FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REBECCA G. HUTCHERSON, 

Plaintiff-Appellant,

v. No. 10-16426

ARIZONA HEALTH CARE COST D.C. No.

CONTAINMENT SYSTEM  2:09-cv-00898-JAT

ADMINISTRATION, and THOMAS J. OPINION BETLACH, in his capacity as

Director of AHCCCS,

Defendants-Appellees. 

Appeal from the United States District Court

for the District of Arizona

James A. Teilborg, District Judge, Presiding

Argued and Submitted

August 30, 2011—San Francisco, California

Filed January 27, 2012

Before: Raymond C. Fisher and Johnnie B. Rawlinson,

Circuit Judges, and Robert J. Timlin,

Senior District Judge.*

Opinion by Judge Timlin

*The Honorable Robert J. Timlin, United States District Judge for the

Central District of California, sitting by designation. 

815
COUNSEL

Eric K. Macdonald and Ryan K. Hodges (argued), Jackson

White, Mesa, Arizona, for the appellant.

Timothy D. Ducar (argued), Lorona Steiner Ducar, Ltd.,

Phoenix, Arizona, for the appellees.

OPINION

TIMLIN, Senior District Judge:

Rebecca Hutcherson (“Appellant”) appeals the district

court’s judgment granting summary judgment to Arizona

Health Care Cost Containment System Administration and

Thomas Betlach (collectively “AHCCCS”). We hold that the

2006 amendment to 42 U.S.C. § 1396p(c)(1)(F)(i) creates a

right in the State to recover as a remainder beneficiary against

a community spouse’s annuity for an institutionalized

spouse’s medical costs. We further hold that the State’s recovery is not limited to the amount it paid for the institutionalized

spouse’s medical costs as of the date of the community

spouse’s death. Accordingly, we affirm.

I.

Appellant is the daughter of John and Betty Hutcherson.1

At some point, Betty required long-term care in a nursing

1For ease of reference, we will refer to John and Betty Hutcherson by

their first names. 

818 HUTCHERSON v. ARIZONA HEALTH CARE COST
home or similar facility. In June 2007, Betty applied for Medicaid assistance from AHCCCS. Betty did not qualify for

Medicaid assistance at that time because the Hutchersons’

assets exceeded the limit to qualify. In order for Betty to qualify for Medicaid assistance, John “spent down” his assets by

purchasing an annuity in his name for $100,000. The annuity

paid a fixed monthly amount of $2,781.63 for 36 months.

AHCCCS was listed as the annuity’s remainder beneficiary in

the first position, as required by the Medicaid statute, and

Appellant was listed as the remainder beneficiary in the second position. 

On April 5, 2008, John died. At that time, the annuity had

a remaining value of approximately $75,000. The annuity provided that, at the time of the annuitant’s death, the beneficiary

could choose to either be paid a lump sum or receive the

remaining monthly annuity payments as scheduled. AHCCCS

opted to receive the monthly payments from the annuity.

At the time of John’s death, AHCCCS had paid $23,840.51

for Betty’s medical care. Following John’s death, AHCCCS

continued to pay for Betty’s care at a monthly cost of

$2,552.92. AHCCCS deducted this continuing monthly cost

from the monthly annuity payments it was receiving and

applied the remaining $228.71 to the $23,840.51 that it had

paid for Betty’s care prior to John’s death.

Betty stopped receiving Medicaid assistance from AHCCCS in 2009. The annuity was then used by AHCCCS to pay

off the remaining balance of the $23,840.51 and AHCCCS

released its claim on the annuity. In total, AHCCCS received

$60,840.51 from the annuity before the remaining value was

paid to Appellant as the secondary remainder beneficiary. 

On April 29, 2009, Appellant filed a declaratory judgment

action seeking a declaration that AHCCCS had no right to

recover from John’s annuity at all or, alternatively, had no

right to recover for any costs incurred for the care Betty

HUTCHERSON v. ARIZONA HEALTH CARE COST 819
received after John’s death. The parties filed cross-motions

for summary judgment following discovery. The district court

granted AHCCCS’s motion, concluding that (1) 42 U.S.C.

§ 1396p(c)(1)(F)(i) was validly enacted by Congress and is

binding on Appellant; (2) AHCCCS could recover from the

annuity for costs it incurred on Betty’s behalf; and (3) AHCCCS could recover for amounts it spent on Betty’s care after

John’s death. 

Appellant timely filed this appeal.

II.

We have jurisdiction over this case pursuant to 28 U.S.C.

