State of Ga., Dept. of Medical Assistance, By and Through Toal v. Shalala, 92-9106

• Citation: 8 F.3d 1565
• Decision Date: 09 December 1993
• Docket Number: No. 92-9106,92-9106
• Parties: , Medicare & Medicaid Guide P 41,947 The STATE OF GEORGIA, DEPARTMENT OF MEDICAL ASSISTANCE, By and Through Its Commissioner, Russell TOAL, and Atlanta Legal Aid Society, Petitioners, v. Donna SHALALA, Secretary of the United States Department of Health and Human Services, and The United States Department of Health and Human Services, and The Health Care Financing Administration, Respondents.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1565

8 F.3d 1565

42 Soc.Sec.Rep.Ser. 555, Medicare & Medicaid Guide

P 41,947

The STATE OF GEORGIA, DEPARTMENT OF MEDICAL ASSISTANCE, By and Through Its Commissioner, Russell TOAL, and Atlanta Legal Aid Society, Petitioners, v. Donna SHALALA, Secretary of the United States Department of Health and Human Services, and The United States Department of Health and Human Services, and The Health Care Financing Administration, Respondents.

No. 92-9106.

United States Court of Appeals Eleventh Circuit.

Dec. 9, 1993.

Rehearing Denied Jan. 21, 1994.

Mary Foil Russell, Asst. Atty. Gen., Charles R. Bliss, Atlanta Legal Aid Soc., Atlanta, GA, for petitioners.

Henry Eigles, Office of Gen. Counsel, Dept. Health and Human Services, Baltimore, MD, for respondents.

Petition for Review of an Order of the Health Care Financing Administration.

Before ANDERSON and BLACK, Circuit Judges, and NANGLE ^*, Senior District Judge.

BLACK, Circuit Judge:

This appeal requires us to determine whether the United States Department of Health and Human Services (HHS or "the Secretary"), Health Care Financing Administration (HCFA), properly interpreted sections of the Medicaid statute involving the calculation of income to determine a recipient's or an applicant's ¹ Medicaid eligibility when it disapproved the methodology proposed by the State of Georgia.

Georgia proposed to calculate income by excluding Social Security benefits that are withheld in one pay period because of an overpayment in an earlier pay period. HCFA rejected Georgia's proposal primarily because calculating income without including withheld Social Security benefits would allow applicants to be Medicaid eligible who had incomes above the statutory maximum level for federal financial participation (FFP), while at the same time permitting the state to receive federal financial assistance. We grant Georgia's petition for review and hold that HCFA permissibly construed the Medicaid statute. Accordingly, we affirm HCFA's ruling.

I. BACKGROUND

Medicaid is a cooperative federal-state program under which federal financial assistance is given to states that choose to reimburse certain costs of medical treatment for needy applicants. Applicants are needy, and therefore eligible for assistance, depending on what income and resources are available to them. Schweiker v. Gray Panthers, 453 U.S. 34, 36, 101 S.Ct. 2633, 2636, 69 L.Ed.2d 460 (1981). States do not have to participate in the Medicaid program but if they do, they must develop a plan containing reasonable standards for determining an applicant's eligibility for assistance. The state plans must comply with the federal statute and with HHS' requirements. Id. at 37, 101 S.Ct. at 2637.

Federal financial participation is available to states that meet the federal statutory and administrative requirements, including requirements encompassing the state's determination of an applicant's income eligibility. Id. at 36-37, 101 S.Ct. at 2636-2637. Georgia's Medicaid plan adopts the statutory maximum level of income at which applicants may be eligible for Medicaid and the state still receive federal funds. ²

Georgia proposed to amend its Medicaid plan to adopt a "less restrictive methodology" pursuant to 42 U.S.C. § 1396a(r)(2), which permits the states to use a methodology for determining Medicaid income eligibility that is the same as or less restrictive than the methodology used in determining income eligibility for Supplemental Security Income (SSI). The proposed income-eligibility methodology excludes from the calculation of income Social Security benefits that are withheld due to an earlier overpayment. The proposed amendment reads: "Title II income considered as countable income in determining eligibility is based on income received rather than income entitlement if the payment is reduced to recover a previous Title II overpayment." That is, in order to determine Medicaid eligibility, Georgia would count as income only Social Security benefits that were actually received in-hand; the amounts withheld would not be counted as part of an applicant's income. Georgia proposed its plan amendment in particular to ease the plight of persons in nursing homes who apply for Medicaid, are credited with receiving more income than they actually receive when a prior overpayment is deducted from a current check (sometimes the entire amount of the check), and may be left with inadequate income to pay for their nursing home care.

