Docket No. 100841.



### IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS

BETTY J. HINES, as Ex = r of the Estate of Beverly Tutinas, Appellee, v. THE DEPAR TMENT OF PUBLIC AID, Appellant.

Opinion filed May 18, 2006.

JUSTICE KARMEIER delivered t he judgment of the court, with opinion.
Chief Justice Thomas and Ju stices Freeman, McMorrow, Fitzgerald, and Garman concu rred in the judgment and opinion. Justice Kilbride took no part in the decision.

OPINION- 2 - This appeal arises from the admin istration of the estate of Beverly J. Tutinas, who died in 2001 leaving a home valued at $69,641.89 and an automobile worth $2,000. A single issue is presented for our review: May t he Department of Public Aid 1 assert a claim against Beverly = s estate to obtain reimbursement of $61,154.48 in Medicaid payments made on behalf of her husband, who predec eased her? The circuit court of Rock Island County determi ned that such a claim was permissible under state and federal law. The appellate court reversed and remanded, with one just ice dissenting. 358 Ill. App. 3d 225. We granted the Department = s petition for leave to appeal. 177 Ill. 2d R. 315. For the reasons that follow, we now affirm the judgment of the appellate court.
The relevant facts are not in dispute. Beverly and Julius Tutinas were married for more than 48 years. They resided together in Moline in a home to wh ich they held joint title. The couple also held joint title to an automobile. They had no children. In 1994, Julius = declining health required that he be cared for in a nursing home. On July 7 of that year, the Department of Public Aid approved Julius for medical assistance pursuant to Title XIX of the Social Security Act, commonly known as the Medicaid Act (42 U.S.C. ' 1396 et seq. (2000)). Julius began receiving Medicaid payments in August of 1994. Those payments continued until he died in 1997 at the age of 66. The payments totaled $61,154.48. No probate estate was created for Julius following his death. Because Julius and his wife, Beverly, held the marital home and their automobile in joint title, full ownership of the home and car passed to Beverl y when Julius died. Beverly lived on for several more years, eventually passing away in May of 2001. Unlike Julius, Beverly neither applied for nor received Medicaid payments.

1 Since this action commenced, the name of the Department of Public Aid has changed. Effective July 1, 2005, it became known as the Department of Healthcare and Family Services.- 3 - Beverly left a will when she died naming her sisters, Shirley A. Nelson and Betty J. Hines, as coexecutors. Beverly = s will was admitted to probate by the circuit court of Rock Island County on May 25, 2001, and letters of office were issued to Betty Hines as independent executor (see 755 ILCS 5/28

B 2 (West 2002)). Beverly = s estate consisted of onl y two items, her home and the automobile she had once held in joint title with Julius. Both items were liquidated during the administration of her estate. The home was sold for $69,641.89, the car for $2000. In July of 2001, the Department of Public Aid filed a claim against the estate to recove r the $61,154.48 in Medicaid payments it had made on behalf of Julius between 1994 and 1997. Betty Hines, acting in her capacity as executor, filed a notice that the claim was being disallowed. The Department of Public Aid challenged the rejecti on of its claim on the grounds that it was contrary to the app licable provisions of the Probate Act of 1975 (755 ILCS 5/1

B 1 et seq. (West 2002)). Faced with that challenge, Hines, as execut or, petitioned the circuit court pursuant to section 28

B 5 of the Probate Act (755 ILCS 5/28

B 5 (West 2002)) for instructions regarding the claim. Following briefing and a hearing, the circuit court entered a detailed order, recounting the per tinent facts of the case and reviewing the governing law. In the circuit court = s view, section
5