§ 1291. We review de novo a district court’s grant of summary judgment. City of Los Angeles v. San Pedro Boat Works,

635 F.3d 440, 446 (9th Cir. 2011).

III.

Medicaid is a cooperative program through which the federal government reimburses states for some costs they incur

in providing medical assistance to the poor. See Wisconsin

Dep’t of Health & Family Servs. v. Blumer, 534 U.S. 473, 479

(2002). Each state develops its own plan for determining

Medicaid eligibility based on standards established by the federal government, taking into account the income and assets of

the applicant. Id.

Unique problems arose regarding Medicaid eligibility for

spouses given that they generally share income and assets. See

id. at 479-80. For example, states generally considered

income from either spouse and jointly-held assets in determining the Medicaid eligibility for the institutionalized spouse,

but did not consider assets held solely in the name of the community spouse. Id.2

 As a result, some community spouses

2

“Community spouse” refers to the spouse of an institutionalized person

who continues to live at home. See Blumer, 534 U.S. at 478. 

820 HUTCHERSON v. ARIZONA HEALTH CARE COST
were left destitute so that the institutionalized spouse could

qualify for Medicaid assistance, while some wealthy couples

were able to qualify for assistance by simply holding their

assets solely in the name of the community spouse. Id. at 480.

Congress responded to this problem by passing the Medicare

Catastrophic Coverage Act of 1988 (“MCCA”), which had

the dual aim of ending the “pauperization” of community

spouses and preventing wealthy couples from qualifying for

Medicaid assistance by sheltering their assets. Id.; see also

J.P. v. Mo. State Family Support Div., 318 S.W.3d 140, 142

(Mo. Ct. App. 2010) (“In enacting the MCCA, Congress

sought to protect the community spouse from poverty, but it

also wanted to protect the Medicaid system from abuse.”). 

[1] One provision of the MCCA allows an institutionalized

spouse to qualify for Medicaid assistance while reserving for

the community spouse a capped amount of assets for the community spouse’s benefit, known as the “community spouse

resource allowance” or “CSRA.” Blumer, 534 U.S. at 482.

The CSRA is designed to ensure that the community spouse

can meet his or her minimum monthly maintenance needs.

See id. at 478. All assets above the CSRA must be spent

before the institutionalized individual can be eligible for Medicaid assistance. See id. at 483. 

Congress regulates the means by which couples may spend

down their assets to qualify an institutionalized individual for

Medicaid assistance. The Medicaid Act prevents wealthy couples from qualifying for Medicaid by imposing a penalty

when couples attempt to dispose of assets that could otherwise be used to pay for the institutionalized spouse’s medical

care. If a couple disposes of any property for less than fair

market value during a five-year “look back” period, the institutionalized spouse is not eligible to receive coverage for an

amount of time equal to the “total, cumulative uncompensated

value of all assets transferred by the individual (or individual’s spouse) . . . divided by . . . the average monthly cost to

a private patient of nursing facility services in the State.” 42

HUTCHERSON v. ARIZONA HEALTH CARE COST 821
U.S.C. § 1396p(c)(1)(A), (E). In other words, if either spouse

tries to give away assets, the institutionalized spouse will be

ineligible for Medicaid benefits for the length of time that

those assets could have covered the spouse’s medical costs.

The effect is to treat couples who dispose of assets as if those

assets were available to the couple to pay for medical care.

[2] Congress has, however, provided specific ways that a

community spouse may spend down his or her assets without

affecting the institutionalized spouse’s eligibility for Medicaid. Of relevance here, the Medicaid statute allows the community spouse to purchase an annuity. See 42 U.S.C.

§ 1396p(c)(1)(F)(i). This provision protects the community

spouse from destitution by allowing the spouse to convert his

or her assets, which are considered in determining the institutionalized spouse’s eligibility, to income, which is not considered. See 42 U.S.C. § 1396r-5(b)(1), (c)(1). 

In 2005, Congress passed the Deficit Reduction Act

(“DRA”), which sought to further close loopholes in the Medicaid Act. See, e.g., N.M. v. Div. of Med. Assist. & Health

Servs., 964 A.2d 822, 827-28 (N.J. Sup. Ct. App. Div. 2009)

(discussing the DRA’s legislative history); see also Mackey v.

Dep’t of Human Servs., ___ N.W.2d ___, 289 Mich. App.

