Case Title: Stevens v. Dept. of Social Welfare

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1992-10-01T00:00:00Z

Document:
NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.

                                 No. 91-227


 Beverly M. Stevens                           Supreme Court

                                              On Appeal from
      v.                                      Human Services Board

 Department of Social Welfare                 October Term, 1992


 Cornelius Hogan, Secretary

 Sheila E. Reed, Vermont Senior Citizens Law Project, St. Johnsbury, for
    plaintiff-appellant

 Jeffrey L. Amestoy, Attorney General, Montpelier, and Wendy A. Burroughs,
    Assistant Attorney General, Waterbury, for defendant-appellee



 PRESENT:  Allen, C.J., Gibson and Johnson, JJ., and Peck, J. (Ret.),
           Specially Assigned



      GIBSON, J.   Plaintiff Beverly Stevens appeals from a decision of the
 Secretary of the Agency of Human Services (Secretary) reversing a decision
 of the Human Services Board (Board) that granted her retroactive Medicaid
 benefits.  The Secretary concluded that reversal was necessary because the
 Board (1) exceeded the authority granted it in 3 V.S.A. { 3091(d) by
 applying the doctrine of equitable estoppel, and (2) erroneously held that
 the elements of estoppel were met.  We reverse the Secretary's decision and
 reinstate the decision of the Board.
      In May of 1990, plaintiff, a sixty-year-old woman, was diagnosed with
 cancer.  At the time of her diagnosis, she was employed and had accumulated
 $4,167.64 in savings.  On June 19, 1990, plaintiff was hospitalized to
 undergo surgery.  While in the hospital, a social worker assisted plaintiff
 in applying for Medicaid.  Her application indicating that she had
 $4,167.64 in savings was filed on June 26, 1990.
      On July 9, 1990, a social welfare eligibility specialist from the
 Department of Social Welfare (DSW) telephoned plaintiff to discuss her
 application.  By that time, plaintiff had incurred doctors' bills related to
 her surgery totaling $2,411.28.  She discussed with the eligibility special-
 ist whether she should pay the doctors' bills with her savings.  The eligi-
 bility specialist told plaintiff "to wait to make payments until she learned
 whether she met the disability criteria for Medicaid eligibility."
 Plaintiff had no further communication with DSW regarding her doctors' bills
 or her savings.
      To be eligible for Medicaid, plaintiff had to satisfy two requirements:
 (1) her income and resources had to be within the eligibility limits, and
 (2) she had to meet the criteria necessary to establish that she was
 disabled.  The social welfare eligibility specialist determines only whether
 an applicant meets the financial requirements; the determination on
 disability is made by medical personnel at the Disability Determination Unit
 (DDU) in Waterbury.  When the DSW eligibility specialist telephoned
 plaintiff on July 9, 1990, she had reviewed plaintiff's financial status,
 but no determination as to disability had been made.
      In late July, plaintiff spoke with an advocate from the Area Agency on
 Aging concerning her Medicaid eligibility.  The advocate told plaintiff that
 she had to spend all but $2,000 of her savings to be eligible for Medicaid.
      Between June 26 and August 8, 1990, plaintiff spent about $2,550 of
 her savings on maintenance, prescriptions, doctors appointments and other
 personal expenses.  At the end of July 1990, after speaking with the advo-
 cate, plaintiff purchased a car for $750, ball joints for $80 and a new tire
 for $30 so that her daughter could drive her from St. Johnsbury to Hanover,
 New Hampshire, for chemotherapy at Dartmouth-Hitchcock Medical Center.
 Later, plaintiff discovered that she did not need the car for this purpose
 because she could receive her chemotherapy treatments in St. Johnsbury.
      On August 8, 1990, plaintiff filed a second Medicaid application with
 the assistance of the advocate from the Area Agency on Aging, although she
 had not yet received a decision concerning the first application.  The new
 application indicated that plaintiff's savings totaled only $1,617.
      In September, DSW notified plaintiff that the first application had
 been denied but that she was eligible for Medicaid as of August 1, 1990,
 based on her second application.  Retroactive benefits for the three months