B 13 of the Public Aid Code (305 ILCS 5/5

B 13 (West 2002)) and 89 Ill. Adm. Code ' 102.200, an administr ative regulation based on that statute, permitt ed the Department to seek reimbursement from Beverly = s estate for the Medicaid payments it had made on Julius = behalf. The circuit court further concluded that the aforem entioned provisions of Illinois law do not conflict with and are not preempted by 42 U.S.C. ' 1396p(b), the section of the M edicaid Act pertaining to adjustment or recovery of Medicaid payments. Hines appealed. After determining that it had jurisdiction to hear the appeal pursuant to S upreme Court Rule 304(b)(1) (155 Ill. 2d R. 304(b)(1)), 2 the appellate court concluded that 42

2 Rule 304(b)(1) authorizes appeals from A [a] judgment or order entered in the administration of an estate, guardianship, or similar proceeding which- 4 - U.S.C ' 1396p(b) does not permit t he Department to seek recovery from the estate of a Medicaid recipient = s surviving spouse under the facts present her e and that the provisions of Illinois law invoked by the D epartment in this proceeding exceed the authority gr anted by the Medicaid Act. It therefore held that the Department = s claim against Beverly = s estate must be dismissed. Accordingly, it reversed the judgment of the circuit court and remanded for further proceedings. 358 Ill. App. 3d at 233. One justice dissented.

finally determines a right or status of a party. 155 Ill. 2d R. 304(b)(1). Committee comments to this rule indicate that orders allowing or disallowing a claim fall within its provisions. See In re Estate of Stepp , 271 Ill. App. 3d 817, 819 (1995). Reasoning that the circuit court = s order had the effect of allowing the Department = s claim, the appellate court determined it possessed jurisdiction under this rule to review that order on the merits. We

agree. The Department petitioned for leave to appeal. 177 Ill. 2d R. 315. That petition was allowed, and the matter is now before us for a decision on the merits. As i ndicated at the outset of this opinion, the sole question bef ore us is whether the Department = s claim against Beverly = s estate was permissible under the Medicaid Act and the st ate statutes and regulations implemented pursuant to that Act. This issue presents a question of law, which we review de novo

. Bowman v. American River Transportation Co. , 217 Ill. 2d 75, 80 (2005). In undertaking our review, we begin with a brief discussion of the purposes and operation of the Medicaid Act. The Act, which originated in the 1960s, created a cooperative program under which the federal gov ernment reimburses state governments for a portion of the costs of providing medical assistance to low income groups. Gillmore v. Illinois- 5 - Department of Human Services , 218 Ill. 2d 302, 304-05 (2006). States are not required to parti cipate in the Medicaid program. Once they elect to do so, howev er, they must design their own plans and set reasonable standar ds for eligibility and assistance. See 42 U.S.C. ' 1396(a)(17) (2000). Such plans and standards must comport wit h the Medicaid Act and the regulations promulgated ther eunder by the United States Department of Health and Human Services. See Cohen v. Quern , 608 F. Supp. 1324, 1326 (N.D. Ill. 1984); Smith v. Miller , 665 F.2d 172, 175 (7th Cir. 1981). The Act provides that partici pating states must designate an agency to administer their Medi caid plans. See 42 U.S.C. ' 1396(a)(5) (2000); 42 C.F.R. ' 431.10(a) (2003). The agency designated by Illinois to adminis ter its Medicaid plan is the Department of Public Aid. See 305 ILCS 5/2

B 12(3) (West 2002); American Society of Consult ant Pharmacists v. Garner

, 180 F. Supp. 2d 953, 958 (N.D. Ill. 2001). Under the Act, two types of lo w income groups are eligible for medical assistance: the categorically needy and the medically needy. Categorically needy persons are those who are automatically eligible to re ceive cash grants under one of the general welfare programs

B the Aid to Families with Dependent Children program (AFDC) (42 U.S.C. ' 601 et seq. (2000)) or the Supplemental Secu rity Income for the Aged, Blind, or Disabled progr am (SSI) (42 U.S.C. ' 1381 et seq. (2000)). See 305 ILCS 5/5