688, 2010 WL 3488988, at *4 n.7 (Mich. Ct. App. Sept. 7,

2010) (“[W]hen signing into law the Deficit Reduction Act of

2005, President George W. Bush stated that the act “‘tightens

the loopholes that allowed people to game the system by

transferring assets to their children so they can qualify for

Medicaid benefits.”’ ”) (quoting Reif, A Penny Saved Can Be

A Penalty Earned: Nursing Homes, Medicaid Planning, The

Deficit Reduction Act of 2005, And The Problem of Transferring Assets, 34 NYU Review of Law & Social Change 339,

347 (2010)). The DRA added several requirements that must

be met before an annuity is exempt from the transfer penalty.

For instance, the annuity must (i) be irrevocable and nonassignable, (ii) be actuarially sound, and (iii) provide for payments in equal amounts with no deferral and no balloon

822 HUTCHERSON v. ARIZONA HEALTH CARE COST
payments. Id. § 1396p(c)(1)(G)(ii). In addition, and of particular relevance to this case, the DRA originally provided that

the purchase of an annuity is allowable only where “the State

is named as the remainder beneficiary in the first position for

at least the total amount of medical assistance paid on behalf

of the annuitant.” 42 U.S.C. § 1396p(c)(1)(F)(i) (2005)

(emphasis added). 

[3] In 2006, Congress amended the language of

§ 1396p(c)(1)(F)(i). Under the amended language, spouses

may purchase an annuity to spend down their assets only if

“the State is named as the remainder beneficiary in the first

position for at least the total amount of medical assistance

paid on behalf of the institutionalized individual.” 42 U.S.C.

§ 1396p(c)(1)(F)(i) (2006) (emphasis added); see also Tax

Relief and Health Care Act of 2006, Pub. L. No. 109-432, 120

Stat. 2922, 2998 (2006).

IV.

The issues raised on appeal turn on our interpretation of

§ 1396p(c)(1)(F)(i), as amended in 2006. In construing a statute, we first look to the plain meaning of that statute. See

Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999).

If the plain meaning is clear, our analysis generally ends and

we apply that plain meaning. See id.; see also Arlington Cent.

School Dist. Bd. of Educ. v. Murphy, 548 U.S. 291, 296

(2006) (plain language of text controls so long as outcome is

not absurd). Interpretation of this provision “depends upon

reading the whole statutory text, considering the purpose and

context of the statute.” Kasten v. Saint-Gobain Performance

Plastics Corp., 131 S.Ct. 1325, 1330 (2011) (citation omitted).

A.

John purchased the annuity at issue in this case in 2007 to

enable Betty to qualify for Medicaid assistance. For the annuHUTCHERSON v. ARIZONA HEALTH CARE COST 823
ity to qualify as a permissible means of “spending down”

assets, John named the State as the remainder beneficiary in

the first position, as required by § 1396p(c)(1)(F). Appellant,

who was named as the second beneficiary, contends that

AHCCCS was not entitled to any reimbursement from the

annuity because AHCCCS’s recovery was limited to expenses

incurred on behalf of John, who was never institutionalized.

We disagree.

[4] Section 1396p(c)(1)(F)(i) provides that spouses may

not “spend down” by purchasing an annuity unless “the State

is named as the remainder beneficiary in the first position for

at least the total amount of medical assistance paid on

behalf of the institutionalized individual.” 42 U.S.C.

§ 1396p(c)(1)(F)(i). By its plain terms, the provision allows

the State to recover the expenses incurred on behalf of “the

institutionalized individual,” in this case, Betty. 

Appellant observes that AHCCCS would not have been

entitled to recover Betty’s medical costs from the annuity

under the previous version of § 1396p(c)(1)(F)(i). She urges

us to ignore the plain meaning of the 2006 amendment

because Congress labeled the amendment as a “technical correction.” See Tax Relief & Health Care Act of 2006, Pub. L.

No. 109-432, 120 Stat. 2922, 2996 (2006). According to

Appellant, the “technical” character of the amendment indicates that Congress was merely trying to “clarify” the law and

not to make substantive changes to the law. Thus, Congress

intended that we interpret “institutionalized individual” to

mean “annuitant” despite the different meanings of those

words.

[5] We disagree. The best indicator of congressional intent

is the language of a statute itself. See Sedima, S.P.R.L. v.

Imrex Co., 473 U.S. 479, 495 n.13 (1985). The term “institutionalized individual” is specifically defined by the statute to

mean “an individual who is an inpatient in a nursing facility,

who is an inpatient in a medical institution and with respect

824 HUTCHERSON v. ARIZONA HEALTH CARE COST
to whom payment is made based on a level of care provided

in a nursing facility, or who is described in section

1396a(a)(10)(A)(ii)(VI) of this title.” 42 U.S.C.

