Trust Co. of Oklahoma v. State ex rel. Dept. of Human Services

• Decision Date: 17 December 1991
• Docket Number: No. 74000,74000
• Citation: 1991 OK 133,825 P.2d 1295
• Court: Oklahoma Supreme Court
• Parties: , Medicare & Medicaid Guide P 39,788, 2 NDLR P 180, 1991 OK 133 TRUST COMPANY OF OKLAHOMA, Guardian of the Estate of Ellen Lea Barker, a minor child, Appellee, v. STATE of Oklahoma, ex rel. DEPARTMENT OF HUMAN SERVICES, Appellant.

Page 1295

825 P.2d 1295

36 Soc.Sec.Rep.Ser. 518, Medicare & Medicaid Guide

P 39,788,

2 NDLR P 180, 1991 OK 133

TRUST COMPANY OF OKLAHOMA, Guardian of the Estate of Ellen

Lea Barker, a minor child, Appellee, v. STATE of Oklahoma, ex rel. DEPARTMENT OF HUMAN SERVICES, Appellant.

No. 74000.

Supreme Court of Oklahoma.

Dec. 17, 1991.

Rehearing Denied March 4, 1992.

Certiorari to the Court of Appeals, Division No. 3; Charles H. Headrick, Trial Judge.

The appellant, Oklahoma Department of Human Services (Department of Human Services), denied medical benefits based on the existence of a trust overseen by the appellee, Trust Company of Oklahoma (Trust Company/trustee). The trial court ruled in favor of the Trust Company. Although the Court of Appeals recognized that a settlement agreement entered by the parties was meant to require payment of medical expenses by the Department of Human Services and to exclude the trust as an available resource, it reversed the trial court. It found that because the Department of Human Services' counsel was without authority to agree to the settlement agreement, it could not be estopped by its agent's actions. We find that a trust, created for the primary purpose of providing nonmedical support and containing a provision allowing the trustee discretion to provide medical care if the beneficiary ceases to qualify for medical assistance programs, is not an "available resource" under 42 U.S.C. § 1396a(a)(17)(B) (Supp.1990) or a "liquid resource in hand" within the meaning of DHS Manual § 1063.212 (11/1/86) for medical assistance eligibility purposes. The medical assistance case is reinstated from the date of termination subject to recertification as provided by the applicable program regulations.

CERTIORARI PREVIOUSLY GRANTED; OPINION OF THE COURT OF APPEALS VACATED; TRIAL COURT AFFIRMED.

Charles Lee Waters, Gen. Counsel, Howard J. Pallotta, Asst. Gen. Counsel, Dept. of Human Services, Oklahoma City, for appellant.

Roland Tague, Groves & Tague, Oklahoma City, for appellee.

KAUGER, Justice.

A single issue of first impression is presented ¹--whether a trust, created for the primary purpose of providing nonmedical support and containing a provision allowing the trustee discretion to provide medical care if the beneficiary ceases to qualify for medical assistance programs, ² is

                an available resource for medical assistance eligibility purposes. 3  We find that a trust, created for the primary purpose of providing nonmedical support and containing a provision allowing the trustee discretion to provide medical care if the beneficiary ceases to qualify for medical assistance programs, is not an "available resource" under 42 U.S.C. § 1396a(a)(17)(B) (Supp.1990) 4 or a "liquid resource in hand" within the meaning of DHS Manual § 1063.212 (11/1/86) 5 for medical eligibility purposes.  The medical assistance case is reinstated from the date of termination subject to recertification as provided by the applicable program regulations
                

FACTS

Ellen Lea Barker (Barker/beneficiary/minor child), is an Oklahoma resident. On September 20, 1980, she and her family were visiting in Arizona when their car was struck by a bus operated by the Ganado Public School District No. 19 (Ganado School District/settlor). Barker's injuries caused permanent paralysis from the neck down. In 1981, the minor child was transferred to Oklahoma Children's Memorial Hospital where she remained until June, 1986. Upon her dismissal, she moved home. Barker continues to use a ventilator, and she requires nursing assistance and other specialized medical equipment.

Barker's mother filed suit against the Ganado School District in Arizona (Arizona suit/action) on the minor child's behalf. During the first six months that Barker was hospitalized in Oklahoma, she incurred approximately $160,000.00 in medical expenses. In an effort to obtain reimbursement, the appellant, Oklahoma Department of Human Services (Department of Human Services), filed a lien against any proceeds From 1981 to March, 1986, Barker received medicaid benefits through Title XIX--Grants to States for Medical Assistance Programs (Medicaid), 42 U.S.C. § 1396 (1984) et seq. Medical benefits were provided through the Oklahoma Crippled Children's Act (Crippled Children's Act/Program), 10 O.S.1981 § 175.1, et seq. from March 1986 until June 30, 1987. Under both programs, an applicant may hold a On May 29, 1987, the Department of Human Services notified the Trust Company that Barker's medical assistance benefits would be terminated effective June 30. ¹⁰ The basis for termination was a determination that the trust fund constituted an available resource for purposes of the Crippled Children's Act. ¹¹ The Trust Company requested an administrative hearing before the Appeals Unit to review the denial of benefits on June 29, 1987. A hearing was conducted before an administrative law judge on September 10, 1987. On February 12, 1988, the administrative law judge sustained the Department of Human Services' termination of benefits. ¹²

