IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

PATRICK MCGOVERN, Deceased,

Plaintiff/Appellee,

v.

ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM 

ADMINISTRATION, an Agency of the State of Arizona; THOMAS J. 

BETLACH, in his capacity as Director of AHCCCS,

Defendants/Appellants.

No. 1 CA-CV 15-0643

Appeal from the Superior Court in Maricopa County

No. LC2014-000540-001

The Honorable Crane McClennen, Judge, Retired

REVERSED

COUNSEL

Jackson White PC, Mesa

By Richard Tyler White

Counsel for Plaintiff/Appellee

Johnston Law Offices PLC, Phoenix

By Logan T. Johnston, III

Counsel for Defendants/Appellants
MCGOVERN v. AHCCCS

Opinion of the Court

2

OPINION

Judge Jon W. Thompson delivered the opinion of the Court, in which 

Presiding Judge Diane M. Johnsen and Chief Judge Michael J. Brown joined.

T H O M P S O N, Judge:

¶1 The Arizona Health Care Cost Containment System 

(AHCCCS) appeals from a final judgment overturning its director’s 

decision denying Patrick McGovern’s application for Medicaid benefits. 

We reverse the trial court’s judgment.

FACTUAL AND PROCEDURAL HISTORY

¶2 AHCCCS denied McGovern’s application for Medicaid 

benefits under its long-term care program, the Arizona Long-Term Care 

System (ALTCS), finding McGovern’s “countable” income and “countable”

resources exceeded the qualifying limits. McGovern appealed the decision,

arguing that certain assets were “unavailable” because he was unable to 

access them.

1

¶3 The denial turned on whether McGovern’s three Bank of 

America (BOA) accounts, owned jointly with his daughter, and a Ford 

Focus he owned, but that was in his daughter’s possession and titled in both 

their names were properly counted as resources. McGovern’s monthly 

pension was deposited in one of the three bank accounts. McGovern’s sister 

held a power of attorney to access his assets because McGovern lacked 

mental capacity to control them. 

¶4 Under BOA’s policy, co-owners of a bank account each may 

exercise control over the account without the consent of the other, but both 

account owners must sign a “Joint Owner Acknowledgement” to allow a 

third-party to access the account using a power of attorney. Under the

policy, even though McGovern lacked capacity to exercise control over his 

BOA accounts, the bank would not permit McGovern’s sister to exercise his 

power of attorney to access his accounts without the signed consent of 

McGovern’s daughter. McGovern’s daughter refused to consent. 

 

1 McGovern died during the pendency of AHCCCS’s decision-making 

before the administrative hearing. 
MCGOVERN v. AHCCCS

Opinion of the Court

3

¶5 An administrative law judge (ALJ) recommended 

McGovern’s appeal be denied, reasoning that while there were practical 

impediments to accessing the resources, the applicable regulations do not 

disallow resources subject to institutional or lack of cooperation 

impediments, and the resources were otherwise legally available. The 

Director of AHCCCS issued a decision adopting the ALJ’s recommendation 

and AHCCCS’s argument that McGovern’s position would encourage 

fraudulent collusion by joint owners to render assets “unavailable.” 

¶6 McGovern’s representatives timely appealed the AHCCCS 

Director’s decision to the superior court. There, McGovern’s attorneys

argued the Director’s decision was arbitrary and capricious, contrary to 

law, and unreasonable. After briefing and oral argument, without 

explanation, the court adopted McGovern’s arguments and authorities and 

reversed the Director’s decision. The court also ordered AHCCCS to pay 

McGovern’s nursing home for his care from the date of his AHCCCS 

application until he died, and his requested attorneys’ fees and costs. 

AHCCCS timely appealed to this court. We have jurisdiction pursuant to 

Arizona Revised Statutes (A.R.S.) § 12-913 (2016).2 

DISCUSSION

¶7 On appeal to this court, McGovern’s representatives reiterate 

his argument that the AHCCCS Director wrongly counted inaccessible 

assets as “available” resources. The dispositive issue is whether McGovern 

had a legal right to the bank accounts (including his pension deposited in 

one of those accounts), and the Ford Focus, not whether as a practical matter 

he would have difficulty accessing these assets. We reverse the trial court’s 

decision and affirm the AHCCCS Director’s ruling. 

