Tannler v. Wisconsin Dept. of Health and Social Services

• Decision Date: 24 June 1997
• Docket Number: No. 96-0118,96-0118
• Citation: 564 N.W.2d 735,211 Wis.2d 179
• Parties: , 53 Soc.Sec.Rep.Ser. 613, Medicare & Medicaid Guide P 45,585 Phyllis A. TANNLER, Petitioner-Respondent-Petitioner, v. WISCONSIN DEPARTMENT OF HEALTH AND SOCIAL SERVICES, Respondent-Appellant.
• Court: Wisconsin Supreme Court

Page 735

564 N.W.2d 735

211 Wis.2d 179, 53 Soc.Sec.Rep.Ser. 613,

Medicare & Medicaid Guide P 45,585

Phyllis A. TANNLER, Petitioner-Respondent-Petitioner, v. WISCONSIN DEPARTMENT OF HEALTH AND SOCIAL SERVICES,

Respondent-Appellant.

No. 96-0118.

Supreme Court of Wisconsin.

Argued May 30, 1997.

Decided June 24, 1997.

For the petitioner-respondent-petitioner, there was a brief by Scott Thompson and Kittelsen, Barry, Ross, Wellington and Thompson, Monroe and oral argument by Scott Thompson.

For the respondent-appellant the cause was argued by Maryann Sumi, Assistant Attorney General, with whom on the brief was Steven E. Tinker, Assistant Attorney General and James E. Doyle, Attorney General.

¶1 DONALD W. STEINMETZ, Justice

The issue in this case is whether an institutionalized person's failure to assert a claim against his or her deceased "community spouse's" ¹ estate constitutes a divestment under the Medical Assistance (MA) program. We conclude that the failure to make a spousal election is an "action" for purposes of determining MA eligibility underWis. Stat. § 49.453 ² as defined by 42 U.S.C. § 1396p(e)(1). ³ We therefore hold that the failure of an institutionalized spouse to assert a claim against the estate of his or her deceased spouse constitutes a divestment for purposes of determining MA eligibility. ⁴

¶2 The relevant facts are not in dispute. The petitioner, Phyllis Tannler (Tannler), lives in a nursing home. ⁵ She has received MA since early in 1993. Tannler's husband, Adolph Tannler, died in 1994 leaving a will that bequeathed all of his assets, both real and personal property, to his grandson and his grandson's wife. Adolph left nothing to his wife. Tannler, represented by a guardian ad litem in the estate of her deceased husband, did not contest the will, nor did she file any elections or select any property passing under her husband's will. ⁶

¶3 Tannler continued to receive MA benefits until 1995 when the respondent, Department of Health and Social Services ("DHSS"), informed Tannler that it was terminating her eligibility. DHSS asserted that Tannler's failure to contest, select, or elect against the will constituted a divestment of assets which rendered her ineligible for MA. A hearing on the matter was held April 12, 1995, and the hearing examiner issued a proposed decision that Tannler remain eligible for MA. DHSS rejected this proposal and modified the decision. It concluded as follows:

1. The petitioner's acceptance of her husband's will transferring to a third person assets to which she was entitled under law was a disposal or a transfer of an asset.

2. The petitioner divested herself of an asset.

The Matter of Phyllis A. Tannler, DHSS Decision, August 17, 1995.

¶4 Tannler appealed. The Green County Circuit Court, Judge David G. Deininger, ordered that DHSS's action terminating Tannler's MA be set aside. The circuit court found that DHSS erroneously interpreted 42 U.S.C. § 1396p(e)(1).

¶5 DHSS appealed from the circuit court order. The court of appeals reversed. According due weight to DHSS's interpretation, the court held that the failure to make a spousal election was an "action" constituting divestment that resulted in MA ineligibility. Tannler v. Department of Health and Social Servs., 206 Wis.2d 385, 557 N.W.2d 434 (Ct.App.1996).

¶6 This case involves the interpretation of Wis. Stat. § 49.453 and 42 U.S.C. § 1396p(e)(1). Interpretation of a statute and its application to undisputed facts are questions of law which this court reviews de novo. Local No. 695 v. LIRC, 154 Wis.2d 75, 82, 452 N.W.2d 368 (1990). This court is not bound by an agency's conclusions of law. See Kelley Co., Inc. v. Marquardt, 172 Wis.2d 234, 244, 493 N.W.2d 68 (1992). However, this court defers to agency decisions in certain instances. See MCI Telecommunications Corp. v. State, 209 Wis.2d 310, ----, 562 N.W.2d 594 (1997).