B 2(1) (West 2002); 42 C.F.R. ' 435.100 et seq . (2003). The medically needy are persons who are ineligible to receive cash grants under AFDC or SSI because their resources exceed the eligibility threshold for those programs, but who still lack the ability to pay for medical assistance. See 305 ILCS 5/5

B 2(2) (West 2002); 42 C.F.R. ' 435.300 et seq . (2003). People who fall into the second category are called MANG (Medi cal Assistance-No Grant) recipients. See 89 Ill. Adm. Code ' 120.10(a) (Conway-Greene CD-ROM March 2002). Gillmore v. Illinois Department of Human Services , 218 Ill. 2d at 304-05. Julius was a MANG recipient. To qualify for Medicaid as a MANG recipient, a person must have low income and low a ssets, and the person must A spend- 6 - down @ any resources over the st atutory and regulatory limits. See 89 Ill. Adm. Code ' 120.10(d) (amended at 24 Ill. Reg. 7361, eff. May 1, 2000). A Spend down @ requirements pose an obvious hardship to the spous es of medical assistance recipients, who face the pros pect of being left with virtually nothing to live on once the couple = s income and resources are reduced to the level necessary to qualify for Medicaid. To ameliorate that hardship, Congress enacted the Medicare Catastrophic Coverage Act of 1988 (MCCA) (Pub. L. No. 100

B 360), which includes provisions to protect, financially, the spouse who was not receiving medical assistance. These provisions, commonly called the spousal impoverishment provisions, allow the spouse to retain a certain level of resources and income and protec t those amounts from use as payment for an institutionalized spouse = s nursing home care. See 42 U.S.C. ' 1396r

B 5 (2000); Cleary v. Waldman , 167 F.3d 801, 805 (3d Cir. 1999).
The Medicaid Act affords an addi tional element of financial protection to the families of Medi caid recipients by limiting the circumstances in which a state may seek reimbursement for the payments it m ade on the recipient = s behalf. The Act, as amended by the Omnibus Budget Reconciliation Act of 1993 (OBRA) (Pub. L. No. 103

B 66, ' 13612(a)), expressly provides that A [n]o adjustment or recovery of any medical assistance correctly paid on behalf of an i ndividual under the State plan may be made, @ except in three spec ified circumstances. 42 U.S.C. ' 1396p(b) (2000). Only one of those exceptions is relevant here. It is set forth in subsection (1)(B) of the statute, which provides:

A In the case of an individual who was 55 years of age or older when the individual received such medical assistance, the State shall s eek adjustment or recovery from the individual = s estate ***. @ 42 U.S.C. ' 1396p(b)(1)(B) (2000). The statute further provides t hat any adjustment or recovery under the foregoing paragraph ma y only be made after the death of the Medicaid recipient = s surviving spouse, if he or she has one. 42 U.S.C. ' 1396p(b)(2) (West 2000).- 7 - Congress has determined that for the purposes of 42 U.S.C. ' 1396(b), the definition of a deceased recipient = s estate shall include all real and personal property and other assets included within the individual = s estate as defined by the particular state = s probate law. 42 U.S.C. ' 1396p(b)(4)(A) (2000). Where the deceased recipient received or is entitled to receive benefits under A a longterm insurance policy in connection with which assets or resources in the manner described in clause (ii) [of subsection (b)(1)(C) of the stat ute], the definition of the deceased recipient = s estate shall also include:

A any other real and pers onal property and other assets in which the individual had any legal title or interest at the time of deat h (to the extent of such interest), including such asse ts conveyed to a survivor, heir, or assign of the deceas ed individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement. @ 42 U.S.C. ' 1396p(b)(4)(B) (2000). In addition, the Act provides that a state may, at its option