¶8 In an appeal of this administrative decision, both the trial 

court and this court reach the same underlying issues: whether the 

administrative action was illegal, arbitrary, capricious or involved an abuse 

of discretion. Smith v. Ariz. Long Term Care Sys., 207 Ariz. 217, 220-21, ¶¶ 

14, 19, 84 P.3d 482, 485-86 (App. 2004). “The [AHCCCS] Director’s decision 

is the final administrative decision entitled to deference.” Id. at 220, ¶ 15, 

84 P.3d at 485 (citing A.R.S. § 41-1092.08(B) (2003)). We are bound to accept 

the administrative agency’s factual findings that are supported by 

reasonable evidence. Whiteco Outdoor Adver. v. City of Tucson, 193 Ariz. 314, 

317, ¶ 7, 972 P.2d 647, 650 (App. 1998) (citation omitted). On review, we

 

2 Absent material changes from the relevant date, we cite a statute’s 

current version.
MCGOVERN v. AHCCCS

Opinion of the Court

4

determine whether the record contains substantial evidence to support the 

judgment. Ethridge v. Ariz. St. Bd. of Nursing, 165 Ariz. 97, 100, 796 P.2d 899, 

902 (App. 1989). We review de novo any legal issues addressed by the 

administrative agency or the trial court. Eaton v. Ariz. Health Care Cost 

Containment Sys., 206 Ariz. 430, 432, 79 P.3d 1044, 1046 (App. 2003).

¶9 In determining eligibility for long term care, “Arizona is 

bound by federal eligibility factors.” Smith, 207 Ariz. at 221, ¶ 21, 84 P.3d 

at 486 (citing 42 U.S.C. § 1396a(a)(17)(B); A.R.S. §§ 36-2931(5)(d) (2003), -

2934(A)(1) (2003)).

3 Eligibility hinges on the amount of “such income and 

resources as are, as determined in accordance with standards prescribed by 

the Secretary [of the Department of Health and Human Services], available 

to the applicant . . . .” 42 U.S.C. § 1396a(a)(17)(B). The relevant federal 

regulation defines “resources” as:

[C]ash or other liquid assets or any real or personal property 

that an individual (or spouse, if any) owns and could convert 

to cash to be used for his or her support and maintenance.

(1) If the individual has the right, authority or power to liquidate 

the property or his or her share of the property, it is 

considered a resource. If a property right cannot be

liquidated, the property will not be considered a resources of 

the individual (or spouse).

20 C.F.R. § 416.1201(a)(1) (2010) (emphasis added). 

¶10 The inquiry under this regulation focuses on an individual’s 

legal right to income or a resource. See Smith, 207 Ariz. at 221, ¶ 22, 84 P.3d 

at 486 (holding “the determining factor [as to whether a resource is 

countable for Medicaid benefits eligibility] is the existence of the legal right 

to liquidate or control either the liquid or illiquid resource”) (emphasis

added).4 The text of 20 C.F.R. § 416.1202(a)(1) focuses on an individual’s 

 

3 See also Markva v. Haveman, 317 F.3d 547, 550 (6th Cir. 2003) (stating 

that “in order for a state to receive federal [Medicaid] assistance, its plan 

must meet the requirements of the Social Security Act and the regulations 

promulgated by the Secretary of Health and Human Services”).

4 “Both liquid and illiquid resources are counted in the resource 

assessment.” Smith, 207 Ariz. at 221, ¶ 22, 84 P.3d at 486. The only 

difference between the two is that liquid resources are “cash or other 
MCGOVERN v. AHCCCS

Opinion of the Court

5

right, authority, and power over a resource; under that provision, any 

practical inconvenience or accessibility difficulties are not relevant to 

determining whether assets are to be counted. See Chalmers v. Shalala, 23 

F.3d 752, 756 (3d Cir. 1994) (rejecting the notion that an individual’s right to 

a resource pursuant to the regulation is dependent upon the difficulty, legal 

expense, or convenience of exercising his or her legal right to it). 

McGovern’s representatives requested that AHCCCS provide a 

conservator to access McGovern’s bank accounts5, thereby implicitly 

conceding that, as co-owner of the bank accounts, he had the legal authority 

to liquidate them despite his daughter’s refusal to consent. Further, as the 

owner of the Ford Focus, he undoubtedly also had the legal right to 

liquidate it. These assets are thus countable resources under the applicable 

regulation.

¶11 We additionally hold McGovern’s assets were “available” to 

him even though he lacked the mental capacity to exercise his power to 

liquidate them and would have needed to obtain a conservator to access the 

assets, particularly the bank accounts, on his behalf. See Frerks v. Shalala, 52 

F.3d 412, 414 (2d Cir. 1995) (finding trust funds “available” to supplemental 

security income benefits applicant, even though the applicant required a 

court order to obtain them); Blaylock v. Harris, 531 F. Supp. 24, 26 (W.D. Mo. 

