Thomas v. Commissioner of Div. of Medical Assistance

• Decision Date: 14 August 1997
• Citation: 682 N.E.2d 874,425 Mass. 738
• Parties: , 53 Soc.Sec.Rep.Ser. 883, Medicare & Medicaid Guide P 45,595 Amelia THOMAS & others 1 v. COMMISSIONER OF THE DIVISION OF MEDICAL ASSISTANCE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 874

682 N.E.2d 874

425 Mass. 738, 53 Soc.Sec.Rep.Ser. 883,

Medicare & Medicaid Guide P 45,595

Amelia THOMAS & others ¹ v. COMMISSIONER OF THE DIVISION OF MEDICAL ASSISTANCE.

Supreme Judicial Court of Massachusetts Suffolk.

Argued April 10, 1997.

Decided Aug. 14, 1997.

Rosemary S. Gale, Assistant Attorney General, for defendant.

John J. Ford, Lynn, for plaintiffs.

Deborah Thomson, Boston, for Alzheimer's Association of Eastern Massachusetts, Inc., amicus curiae, submitted a brief.

Before WILKINS, C.J., and ABRAMS, LYNCH, GREANEY and FRIED, JJ.

LYNCH, Justice.

The plaintiffs brought an action against the Commissioner of the Division of Medical Assistance (commissioner) seeking judicial review under G.L. c. 30A, §§ 7 and 14, and declaratory relief under G.L. c. 231A. The plaintiffs alleged that the commissioner's Medicaid eligibility regulation, 130 Code Mass. Regs. § 505.190(A)(1)(b) (the "income first" rule), in effect from June 3, 1994, to July 1, 1995, and the form letter which notified applicants of their right to a fair hearing in effect from October 1, 1989, to March 30, 1995, violated the Federal Medicaid law. The action was bifurcated and the parties filed cross motions for summary judgment on each issue. The plaintiffs' motions were allowed. ² The commissioner appealed and we granted the plaintiffs' application for direct appellate review. We vacate the summary judgment entered on the "income first" issue and remand to the Superior Court for the entry of summary judgment for the defendant.

1. Statutory background. We begin with an overview of the Federal statutory scheme and corresponding State regulations. Medicaid, enacted in 1965 as Title XIX of the Social Security Act, often referred to as the Medicaid Act, 42 U.S.C. §§ 1396 et seq., is a cooperative State-Federal program which provides medical assistance to the poor. The Secretary of the United States Department of Health and Human Services (Secretary) administers the program at the Federal level. A State that chooses to participate in Medicaid must submit a plan to the Secretary which complies with the substantive requirements of §§ 1396 et seq., and the accompanying regulations, 42 C.F.R. § 447.200 (1987). See Tarin v. Commissioner of the Div. of Medical Assistance, 424 Mass. 743, 746, 678 N.E.2d 146 (1997). The commissioner is responsible for administering the Medicaid program in Massachusetts and is authorized to promulgate regulations in accordance with State and Federal law. See G.L. c. 118E, §§ 1 and 7.

In 1988, Congress enacted the Medicare Catastrophic Coverage Act of 1988 (MCCA). Pub.L. No. 100-360, 102 Stat. 683 (1988). The objective of the MCCA was to protect married couples when one spouse (institutionalized spouse) enters a nursing facility by ensuring that the spouse living in the community (community spouse) has sufficient income and resources to live with independence and dignity. Prior to 1988, the Medicaid eligibility rules required couples to deplete virtually all their combined resources before the institutionalized spouse was eligible. Once eligible, most of the couple's income had to be spent on the nursing home care. Frequently, this policy left the community spouse financially vulnerable. ³ The MCCA addressed this problem by setting aside minimum amounts of income and resources for the community spouse.

At the same time, the MCCA was designed to eliminate loopholes which allowed couples to qualify for Medicaid even though they had substantial resources. See Cleary v. Waldman, 959 F.Supp. 222, 229 (D.N.J.1997). Under the prior eligibility rules, based on the legal title principle, a couple could shelter a majority of the resources in the community spouse's name, while the institutionalized spouse received Medicaid. See id. The MCCA closed this loophole by attributing certain amounts of the couple's combined resources to each spouse for eligibility purposes. Thus, the MCCA struck a balance between preventing impoverishment of the community spouse and ensuring that no one avoided contributing his or her fair amount to medical care.

Section 1396r-5 contains the Medicaid application and eligibility requirements of the MCCA. When a married couple applies for Medicaid, the State agency must calculate the total value of the couple's resources ⁴ and allocate a share of the resources to each spouse. 42 U.S.C. § 1396r-5(c)(1). For purposes of determining eligibility, the amount allocated to the community spouse is called the community spouse resources allowance (CSRA). 42 U.S.C. § 1396r-5(c)(2)(B). The CSRA is the greatest of (a) $12,000 (adjusted annually), (b) the lesser of one-half total joint resources or $60,000 (adjusted annually), (c) an amount established pursuant to a fair hearing under subsection (e)(2), or (d) an amount transferred under court order. 42 U.S.C. § 1396r-5(f)(2)(A). ⁵ The institutionalized spouse only has available those resources in excess of the CSRA. 42 U.S.C. § 1396r-5(c)(2).