 prior to the second application (May, June, and July) were denied because
 plaintiff had excess resources amounting to $2,167.64 during this period.
 Although plaintiff would have been eligible for benefits during these three
 months if she had spent the excess resources on medical expenses, DSW found
 that only $1,027.11 had been spent on allowable medical expenses.  This left
 plaintiff with the $2,411.28 in unpaid doctors' bills from the surgery in
 June.
      On April 4, 1991, the Human Services Board reversed DSW's denial of
 benefits based on the first application and also found plaintiff eligible
 for retroactive benefits for the three months prior to this application,
 March, April and May.  The Board concluded that DSW correctly applied the
 regulations regarding the dates of plaintiff's eligibility.  Nevertheless,
 the Board held that DSW was estopped from denying plaintiff retroactive
 benefits because the erroneous information it provided to plaintiff caused
 her to become ineligible.
      The Board found that plaintiff would have been eligible based on the
 first application if she had spent her excess resources on medical expenses
 she incurred during March, April, May and June.  Although plaintiff had
 doctors' bills from this period totaling $2,411.28, she did not make any
 payments toward them because she was told by the eligibility specialist to
 wait until the determination on disability was made.  Further, the Board
 found that if she had been told that she was required to spend excess
 resources on medical expenses in order to be eligible for retroactive bene-
 fits, she would have paid the doctors' bills, rather than purchasing a car
 to "spend-down" her resources.  The Board concluded that plaintiff was left
 with $2,411.28 in unpaid medical bills that she cannot afford to pay because
 she relied on the information provided by the eligibility specialist.
      On April 16, 1991, the Secretary issued an opinion in which he accepted
 the Board's findings of fact but reversed its decision because he concluded
 that the Board did not have the authority to apply the doctrine of equitable
 estoppel; he found further that, even if the Board had this authority,
 plaintiff had not met the elements of estoppel.  Plaintiff appeals this
 decision.
                                     I.
      The Medicaid program was established in 1965 by Title XIX of the Social
 Security Act, 42 U.S.C. {{ 1396-1396n, to provide medical assistance to the
 poor.  Massachusetts Ass'n of Older Americans v. Sharp, 700 F.2d 749, 750
 (1st Cir. 1983); 42 U.S.C. { 1396.  The program provides federal financial
 assistance to those states that choose to participate provided they submit
 and follow an approved state plan that complies with the Act and federal
 regulations.  Sharp, 700 F.2d  at 750; see 42 U.S.C. { 1396a (requirements
 for state plans).  In Vermont, the Medicaid program is administered by DSW.
      To be eligible for Medicaid based on disability, applicants must meet
 both income and resource requirements.  See 4 Code of Vermont Rules,
 Medicaid Manual {{ 230, 240.  The resource limit for one person is $2,000.
 A person whose resources exceed this maximum, but is otherwise eligible for
 benefits, may become eligible in two ways.  First, Medicaid may be granted
 for the month in which the application was filed if the resource test is
 met at any point in the month and all other eligibility criteria are
 satisfied.  Id. { 235.  Thus, an applicant with excess resources may become
 eligible for Medicaid by spending or giving away the excess.  If, however,
 the applicant spends the excess resources on allowable medical expenses, the
 applicant may be eligible for up to three months of retroactive benefits.
 Id.
      The parties agree that DSW has an affirmative obligation to inform
 applicants who exceed the resource limit of the "spend-down" provisions.
 This affirmative obligation arises pursuant to 42 C.F.R. { 435.905(a), which
 provides that the state agency responsible for administering the Medicaid
 program:
           must furnish the following information in written form,
           and orally as appropriate, to all applicants and to all
           other individuals who request it:
             (1)  The eligibility requirements.
             (2)  Available Medicaid Services.
             (3)  The rights and responsibilities of applicants and
           recipients.
      In Lavigne v. Department of Social Welfare, 139 Vt. 114,