HCFA disapproved the proposed amendment primarily on the basis of another section of the Medicaid statute, § 1396b. That section establishes the upper income limit at which certain applicants may be eligible for Medicaid and the state still receive FFP. § 1396b(f)(4)(C). HCFA determined that Georgia's proposed methodology would permit applicants to be eligible for Medicaid even though they have incomes above the maximum for FFP, a result that primarily derives from Georgia's income eligibility level being set at the maximum permitted under § 1396b(f)(4)(C). HCFA also determined that the proposed amendment would hamper efficient administration of the Medicaid program.

Georgia appealed HCFA's initial disapproval and requested a hearing. The hearing officer recommended affirming the initial disapproval. Georgia then filed exceptions to the hearing officer's recommended decision, and the HCFA Administrator issued the final agency decision affirming the disapproval. Georgia appealed to this Court. 42 U.S.C. § 1316(a)(3).

II. STANDARD OF REVIEW

The Supreme Court established the standard for an appellate court's review of agency decisions in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). ³ The first step in the Chevron two-step review is to determine whether Congress has directly and unambiguously spoken to the precise question at issue. Chevron, 467 U.S. at 842-43, 104 S.Ct. at 2781-82. Under common statutory interpretation principles, this Court must look at the "particular statutory language at issue, as well as the language and design of the statute as a whole." Sullivan v. Everhart, 494 U.S. 83, 89, 110 S.Ct. 960, 964, 108 L.Ed.2d 72 (1990) (quoting K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 108 S.Ct. 1811, 1817, 100 L.Ed.2d 313 (1988)). Statutory interpretation is within the special competence of the courts. If congressional intent is clear and the agency action is contrary, then that action must be set aside by the judiciary. Chevron, 467 U.S. at 843 n.9, 104 S.Ct. at 2782 n.9.

If Congress has not spoken directly to the issue, or the statutory provision is ambiguous, then we reach the second step of the Chevron analysis: whether the agency's construction of the statute is permissible and consistent with congressional intent. If the agency's interpretation reflects a permissible construction of the statute and a reasonable reconciliation of conflicting policies, a reviewing court may not substitute its own judgment, but must defer to the agency interpretation. Chevron, 467 U.S. at 842-45, 104 S.Ct. at 2781-2783. Indeed, as the Supreme Court recently stated, "the resolution of ambiguity in a statutory text is often more a question of policy than of law.... When Congress ... has delegated policy-making authority to an administrative agency, the extent of judicial review of the agency's policy determinations is limited." Pauley v. Bethenergy Mines, Inc., 501 U.S. ----, ----, 111 S.Ct. 2524, 2534, 115 L.Ed.2d 604 (1991) (citations omitted).

Even if its position has changed across time, the agency's interpretation is still due deference, although the consistency of its position is a factor in the extent of deference given. Good Samaritan Hosp. v. Shalala, --- U.S. ----, ----, 113 S.Ct. 2151, 2161, 124 L.Ed.2d 368 (1993); Bethenergy Mines, --- U.S. at ----, 111 S.Ct. at 2535; see also Chevron, 467 U.S. at 863-64, 104 S.Ct. at 2791-92 (changes in agency interpretation do not mean that a court should not accord deference to the interpretation). On the other hand, the Supreme Court has cautioned that:

We have never applied the principle of [deference] to agency litigating positions that are wholly unsupported by regulations, rulings, or administrative practice. To the contrary, we have declined to give deference to an agency counsel's interpretation of a statute where the agency itself has articulated no position on the question, on the ground that 'Congress has delegated to the administrative official and not to appellate counsel the responsibility for elaborating and enforcing statutory commands.'

Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212, 109 S.Ct. 468, 473, 102 L.Ed.2d 493 (1988) (quoting Investment Co. Institute v. Camp, 401 U.S. 617, 628, 91 S.Ct. 1091, 1097, 28 L.Ed.2d 367 (1971)).

III. DISCUSSION

A.

In appreciation of the well-recognized complexity and "Byzantine construction" of the Medicaid statute, Gray Panthers, 453 U.S. at 43, 101 S.Ct. at 2639, we first identify in some detail the statutory and regulatory provisions applicable to our decision. This appeal involves an interaction between Medicaid, a medical assistance program, and the SSI statute, a cash assistance program. The Medicaid sections pertinent to this appeal include § 1396a, which specifies what the state plans for medical assistance must include, and § 1396b, which outlines the FFP in the program. The pertinent SSI section is § 1382a, which defines the term "income" for SSI and, by cross-reference, for § 1396b.

In particular, §§ 1396a(a)(17)(B) and (r)(2) require a state to establish reasonable standards for determining an applicant's income eligibility. Section 1396a(a)(17)(B) states that the income-eligibility methodology must take into account income and resources that are available to the applicant. ⁴ Section 1396a(r)(2)(A)(i) permits a state to determine income eligibility by using a methodology that is "less restrictive" than the SSI...