1981) (concluding a retirement account was property similar to a savings 

account and was an “available” “liquid” resource pursuant to 20 C.F.R. § 

416.1202(a) and (b) because plaintiff was “presently entitled” to convert it to 

cash to use for support and maintenance) (emphasis added). 

¶12 Smith is consistent with our holding on the “availability” 

issue. The key issue in Smith was whether to count proceeds of an insurance 

settlement from a car accident that injured the ALTCS applicant as an 

“available” resource as of the date of the accident. There, we stated “income 

and resources are considered available both when actually available and when 

the applicant or recipient has the legal ability to make such sum available for 

support and maintenance.” Smith, 207 Ariz. at 222, ¶ 24, 84 P.3d at 487 

 

property which can be converted to cash within twenty days,” while 

illiquid resources are those which cannot be converted to cash within 20 

days. 20 C.F.R. § 416.1201(b)–(c). 

5 McGovern did not argue before the superior court, and does not 

argue on appeal, that AHCCCS is required to assist applicants in asserting 

control of their own assets.
MCGOVERN v. AHCCCS

Opinion of the Court

6

(emphasis added).6 Ultimately, we held the unpaid insurance proceeds 

were “unavailable” to the plaintiff as of the date of the accident because the 

“proceeds were not [then] available to convert to cash.” Id. at 222, ¶ 25, 84 

P.3d at 487. The Smith plaintiff did not have a present right to use the 

“future,” “not yet exist[ing]” proceeds or the right to force the insurer to 

pay any specific sum from those proceeds as of AHCCCS’s resource 

assessment date. See id. at 222-23, ¶¶ 24-29, 84 P.3d at 487-88. In contrast, 

McGovern’s representatives’ concession that a conservatorship could have 

been obtained to access the bank accounts on McGovern’s behalf implicitly 

acknowledges McGovern’s ability to force payment from the account

through the power retained by the conservator. The same conservator 

could have acquired the proceeds from sale of the vehicle. We therefore 

agree with AHCCCS that the assets were “available” to McGovern through 

a conservatorship.

¶13 Furthermore, the Social Security Administration’s (SSA) 

Program Operations Manual System (POMS)7 contemplates the use of 

 

6 Contrary to this expressed holding, McGovern’s representatives 

posit that Smith stands for the proposition that an asset is not available if an 

applicant lacks “immediate access” to it. But in Smith, the funds at issue 

were non-existent as of the date of the resource determination. See 207 Ariz. 

at 223, ¶¶ 26-27, 84 P.3d at 488. The immediacy of access was meaningless 

as to funds that did not exist. Thus, inferentially, the meaning of 

“immediate access” in that context would not apply to this case where the 

funds do exist and there is a legal right to liquidate them. 

7 The POMS is often referred to as the Supplemental Security Income 

Program Operations Manual. It was issued by the SSA to further construe 

statutes governing its operations, chiefly the Social Security Act. See, e.g.,

Lopes v. Dep’t of Soc. Servs., 696 F.3d 180, 186 (2d Cir. 2012). “Arizona 

administers AHCCCS . . . pursuant to Title XIX of the Social Security Act.” 

Mercy Healthcare Ariz., Inc. v. Ariz. Health Care Cost Containment Sys., 181 

Ariz. 95, 97, 887 P.2d 625, 627 (App. 1994) (citing A.R.S. §§ 36-2901 to -2975 

(1993 & Supp. 1994)). Even though the POMS does not impose judicially 

enforceable duties on courts, it has been held to be entitled to respect to the 

extent it has the power to persuade. Lockwood v. Comm’r Soc. Sec. Admin., 

616 F.3d 1068, 1073 (9th Cir. 2010) (internal quotation and citation omitted);

see also Gragert v. Lake, 541 F. App’x 853, 856 n.1 (10th Cir. 2013) (stating the 

POMS warrants respect) (internal quotation and citations omitted). The 

POMS is entitled to deference so long as it is reasonable and consistent with 

the Social Security Act. Lopes, 696 F.3d at 186.
MCGOVERN v. AHCCCS

Opinion of the Court

7

conservatorships by individuals such as McGovern to access their assets for 

their support and maintenance.

