Case Title: In re Houston

Citation: 180 Vt. 535, 2006 VT 59, 904 A.2d 1174

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2006-06-28T00:00:00Z

Document:
In re Houston (2005-175); 180 Vt. 535; 904 A.2d 1174

 2006 VT 59

[Filed 28-Jun-2006]

                                 ENTRY ORDER

                                 2006 VT 59

                      SUPREME COURT DOCKET NO. 2005-175

                             DECEMBER TERM, 2005

  In re Appeal of Kenneth Houston      }         APPEALED FROM:
                                       }
                                       }
                                       }         Human Services Board
                                       }  
                                       }
                                       }         DOCKET NO. 19,287

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  Claimant Kenneth Houston appeals from the Human Services
  Board's dismissal, without prejudice, of his appeal of a decision by the
  Department for Children and Families (DCF) to terminate his Long-Term-Care
  Medicaid benefits.  DCF sent claimant notice that his benefits would be
  terminated as a result of the sale of his home and the transfer of the
  proceeds for less than fair market value.  Claimant appealed to the Human
  Services Board, and DCF began requesting information for discovery
  purposes.  Claimant opposed DCF's discovery requests on relevance grounds. 
  Claimant also filed a motion to dismiss the action, alleging DCF's notice
  failed to state a valid basis for terminating his benefits.  The hearing
  officer assigned to the appeal denied claimant's motion to dismiss and
  ordered him to provide the documents requested by DCF.  When claimant
  refused to comply with this order, the hearing officer recommended that the
  Board dismiss his appeal.  The Board dismissed claimant's appeal without
  prejudice.  The Secretary of the Agency of Human Services approved the
  dismissal, and this appeal followed.  Claimant contends the Board erred by: 
  (1) improperly dismissing claimant's appeal; (2) failing to rule on
  claimant's motion to dismiss termination of his benefits; and (3) failing
  to decide claimant's appeal on the merits.  We hold that the Board was not
  required to consider claimant's motion to dismiss, but that it prematurely
  dismissed claimant's appeal, so we do not reach the issue of whether the
  Board was required to hold a hearing on the merits of claimant's appeal. 
  We reverse in part and remand to the Board for further proceedings.

       ¶  2.  Claimant receives long-term care at the Woodridge Nursing
  Home in Barre, Vermont.  Medicaid pays most of the cost of his nursing
  care.  Under Medicaid, claimant's eligibility and his "patient share"-the
  share of nursing costs he must pay out of pocket-are determined by the
  amount of his financial resources.  Medicaid Manual § M430, 5 Code of
  Vermont Rules 13 170 008-191.  To prevent Vermont recipients of Medicaid
  benefits from hiding assets that would alter or eliminate their eligibility
  for benefits, DCF administers regulations prohibiting transfers of patient
  resources, with certain exceptions.  Medicaid Manual § M440.2 & 3, 5 Code
  of Vermont Rules 13 170 008-201 & 202/204.  Medicaid recipients DCF finds
  have improperly transferred resources are subject to having their benefits
  terminated for penalty periods defined by the regulations.  Medicaid Manual
  § M440, 5 Code of Vermont Rules 13 170 008-201.
   
       ¶  3.  Claimant began receiving long-term-care benefits in November
  2003, at which point, DCF set claimant's patient share at $1,515.59 per
  month, to be paid out of claimant's income.  Between November 2003 and
  August 2004, claimant failed to pay his patient share to Woodridge.  In
  August 2004, claimant sold his home.  Claimant provided notice of the sale
  to DCF, and informed DCF that the net proceeds, $64,550, had been disposed
  of through several transactions and should not affect his Medicaid
  eligibility.  According to this notice, claimant used some of the proceeds
  of the sale to pay his overdue patient share, and he transferred additional
  funds to a revocable trust.  Under the trust agreement, claimant's son and
  daughter were named trustees and claimant was the trust's beneficiary. 
  Claimant's daughter, as trustee, loaned herself the entire amount of the
  trust principal, with her own home as security, in exchange for a
  promissory note, which required repayment over the course of seven years
  and seven months, primarily through a payment of $26,432.61 at the end of
  this period.  DCF responded to claimant's notice on September 1, 2004, with
  a Notice of Decision reading:

    Long-Term Care Medicaid eligibility for Kenneth W. Houston ends
    09-13-04 because of resource transfers of $11,242.24 for patient
    share payment to Woodridge and $26,432.61 for promissory note
    beyond life expectancy.  The penalty period resulting from these
    two resource transfers begins 08-01-04 and ends 03-02-05.  (M440,
    M440.4)

       ¶  4.  Claimant appealed DCF's decision through its fair hearing
  process, and he requested that his benefits continue during the process,
  which they did.  In preparation for claimant's fair hearing, DCF sent a
  letter requesting documents containing information pertaining to the
  proceeds of the sale of claimant's home, and it subpoenaed claimant's bank
  records. (FN1)  Claimant refused to turn over certain of the requested
  documents and filed an objection with the hearing officer to DCF's request
  for information, arguing that the information sought by DCF was not
  relevant to his appeal.  Claimant also filed a motion to dismiss DCF's
  termination of his benefits, arguing that as a matter of law, DCF's Notice
  of Decision did not contain sufficient grounds to merit termination.
        
       ¶  5.  On February 2, 2005, the hearing officer (FN2) issued an order: 
  (1) granting DCF's requests to produce and ordering claimant to turn over
  the requested documents by February 11, 2005, warning claimant that
  "[f]ailure to provide this information will result in a recommendation that
  [DCF's] decision be affirmed based on [claimant's] failure to provide
  reasonable verification of his financial status"; (2) requiring DCF to
  "furnish [claimant] and the Board with a concise written explanation of all
  the factual and legal bases of the action it is taking" by February 18,
  2005; (3) denying claimant's motion to dismiss; and (4) stating that a
  hearing would be held on the merits without further delay.  DCF responded
  with a "Statement of Law and Facts" dated February 17, 2005, reiterating
  its view of the transfers leading to its decision to terminate claimant's
  benefits.  Claimant did not respond to the February 2 order.  Instead, he
  submitted a letter requesting appointment of a new hearing officer, citing
  the officer's lack of impartiality due to a pending action in federal
  district court.                                            

       ¶  6.   On March 10, 2005, the hearing officer submitted a
  recommended decision to the Board, detailing the procedural history of the
  appeal and recommending that the Board dismiss the appeal based on
  claimant's refusal to comply with the February 2 discovery order.  The
  Board, following oral argument regarding the hearing officer's recommended
  decision, issued a final decision on March 23, 2005, dismissing claimant's
  appeal without prejudice for failure to comply with the hearing officer's
  discovery order.  The Board determined that while the hearing officer's
  order was subject to review, claimant was required to move for review of
  the order prior to February 11, instead of ignoring the order and
  challenging the relevance of the documents following the hearing officer's
  recommendation of dismissal.  The Board noted that at oral argument,
  claimant based his objection to the hearing officer's discovery order on
  the same relevance arguments rejected by the hearing officer, and stated
  that "the Board also rejects those arguments."  The Board's order stated
  that if claimant "is willing to follow the directives of the hearing
  officer consistent with the Board's rules, he is free to refile his appeal
  in this matter.  However, he shall not be entitled to continuing benefits
  pending any further consideration of this matter by the Board or its
  hearing officers."  Claimant appealed the Board's decision to the Secretary
  of the Agency of Human Services.  The Secretary approved the Board's
  decision, and this appeal followed. 

       ¶  7.  Claimant contends the Board committed numerous errors in
  dismissing his appeal.  In essence, he argues that the Board erred by:  (1)
  dismissing his appeal as a sanction for discovery violations; (2) failing
  to rule on his motion to dismiss; and (3) failing to decide his appeal on
  the merits.  While we presume the validity of certain agency actions,
  "adjudicatory functions of an administrative body are reviewed with special
  vigilance."  In re Vt. Verde Antique Int'l., Inc., 174 Vt. 208, 211,