                which might be collected in the Arizona suit. 6  On May 18, 1981, the Arizona court entered an order approving the settlement of Barker's claim.  Pursuant to the settlement, $818,940.00 were paid to the appellee, Trust Company of Oklahoma (Trust Company/trustee), 7 to be held pursuant to a trust agreement reviewed and approved by the Arizona court.  On May 22, 1981, the Trust Company filed an application to approve inventory, disbursement and the trust agreement in Oklahoma County.  The application provided that:  1) the trustee had received $818,940.00 to be held for Barker;  and 2) the settlement was subject to a lien in favor of the Department of Human Services.  The Trust Company requested an order allowing disbursement of $200,000.00 to the Department of Human Services in return for a full and complete disclaimer of any further or future interest in the trust estate.  On the same date, the district court entered an order signed by the Department of Human Services' counsel approving the inventory of the trust and the trust agreement.  The order also approved the disbursement to the Department of Human Services "in full and complete satisfaction and accord as to any lienable interest held by said Department in the funds arising from the litigation in Arizona." 8
                maximum of $1,800.00 in available resources to qualify for medical services. 9  When Barker's mother filed a re-application for benefits on March 14, 1985, she reported the existence of the trust.  Medical coverage was switched from Title XIX to the Crippled Children's Program because of a belief that the trust made Barker ineligible for Medicaid.  In 1985, the trust contained approximately $1,000,000.00.  By June 30, 1987, the trust corpus consisted of approximately 1.2 million dollars
                

The Trust Company received the decision of the appeals unit on February 19 and filed a petition with the district court on March 14 pursuant to 56 O.S.Supp.1985 § 168(D). ¹³ After hearing argument and considering the parties' briefs, the trial court ruled from the bench in the Trust Company's favor. ¹⁴ The trial court found that the decision of the Appeals Unit was clearly erroneous in light of the evidence on estoppel and ordered the reinstatement of medical benefits. The Department of Human Services appealed pursuant to 75 O.S.1981 § 323. ¹⁵ Although the Court of Appeals recognized that the 1981 settlement agreement was meant to require payment of medical expenses by the Department of Human Services and to exclude the trust as an available resource, it reversed the trial court. The Court of Appeals found that because the Department of Human Services' counsel was without authority to enter the settlement agreement, it could not be estopped by its agent's actions. On September 17, 1991, we granted certiorari to address a question of first impression in Oklahoma--whether a trust, created for the primary purpose of providing nonmedical support and containing a provision allowing the trustee discretion to provide medical care if the beneficiary ceases to qualify for medical assistance programs, is an available resource for medical eligibility purposes.

A TRUST, CREATED FOR THE PRIMARY PURPOSE OF PROVIDING

NONMEDICAL SUPPORT AND CONTAINING A PROVISION ALLOWING THE

TRUSTEE DISCRETION TO PROVIDE MEDICAL CARE IF THE

BENEFICIARY CEASES TO QUALIFY FOR MEDICAL ASSISTANCE

PROGRAMS, IS NOT AN "AVAILABLE RESOURCE" UNDER 42 U.S.C. § 1396a(a)(17)(B) (Supp.1990)

or A "LIQUID RESOURCE IN HAND" WITHIN THE MEANING OF DHS

MANUAL § 1063.212 (11/1/86) FOR MEDICAL ELIGIBILITY PURPOSES.

The Trust Company asserts that the trust is not an available resource for medical assistance eligibility purposes. The Department of Human Services characterizes this issue as "interesting" but argues that a finding that it is not bound by estoppel moots the question. Without deciding the estoppel issue, we disagree. If the Department of Human Services was not estopped by the actions of its agent in the settlement proceedings, ¹⁶ Barker may still qualify for assistance if she meets the resource requirements under either Medicaid or the Crippled Children's Act.

Medicaid was enacted in 1965 as a cooperative federal-state endeavor designed to provide health care to needy individuals. ¹⁷ States are not required to participate in the program. However, once a state chooses to adopt the program, it must create a plan conforming with the requirements of the federal statute, 42 U.S.C. § 1396 et seq., and related federal regulations. ¹⁸ Participating states must provide medicaid coverage to the categorically needy. ¹⁹ The categorically needy are those persons eligible for cash assistance under either of two programs: Supplemental Security Income for the Aged, Blind, and Disabled (SSI), 42 U.S.C. § 1381 et seq. or Aid to Families with Dependent Children (AFDC), 42 U.S.C. § 601 et seq. Because she receives SSI benefits, Barker is classified as...