§ 1396p(h)(3). Here, that definition captures only Betty. 

That Congress labeled its amendment as a “technical correction” does not defeat the plain language of the statute. See

United States v. R.L.C., 503 U.S. 291, 305 n.5 (1992) (plurality) (rejecting the contention that the usual tools of statutory

construction do not apply to technical amendments); see also

id. at 307 (Scalia, J., concurring) (“The Court begins its analysis, quite properly, by examining the language of [the statute]

. . .”).3

[6] We will give the plain meaning to the unambiguous

language in § 1396p(c)(1)(F)(i), which allows states to reach

a deceased community spouse’s annuity for costs incurred on

behalf of an institutionalized spouse. We therefore hold that

AHCCCS was entitled to recover as the primary remainder

beneficiary from John’s annuity for the amount of medical

costs it paid on behalf of Betty.

B.

Appellant argues in the alternative that AHCCCS’s interest

as a remainder beneficiary in the first position was limited to

the amount it had paid on behalf of Betty as of the date of

John’s death. Appellant’s argument again turns on the language of the statute, which requires an annuitant to name the

State “as the remainder beneficiary in the first position

for at least the total amount of medical assistance paid on

behalf of the institutionalized individual.” 42 U.S.C.

3Appellant also notes that the amendment’s retroactivity “is an indicia

of [its] technical nature.” Congress’s indication that the amendment should

apply retroactively does not alter our analysis in light of the statute’s plain

language. We express no opinion as to whether retroactive application of

the amendment would raise a due process issue. 

HUTCHERSON v. ARIZONA HEALTH CARE COST 825
§ 1396p(c)(1)(F)(i). Appellant contends that the provision’s

use of “paid” in the past tense evidences a congressional

intent to cap a state’s recovery at the amount it had paid up

to the date of the annuitant’s death. Hence, any additional

amount from the annuity would be disbursed to the remainder

beneficiary in the second position even though the State continues incurring costs on behalf of the annuitant’s spouse. 

[7] We disagree. To begin with, nothing in the statutory

language is inconsistent with permitting AHCCCS to recover

from the annuity expenses incurred after John’s death. In

doing so, AHCCCS would be recovering the “medical assistance paid on behalf of the institutionalized individual,” Betty,

as § 1396p(c)(1)(F)(i) permits. This interpretation is also the

most consistent with the statutory scheme and purpose. As

noted above, the provisions regarding transferring assets were

tailored to balance Congress’s desire to avoid impoverishment

of the community spouse, on the one hand, and closing loopholes that allowed wealthy couples to game the system, on the

other hand. The annuity payments to AHCCCS as a beneficiary functioned precisely the way the statute was intended to

work. The Hutchersons were able to qualify Betty for Medicaid assistance, while ensuring that John did not become

impoverished. As part of that balance, AHCCCS was named

as the primary remainder beneficiary of John’s annuity so that

it could recoup its costs for the medical care that Betty

received in the event that John died before the annuity had run

its course.

Accepting Appellant’s position that the state should not

recover and, instead, she should inherit what remained in

John’s annuity would frustrate the purpose of the Medicaid

statute. As we have noted above, Congress prevents the community spouse from disposing of assets that would otherwise

be available to pay for the institutionalized spouse’s medical

care. For instance, if John, instead of purchasing the annuity,

attempted to transfer funds to Appellant, Betty would have

been ineligible for Medicaid for the approximate length of

826 HUTCHERSON v. ARIZONA HEALTH CARE COST
time that the funds could have covered Betty’s medical costs.

By purchasing an annuity, John avoided this transfer penalty.

Consistent with the Medicaid Act’s objective of protecting the

community spouse from destitution, John was entitled to collect monthly payments from the annuity for as long as he

lived. When John died before the annuity ran its course, however, funds remained in the annuity that could have otherwise

been used to pay for Betty’s medical care. To limit AHCCCS’s recovery to the medical expenses incurred before John’s

death would allow the Hutchersons to keep money and transfer money that would have otherwise made them ineligible for

Medicaid. The Medicaid Act, through the transfer penalty and

the DRA amendments to the annuity provision, reflect a clear

intent to prevent individuals from sheltering funds in this

manner. 

[8] We therefore conclude that AHCCCS could be reimbursed as the primary remainder beneficiary from John’s

annuity for the cost of the medical assistance it paid on

Betty’s behalf after John’s death.

V.

Accordingly, we AFFIRM the judgment of the district

court granting summary judgment to AHCCCS and Betlach.

HUTCHERSON v. ARIZONA HEALTH CARE COST 827