, adopt this second, more expansive definition of estate to all cases, not just those involv ing long-term care insurance policies. 42 U.S.C. ' 1396p(b)(4)(B) (2000). Under the foregoing provisions , the Department clearly had a right to seek reim bursement from Julius = estate, as defined by Illinois law, following Beverly = s death. That, however, is not what it is attempting to do. Through this action, it seeks reimbursement from the estate of Beverly, his surviving spouse, even though she, herself, received no Medicaid payments. Nothing in the Medicaid Act authorizes such recourse. As we have just indicated, the Ac t provides three and only three exceptions for when the state may seek reimbursement for costs correctly expended on behalf of a Medicaid recipient. All are specifically directed to t he estate of the recipient. No provision is made for collecti on from the estate of the recipient = s spouse. Where, as here, the language of a statute is clear and unambiguous, the court must enforce it as written. It may not- 8 - annex new provisions or substitu te different ones, or read into the statute excepti ons, limitations, or conditions which the legislature did not express. People ex rel. Department of Professional Regulation v. Manos , 202 Ill. 2d 563, 568 (2002), quoting Bronson v. Washington National Insurance Co ., 59 Ill. App. 2d 253, 261-62 (1965). Moreov er, as the appellate court correctly observed, it is a basic principle of statutory construction that A > the enumeration of exc eptions in a statute is construed as an exclusion of all other exceptions. = @ 358 Ill. App. 3d at 232, quoting People ex rel. Sherman v. Cryns , 203 Ill. 2d 264, 286 (2003). In cases su ch as this, where a statute specifies exceptions to a general rule, no exceptions other than those designated will be recognized. In re Estate of Tilliski , 390 Ill. 273, 283, 61 N.E.2d 24 ( 1945). The appellate court was therefore correct to conclude t hat the Medicaid Act cannot be construed as permitting the state to look to the estate of a spouse of a recipient of medica l assistance for reimbursement of costs correctly paid on the recipient = s behalf.
Section 5

B 13 of the Illinois Pub lic Aid Code (305 ILCS 5/5

B 13 (West 2004)) does give the Department a claim against the estate of a person or A the estate of the person = s spouse @ for amounts expended for the person for the type of nursing home care received by Julius. T he right to collection conferred by this statute, however, is expressly limited. Under the
statute = s terms, the Department ma y assert its claim for reimbursement only to the A extent permitted under the federal Social Security Act. @ 305 ILCS 5/5

B 13 (West 2004). Such a limitation is required by the primacy of f ederal law. Although a state possesses wide discretion in administering its Medicaid programs, that discretion is qua lified by its mandate to adhere to federal statutes and corres ponding federal regulations. See Smith v. Miller , 665 F.2d at 178. As we have just explained, federal law does not authorize a state to seek reimbursement of Medicaid payments from the estate of a recipient = s spouse. If section 5

B 13 of the Public Aid C ode were read to authorize collection from the estate of a recipient = s spouse, it would therefore exceed what is permitted by the Social Security Act and could not serve as the predicate for the Department = s claim against Beverly = s estate. See In re Estate of Budney , 197- 9 - Wis. 2d 948, 950, 541 N. W.2d 245, 246 (App. 1995); In re Estate of Craig , 82 N.Y.2d 388, 394, 624 N.E.2d 1003, 1006, 604 N.Y.S.2d 908, 911 (1993) . The same is true for 89 Ill. Adm. Code ' 102.200, the administrative regulation based on that statute invoked by the circuit c ourt in support of its decision.
While the Medicaid Act does not authorize the Department to proceed against Beverly = s estate, that does not end our inquiry. As we have just discuss ed, the Act bestows on Illinois the option of defining t he estate of a Medicaid recipient such as Julius more expansively than under this state = s normal probate law. 42 U.S.C. ' 1396p(b)(4)(B) (2000). Under the Act, assets conveyed to a spouse the way the house and automobile were conveyed to Beverly could hav e been defined by the Illinois General Assembly to remain part of the Medicaid recipient = s estate for purposes of recovering Medicaid payments. Reported decisions indicate t hat some other states have elected to take this approach. See In re Laughead , 696 N.W.2d 312 (Iowa 2005) (under Iowa C ode section 249A.5(2)(c), the estate of a medical assistanc e recipient includes any real property, personal property or other asset in which the recipient had any interest at the time of the recipient = s death, to the extent of such interests, includi ng but not limited to interests in jointly held property); Estate of DeMartino v. Division of Medical Assistance & Health Services , 373 N.J. Super. 210, 861 A.2d 138 (2004) (N.J. Stat. Ann. ' 30:4D