8 In the answering brief on appeal, 

McGovern’s representatives argue the POMS’s policy that an applicant is 

not required to commence litigation to render assets “available,” see, e.g., 

Kubetin v. Astrue, 637 F. Supp. 2d 59, 64-65 (D. Mass. 2009), means that

McGovern was not required to obtain a conservatorship to render his funds 

available to him. But, the POMS also states that the fact that an applicant

may have to petition a court for withdrawal of his funds in a 

conservatorship does not make a resource “unavailable for the individual’s 

support and maintenance.” POMS, § SI 01140.215, ¶ B.3 (eff. Dec. 4, 2012). 

We therefore do not read the POMS’s policy against forcing litigation to 

broadly preclude all resorts to the legal system, such as the use of a courtappointed conservator to make assets available. 

¶14 At oral argument, McGovern’s representatives further urged 

that the POMS’s conservatorship policy applies only to existing

conservatorships and should not be read to require an applicant to establish

a conservatorship to access existing resources. No authority is provided for

this position and this court declines to read that limitation into the POMS. 

See Brown v. U.S. Fid. and Guar. Co., 194 Ariz. 85, 93, ¶ 50, 977 P.2d 807, 815 

 

8 We will not speculate, as part of the availability analysis, whether 

the cost of pursuing a conservatorship to access the bank accounts would 

swallow the value of McGovern’s assets. The accounts’ value is not at issue 

in this case. While McGovern’s representatives argue they could not verify 

that the value of the bank accounts would “actually” provide McGovern 

with sufficient resources for his support and maintenance without his 

daughter’s permission, both parties agreed that the denial of ALTCS 

benefits is appropriate if the accounts were properly counted as resources. 

If the accounts’ value was relevant, McGovern would have the burden to 

show that the funds therein were insufficient to provide for his support and 

maintenance at the time he applied for benefits. See also Lavine v. Milne, 424 

U.S. 577, 582-83 (1976) (stating that applicants for most government benefits 

“bear the burden of showing their eligibility in all aspects”); Aranda v. 

Cardenas, 215 Ariz. 210, 216, ¶ 20, 159 P.3d 76, 82 (App. 2007) (“[I]t is 

generally held that a party seeking a right or benefit under a statute bears 

the burden of proving that he comes within the ambit of the statute.”) 

(internal quotation and citation omitted). 
MCGOVERN v. AHCCCS

Opinion of the Court

8

(App. 1998) (rejecting an assertion without supporting argument or citation 

of authority). 

¶15 Nor did counsel cite any authority to support his additional 

contention that establishing a conservatorship for the purpose of accessing 

funds for support and maintenance is equivalent to engaging in litigation. 

The fact that the POMS addresses litigation and conservatorships in 

different subsections, see POMS, § SI 01120.010, ¶ C.2 (eff. Sept. 26, 2014)9

(addressing litigation) and ¶ C.3 (addressing conservatorship accounts), 

suggests they are considered separate and distinct means of accessing 

resources. See generally POMS, § SI 01120.010, ¶ C (identifying and 

separately addressing access to resources via (1) an agent, (2) litigation, and 

(3) petitioning a court regarding a conservatorship account). Moreover, 

regarding litigation, ¶ C.2 specifically states that an applicant is not 

required to undertake litigation in order to accomplish sale or access 

“[w]hen there is a legal bar” to doing so. Thus, even if we were to equate 

establishing a conservatorship with litigation, in this case there was no legal 

bar to establishing the conservatorship since McGovern indisputably had 

the legal right to liquidate his assets and, as we hold, force payment from 

them for his support and maintenance.

¶16 “Medicaid is intended to be the payer of last resort . . . .”10 

McGovern was therefore required to use his available resources before he 

could be eligible to have Medicaid pay for his care. The AHCCCS Director 

did not err in rejecting McGovern’s attempt to insert a “readily accessible”

or other convenience requirement into the applicable law.

CONCLUSION

¶17 For the foregoing reasons, we conclude substantial evidence 

supported the AHCCCS Director’s finding that McGovern’s resources were 

both “countable” and “available” for purposes of McGovern’s ALTCS 

eligibility for Medicaid benefits. We affirm the AHCCCS Director’s 

decision concluding that McGovern’s application was properly denied and 

we reverse the trial court’s inapposite ruling and vacate its award of 

 

9 We cite the current version of this POMS section as there are no 

applicable material changes from the relevant date.

10 S. Rep. No. 146, 99th Cong., 2d Sess. 1, 312, reprinted in 1986 U.S. Code 

Cong. & Admin. News 42, 279. 
MCGOVERN v. AHCCCS

Opinion of the Court

9

attorneys’ fees. As McGovern is not the prevailing party on appeal, we also 

deny his request for attorneys’ fees.