State, Family and Social Services Admin. v. Thrush

• Decision Date: 30 January 1998
• Docket Number: No. 85A05-9606-CV-240,85A05-9606-CV-240
• Parties: STATE of Indiana, FAMILY AND SOCIAL SERVICES ADMINISTRATION and State of Indiana, Division of Family and Children, Appellants-Defendants, v. James THRUSH, Authorized Representative of Goldie Thrush, Deceased Spouse, Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 769

690 N.E.2d 769

STATE of Indiana, FAMILY AND SOCIAL SERVICES ADMINISTRATION and State of Indiana, Division of Family and Children, Appellants-Defendants, v. James THRUSH, Authorized Representative of Goldie Thrush Deceased Spouse, Appellee-Plaintiff.

No. 85A05-9606-CV-240.

Court of Appeals of Indiana.

Jan. 30, 1998.

Pamela Carter, Attorney General, Randi F. Elfenbaum, Deputy Attorney General, Indianapolis, for Appellants-Defendants.

James A. Federoff, Craig R. Patterson, Beckman, Lawson, Sandler, Snyder & Federoff, L.L.P., Fort Wayne, for Appellee-Plaintiff.

OPINION

RUCKER, Judge.

In this dispute concerning Medicaid eligibility the Indiana Family and Social Services Administration (FSSA) appeals the trial court's judgment in favor of James Thrush. We address the following restated issue: did the trial court err in rejecting FSSA's calculation of Thrush's Medicaid resource spend down liability. We reverse.

The facts show that Goldie Thrush was hospitalized from February 1991 to May 1991 at which time she died. Facing medical bills exceeding $180,000.00 her husband, James Thrush, filed an application with the Wabash County Office of Family and Children (County) seeking Medicaid assistance. After a series of administrative delays not relevant to this appeal, County advised Thrush that his assets exceeded Medicaid eligibility limits. Accordingly, Thrush was required to "spend down" his excess resources in order to qualify for Medicaid assistance. County calculated the amount of the spend down at $38,674.94. Although acknowledging that his assets exceeded the limit, Thrush nonetheless disputed County's calculations. He appealed County's decision to an Administrative Law Judge (ALJ). Following an evidentiary hearing the ALJ affirmed County's decision which was later adopted by FSSA. Thrush then filed a petition for judicial review in the Wabash Circuit Court. After a hearing the trial court affirmed FSSA's determination as to the month of February, but concluded FSSA erred in its calculation of Thrush's spend down amounts for the months of March, April, and May. Vacating FSSA's decision, the trial court remanded the matter for further proceedings. This appeal followed.

The purpose of the Medicaid program is to provide medical assistance to needy persons whose income and resources are insufficient to meet the expenses of health care. 42 U.S.C. § 1396; Sullivan v Day, 681 N.E.2d 713, 715 (Ind.1997). The program operates through a combined scheme of state and federal statutory and regulatory authority. See 42 U.S.C. § 1396a; I.C. § 12-15-1-1; Family & Social Servs. Admin. v. Calvert, 672 N.E.2d 488, 493 (Ind.Ct.App.1996), trans. denied. States participating in the Medicaid program must establish reasonable standards for determining eligibility, including the reasonable evaluation of an applicant's income and resources. 42 U.S.C. § 1396a(a)(17); Glaser v. Department of Pub. Welfare, 512 N.E.2d 1128, 1132 (Ind.Ct.App.1987), trans. denied. To qualify for Medicaid, an applicant must meet both an income eligibility test and a resources eligibility test; if either the applicant's income or the value of the applicant's resources is too high, then the applicant does not qualify for Medicaid. Roloff v. Sullivan, 975 F.2d 333, 337 (7th Cir.1992).

Indiana calculates resources pursuant to the "first day of the month" rule as set forth in 405 IAC 2-3-15 which provides in relevant part:

(a) An applicant or recipient is ineligible for medical assistance for any month in which the total equity value of all nonexempt personal property exceeds the applicable limitation, set forth below, on the first day of the month:....

Under the Code an applicant's financial resources are evaluated as of the first date of the month for which Medicaid assistance is sought. If the applicant's financial resources exceed the eligibility limit on the first day of the month, then the applicant is not eligible for that month. Glaser, 512 N.E.2d at 1132. However, an applicant whose financial resources exceed the limit on the first day of month may still qualify for Medicaid assistance through a procedure commonly referred to as "resource spend down." ¹ The term "spend down" is somewhat misleading because although an applicant may, he is not actually required, to spend or to liquidate any of his assets. Rather, excess resources may be offset against incurred but unpaid medical bills. Indiana Dep't of Pub. Welfare v. Payne, 622 N.E.2d 461 (Ind.1993), reh'g denied.

Applying the first day of the month rule, FSSA calculated the amount Thrush was required to spend down each month. It did so by determining Thrush's available resources on the first day of each month and subtracting the resource limit. This left the excess amount of Thrush's available resources. For example on February 1, 1991, Thrush's combined non-exempt resources totaled $34,415.94. The applicable Medicaid resource limit was $19,069.00. Thus, for the month of February Thrush exceeded the resource limit by $15,346.94. Therefore Thrush was required to spend down that amount in order to qualify for Medicaid for the month of February. Stated differently, a portion of Thrush's incurred but unpaid medical expenses could be offset by $15,346.94. Medicaid assistance would then apply to the remainder of Thrush's medical expenses for that month. For each of the four relevant months, FSSA concluded that Thrush's non-exempt resources exceeded the $19,069.00 resource limit. According to FSSA, on March 1, 1991 Thrush exceeded the limit by $8,605.00; on April 1, 1991 he exceeded the limit by 7,346.00, and on May 1, 1991 he exceeded the limit by $7,377.00. Combining the foregoing amounts, FSSA determined that Thrush would have to spend down $38,674.94 in order to qualify for Medicaid assistance.

In proceedings before the trial court Thrush challenged the first day of the month rule as unreasonable, arbitrary, capricious and otherwise not according to law. ² In Glaser v. Department of Pub. Welfare, 512 N.E.2d 1128 (Ind.Ct.App.1987), trans. denied, DPW denied Medicaid assistance to eighty year old Gertrude Glaser because her resources exceeded the eligibility limits. Glaser sought judicial review of DPW's decision which the trial court affirmed. On appeal to this court Glaser did not claim that the first day of the month rule was inherently unreasonable, but rather was unreasonable as applied to her. More specifically Glaser acknowledged that her resources exceeded the eligibility limit, but maintained that they were earmarked to pay bills she had incurred the previous month and therefore it was unreasonable to consider those funds in determining her Medicaid eligibility. We disagreed and affirmed the trial court. In so doing we implicitly acknowledged the reasonableness of the first day of the month rule and explicitly held that the rule was reasonable as applied to Glaser. Id. at 1133. We now explicitly hold that the first day of the month rule is not inherently unreasonable, arbitrary, capricious, or otherwise contrary to law. Our conclusion is consistent with Stockton v. Department of Pub. Welfare, 533 N.E.2d 148, 151 (Ind.Ct.App.1988) ("The 'first day of the month' rule is a properly promulgated state regulation based upon [the Tax Equity and Fiscal Responsibility Act of 1982] as required by [the U.S. Department of Health and Human Services]"), as well as Roloff v. Sullivan, 975 F.2d 333, 342 (7th Cir.1992) (use of "first day of the month" rule does not violate federal statute requiring reasonable evaluation of Medicaid applicants' income and resources).

Pointing out that his total combined assets have never exceeded $34,415.94 Thrush argues the first day...