B 7.2 (West 1997) defines deceased Medicaid recipient = s estate to include A assets conveyed to a survivor, heir or assign of the recipient through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement @ ); State of Nevada Department of Human Resources v. Ullmer , 120 Nev. 108, ___, 87 P.3d 1045, 1050 (2004) (statutes broaden the definition of A estate @ to include A assets conveyed to a survivor, heir or assign of the [deceased] [Medicaid] recipient through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement @ ); In re Estate of Jobe, 590 N.W.2d 162, 164 (Minn. App. 1999) (Minnesota statute expressly allows claims for re covery of medical assistance costs rendered for predeceased spous e up to value of assets that A were marital property or jo intly owned property *** during- 10 - the marriage); In re Estate of Knudson , 132 Idaho 213, 216, 970 P.2d 6, 9 (1998) (Medicaid recipient = s estate defined by Idaho statute to include communi ty property of surviving
spouse

B Medicaid Act preempts recovery from surviving
spouse = s estate except to the ex tent of such community property). For a brief period, the Gener al Assembly took that approach as well. It exercised the option conferred on states by 42 U.S.C. ' 1396p(b)(4)(B) and, in 1995, amended section
5

B 13 of the Public Aid Code (305 ILCS 5/5

B 13 (West 2004)) to make the more expansive definiti on of estate applicable in all proceedings to recover amount s correctly paid on behalf of Medicaid recipients in Illinois. After only a year, however, the legislature changed its position. In 1996, it enacted new legislation which expressl y limited the more expansive definition of estate to the only situation where the Medicaid Act requires it to be used, namely, where the deceased recipient

A has received (or [was] entitl ed to receive) benefits under a long-term care insurance policy. @ See 305 ILCS Ann. 5/5

B 13, Historical & Statutory Notes, at 189 (Smith-Hurd 2001). That limitation was in effect when both Julius and Beverly died, and it remains in effect today.
The existence of this statutor y limitation distinguishes our case from In re Estate of Schwab , 1998 N.D. 226, 586 N.W.2d 847, a decision cited by the Department in support of its position. The North Dakota statutes at issue in Schwab did not define a recipient = s estate as Illinois has, and the matter was left to the court to delineate. It is therefore of no use in resolving this case. Our legisl ature has spoken clearly on the matter, and we are bound to follow the law as written. Because no long-term care insurance policy was involved here, Julius = estate consists only of t hat property that would be regarded as part of his estate under the Probate Act of 1975 (755 ILCS 5/1

B 1 et seq . (West 2004)). 305 ILCS 5/5

B 13 (West 2004). Under Illinois probate law, property held in joint tenancy is never part of the estate of the joint owner who dies first. Upon the death of one joint t enant, title to the property automatically vests in the surviving joint tenant. See In re Estate of Alpert , 95 Ill. 2d 377, 381 (1983). Accordingly, the- 11 - house and automobile at issue in this case cannot be deemed part of Julius = estate for purposes of the Department = s action for reimbursement of the M edicaid payments made on his behalf. The proceeds from the sa le of that property are therefore not subjec t to the Department = s claim under section
5

B 13 of the Public Aid Code (305 ILCS 5/5

B 13 (West 2004)). For the foregoing reasons, the Department = s claim for reimbursement should not have been permitted by the circuit court. The appellate court = s judgment reversing the circuit
court = s order and remanding the cause to the circuit court for further proceedings is therefore affirmed.

Affirmed.

JUSTICE KILBRIDE took no par t in the consideration or decision of this case.