistance programs (other than Medicaid) are contained in K.A.R. 30-6-34 et seq.

"K.A.R. 30-4-53 contains financial eligibility requirements for public assistance and provides in part:

'Each applicant or recipient shall be determined to be financially eligible if the client: (a) Owns property within the allowable limits;

'(b) has income that does not exceed 185% of the public assistance standards as set forth in K.A.R. 30-4-100; and

'(c) has a budgetary deficit after subtracting total applicable income from the public assistance standards.'

"While K.A.R. 30-4-53 has been restructured and the income eligibility standard has been adjusted, the basic eligibility requirements of the regulation have not changed since 1982. See K.A.R. 30-4-53 (1983); K.A.R. 30-4-53 (1982 Supp.).

"K.A.R. 30-4-106 (1983) contains 'rules for consideration of resources' of a public assistance applicant and provides in part:

'(a) Ownership for assistance purposes shall be determined by legal title. In the absence of a legal title, ownership shall be determined by possession.

'(b) Resources shall be real and of a nature that the value can be defined and measured....

'(c) Resources shall be considered available both when actually available and when the applicant or recipient has the legal ability to make them available.

'(d) The resource value of property shall be that of the applicant's or recipient's equity in the property.'

"K.A.R. 30-4-109 provides a definition of personal property for eligibility purposes. K.A.R. 30-4-109(a)(2) provides: ' "Cash assets" means money, investments, cash surrender or loan values of life insurance policies, trust funds, and similar items on which a determinate amount of money can be realized.' This definition has not been changed since 1982. See K.A.R. 30-4-109(a)(2) (1982 Supp.).

"The provisions of K.A.R. 30-6-106 (1983), concerning medical assistance, are nearly identical to the provisions of K.A.R. 30-4-106. The current version of 30-6-106 contains an additional provision concerning trusts created by the applicant or their spouse. See K.A.R. 30-6-106(c)(2) (1990 Supp.). Even if this provision is deemed applicable to benefits granted in 1986 and earlier, the provision does not address a trust created by a grandparent.

"Essentially, the State argues the trust [fund was] an 'available' resource within the meaning of K.A.R. 30-4-106...