¶7 In reviewing agency interpretations, this court has applied three distinct levels of deference: great weight, due weight, and de novo review. Id., citing Harnischfeger Corp. v. LIRC, 196 Wis.2d 650, 659-60, 539 N.W.2d 98 (1995). In order to accord great weight deference, a court must conclude that: 1) the agency was charged by the legislature with the duty of administering the statute; 2) the interpretation of the agency is one of long-standing; 3) the agency employed its specialized knowledge or expertise in forming the interpretation; and 4) the agency's interpretation will provide consistency and uniformity in the application of the statute. Id., citing Jicha v. DILHR, 169 Wis.2d 284, 290, 485 N.W.2d 256 (1992).

¶8 If an agency conclusion does not meet all of the criteria necessary to accord it great weight deference, this court may give "due weight" deference to the agency conclusions. Jicha, 169 Wis.2d at 290-91, 485 N.W.2d 256. Due weight deference, the middle level of review, is appropriate "if the agency decision is 'very nearly' one of first impression." Id. at 291, 485 N.W.2d 256. However, if the case is one of first impression for the agency and the agency lacks any special expertise, then the court must review the agency's conclusion de novo. Id.

¶9 As the court of appeals noted, the Medical Assistance Handbook produced by DHSS provides guidance on the issue presented by this case. The court stated that "[b]ecause the MA Handbook is designed to assist state and local agencies to implement the federal-state MA program, we conclude that its provisions are persuasive in resolving disputes such as the one before the court." Tannler, 206 Wis.2d at 391, 557 N.W.2d 434. Tannler claims that this case presents an issue of first impression that should be subject to de novo review by this court. While it appears from the lack of agency precedent that this case is one of first impression, the language found in the handbook indicates that the agency possesses a specialized knowledge on the issue of whether the failure to contest a will constitutes divestment for purposes of determining MA eligibility. Consequently, like the court of appeals, we also conclude that the findings of DHSS should be accorded due weight. Due weight deference means that this court will give some deference to the agency, but if a more reasonable interpretation exists, this court will adopt that interpretation.

¶10 Wisconsin Statutes § 49.45(10) authorizes DHSS to "promulgate such rules as are consistent with its duties in administering medical assistance." Pursuant to this provision, DHSS instituted Wis. Admin. Code §§ HSS 101-108. ⁷ Section HSS 103.065(4) states that an applicant who disposes of a "resource" at less than fair market value within 30 months of his or her application for MA is deemed to have "divested." According to the code provisions and the statutes, divestment renders a party ineligible for MA. Wis. Admin. Code § HSS 103.065(4); Wis. Stat. § 49.453(2).

¶11 In rendering its decision in this case, DHSS considered the language, purposes, and policies of the federal and state legislation regarding the MA program. It also looked to language found in the MA Handbook for guidance. Specifically, DHSS relied on an example found in the section of the Handbook covering divestment. The example provides as follows:

It is also divestment if a person takes an action to avoid receiving income or assets s/he is entitled to. Actions which would cause income or assets not to be received include:

....

6) Refusing to take action to claim the statutorily required portion of a deceased spouse's or parent's estate. Count the action as a divestment only if:

a. The value of the abandoned portion is clearly identified, and

b. There is certainty that a legal claim action will be successful.

This includes situations in which the will of the institutionalized person's spouse precludes any inheritance for the institutionalized person. Under Wisconsin law, a person is entitled to a portion of his/her spouse's estate. If the institutionalized person does not contest his/her spouse's will in this instance, the inaction may be divestment.

MA Handbook, Section 14.2.1 (emphasis added).

¶12 DHSS explains in its decision that even though the statutes speak in terms of "action" while the Handbook refers to "refusal to take action," the distinction is one without a difference. DHSS concludes that the statutes and the Handbook are consistent because both seek to terminate MA eligibility where a recipient or spouse somehow dispose of or avoid acceptance of an available asset. In accepting the will, DHSS concludes, Tannler acted in concert with her deceased husband in completing the divestment, and, therefore, she is ineligible for further MA benefits according to Wis. Stat. § 49.453(2).

¶13 Tannler asserts that reliance on the MA Handbook is misplaced. Tannler claims that the relevant provisions of this handbook should not be applied in this case because it is in conflict with the provisions of the controlling federal and state legislation. Specifically, Tannler objects to the Handbook 's use of the phrase "refusal to take action" in light of the fact that the statutes use the term "action." Because "action" is an unambiguous term, Tannler argues, this court must enforce the plain meaning of the term.

¶14 We reject Tannler's arguments. This court concludes that the MA Handbook used by DHSS is consistent with the federal and state legislation regarding medical assistance. We further conclude that the term "action" as it is used in 42 U.S.C. § 1396p(e)(1) is an ambiguous term because there is more than one reasonable interpretation of the term. ⁸

¶15 The Department may use policies and guidelines to assist in the implementation of administrative rules provided they are consistent with state and federal legislation governing MA. As long as the document simply recites policies and guidelines, without attempting to establish rules or regulations, use of the document is permissible. DHSS's MA Handbook is a policy...