If either spouse is dissatisfied with the CSRA determination, he or she may request a "fair hearing." 42 U.S.C. § 1396r-5(e). At this hearing, the State agency must ascertain the minimum monthly maintenance needs allowance (MMMNA) of the community spouse, which is 150% of the Federal poverty level for a couple, plus certain shelter expenses in excess of thirty per cent of that figure. See 42 U.S.C. § 1396r-5(d)(3), (4). Subsection (e)(2)(C), to which subsection (f)(2)(A)(iii) refers, provides:

"If either such spouse establishes that the community spouse resources allowance (in relation to the amount of income generated by such an allowance) is inadequate to raise the community spouse's income to the minimum monthly maintenance needs allowance, there shall be substituted, for the community spouse resource allowance under subsection (f)(2), an amount adequate to provide such a minimum monthly maintenance needs allowance" (emphasis added).

If the community spouse's income, including income generated from the CSRA, does not satisfy the MMMNA, the hearing officer must revise the CSRA to provide the community spouse with enough income generating assets to meet the MMMNA level. 42 U.S.C. § 1396r-5(e)(2)(C).

The resources available to the institutionalized spouse must not exceed a prescribed limit, which in this case was $2,000. If the applicant's resources exceed the prescribed limit, the applicant must "spend down" those assets to become eligible. See Tarin v. Commissioner of the Div. of Medical Assistance, supra at 747-748, 678 N.E.2d 146.

Section 1396r-5 also provides for the allocation and use of each spouse's income. Subsection (b) sets the rules for the treatment of income. ⁶ Subsection (b)(1) provides that no income of the community spouse shall be deemed available to the institutionalized spouse. Subsection (b)(2) governs the determination of the income of the institutionalized spouse or community spouse for purposes of the posteligibility income determination described in subsection (d). With respect to nontrust property, payment of income solely in the name of one spouse is considered available only to that spouse. Payment in both spouses' names is divided equally. 42 U.S.C. § 1396r-5(b)(2). In general, for posteligibility purposes, each spouse is entitled to his or her own income.

Subsection (d) provides for certain allowances which may be deducted from the institutionalized spouse's income that is applied to payment of medical costs. Subsection (d)(1) provides, in part, as follows:

"After an institutionalized spouse is determined ... to be eligible for medical assistance, in determining the amount of the spouse's income that is to be applied monthly to payment for the costs of care in the institution, there shall be deducted ...

"(B) A community spouse monthly income allowance (as defined in paragraph (2)), but only to the extent income of the institutionalized spouse is made available to (or for the benefit of) the community spouse." (Emphasis added.)

The community spouse monthly income allowance (CSMIA) is defined as the amount by which the MMMNA exceeds the monthly income otherwise available to the community spouse. ⁷ Thus, the CSMIA is intended to make up any difference between the MMMNA and the community spouse's income. 42 U.S.C. § 1396r-5(d)(1). On appeal, we must decide whether § 1396r-5 permits the CSMIA to be deemed part of the "community spouse's income" as the term is used in subsection (e)(2)(C), for purposes of determining whether the CSRA needs to be readjusted at the time eligibility is determined.

In 1994, the commissioner adopted the so-called "income first" rule. ⁸ During the period at issue on appeal, 130 Code Mass. Regs. § 505.190(A)(1)(b), provided:

"If the gross income as defined in 130 CMR 505.190, (A)(1)(a) is less than the minimum monthly maintenance needs allowance (MMMNA) determined in accordance with 130 CMR 506.220, (B), then the fair hearing officer shall deem from the institutionalized spouse to the community spouse the amount of income remaining after the personal needs allowance deduction described in 130 CMR 506.420, that, when added to the community spouse's gross available income, would raise the community spouse's total income to an amount up to, but not in excess of, the MMMNA."

The institutionalized spouse's income was deemed available to the community spouse to the extent necessary to meet MMMNA. Thus, the CSRA was only redetermined when the CSMIA was not adequate to satisfy the MMMNA. 130 Code Mass. Regs. § 505.190(A)(1)(c). As a result, it was less likely that the CSRA would be increased, which in turn left the institutionalized spouse with more available resources, and therefore made it harder to qualify for Medicaid. Id.

2. Facts. These facts were not in dispute for purposes of summary judgment.

a. Dorothy Smith. In June, 1994, Dorothy Smith's husband, George Smith, was admitted to a nursing home. At the time, her husband had a monthly income...