668 December 15, 2016 No. 78

IN THE SUPREME COURT OF THE

STATE OF OREGON

Tim NAY,

Respondent on Review,

v.

DEPARTMENT OF HUMAN SERVICES,

Petitioner on Review.

(CA A150722; SC S062978)

On review from the Court of Appeals.*

Argued and submitted November 9, 2015.

Carson L. Whitehead, Assistant Attorney General, 

Salem, argued the cause and filed the briefs for petitioner on 

review. Also on the briefs were Ellen F. Rosenblum, Attorney 

General, and Anna M. Joyce, Solicitor General.

Matthew W. Whitman, Portland, argued the cause and 

filed the brief for respondent on review. Also on the brief was 

the firm of Nay & Friedenberg, Portland.

Before Balmer, Chief Justice, and Kistler, Walters, 

Landau, Baldwin, and Brewer, Justices.**

BALDWIN, J.

The decision of the Court of Appeals is affirmed in part 

and vacated in part. The rule amendments to OAR 461-

135-0832(10)(b)(B)(viii) (2010) and OAR 461-135-0835

(1)(e)(B)(iii) (2010) are held invalid.

______________

** On Judicial Review of Department of Human Services Administrative 

Rules OAR 461-135-0832 and OAR 461-135-0835. 267 Or App 240, 340 P3d 720 

(2014).

** Linder, J., retired December 31, 2015, and did not participate in the decision of this case. Nakamoto, J., did not participate in the consideration or decision 

of this case.
Cite as 360 Or 668 (2016) 669

Case Summary: Statutes provided that Department of Human Services must 

recover Medicaid payments from assets in which Medicaid recipient had an interest at the time of death. Department amended its rules to allow it to recover 

Medicaid payments from assets that Medicaid recipient had transferred to a 

spouse up to five years before the Medicaid recipient had applied for Medicaid. 

Petitioner challenged validity of rules, and Court of Appeals agreed with petitioner that rule amendments were invalid. Held: (1) proper standard of review 

was whether rule amendments depart from a legal standard expressed or implied 

in the particular law being administered; (2) rule amendments departed from 

legal standards expressed in laws regarding presumption of common ownership in marital dissolution; (3) rule amendments departed from legal standards 

expressed in laws regarding right of spouse to claim elective share under probate law; (4) rule amendments departed from legal standards expressed in laws 

regarding ability to avoid transfers made without adequate consideration or with 

intent to hinder or prevent estate recovery; and (5) Supreme Court vacated that 

part of Court of Appeals’ opinion relating to validity under federal law.

The decision of the Court of Appeals is affirmed in part and vacated in part. 

The rule amendments to OAR 461-135-0832(10)(b)(B)(viii) (2010) and OAR 461-

135-0835(1)(e)(B)(iii) (2010) are held invalid.
670 Nay v. Dept. of Human Services

BALDWIN, J.

In general, the Department of Human Services is 

required by law to recover Medicaid payments from those 

assets in which the Medicaid recipient had an interest at the 

time of death. In 2008, the department amended its administrative rules regarding the scope of that recovery. The 

amended rules allow the department to recover the payments 

from assets that the recipient had transferred to a spouse up 

to five years before a person applies for Medicaid. Pursuant 

to ORS 183.400, petitioner Tim Nay sought judicial review of 

those rule amendments in the Court of Appeals. The Court 

of Appeals agreed with petitioner that the amendments 

were invalid, Nay v. Dept. of Human Services, 267 Or App 

240, 340 P3d 720 (2014), and the department sought review. 

As we will explain, we conclude that the rule amendments 

are invalid under ORS 183.400(4)(b) because they exceed 

the department’s statutory authority. Accordingly, we affirm 

the Court of Appeals.

I. BACKGROUND

A. Medicaid

This case involves the recovery of payments by the 

state under Medicaid. Medicaid “is a cooperative endeavor in 

which the Federal Government provides financial assistance 

to participating States to aid them in furnishing health care 

to needy persons.” Harris v. McRae, 448 US 297, 308, 100 S Ct 

2671, 65 L Ed 2d 784 (1980). The full scheme is quite complex, 

but most of those details are not relevant to our analysis here. 

(For a more detailed explanation of the legal framework, see 

Nay, 267 Or App at 242-45.) It is sufficient here to note that 

(1) a person may be eligible to receive certain benefits under 

the program, and (2) those benefits later may be recovered by 

the state from certain assets. The latter aspect—the recovery of those benefit payments by the state, known as “estate 

recovery”—is the issue on which this case turns.

B. Estate Recovery

1. Current Statutes

We first briefly address the relevant federal and 

state statutes regarding the recovery of those Medicaid 
Cite as 360 Or 668 (2016) 671

benefit payments. In doing so, we must consider which version of the federal and state statutes we should examine. 

The parties and the Court of Appeals all appear to have 

quoted the current versions of those statutes. Many of those 

statutes, however, have been amended multiple times since 

the rule amendments were first promulgated in 2008.1

It is plausible that the validity of the rule amendments should be evaluated against the versions of the statutes in effect when the rules were amended, and not by later 

versions. The parties did not address that question in their 

briefing. However, we have reviewed the statutory amendments since 2008 and do not find any substantive changes 

that would affect our analysis of the issues here. Thus, we 

follow the lead of the parties and the Court of Appeals and 

quote all relevant statutes as they exist currently.

2. Federal Statutes

Federal law generally prohibits recovery of properly 

paid Medicaid benefits, except from the Medicaid recipient’s 

estate. The relevant statute provides, in part:

“(b) Adjustment or recovery of medical assistance correctly paid under a State plan

“(1) No adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the 

State plan may be made, except that the State shall seek 

adjustment or recovery of any medical assistance correctly 

paid on behalf of an individual under the State plan in the 

case of the following individuals:

“(A) In the case of an individual described in subsection (a)(1)(B) of this section, the State shall seek adjustment or recovery from the individual’s estate * **.

“(B) In the case of an individual who was 55 years 

of age or older when the individual received such medical 

1 For example, 42 USC § 1396p was amended by Pub L 111-5, div B, title V, 

§ 5006(c), Feb 17, 2009, 123 Stat 507; and Pub L 113-67, div A, title II, § 202(b)(3),

Dec 26, 2013, 127 Stat 1177. ORS 411.620 was amended by Or Laws 2009, ch 595, 

§ 262; Or Laws 2011, ch 720, § 115; and Or Laws 2013, ch 688, § 50. ORS 411.630 

was amended by Or Laws 2011, ch 720, § 116, and Or Laws 2013, ch 688, § 51. 

Additionally, ORS 416.350 was amended by Or Laws 2009, ch 595, § 278 (at that 

time the statute had been numbered ORS 414.105); Or Laws 2011, ch 720, § 154; 

and Or Laws 2013, ch 688, § 87.
672 Nay v. Dept. of Human Services

assistance, the State shall seek adjustment or recovery 

from the individual’s estate, but only for [certain identified 

forms of medical assistance.]”

42 USC § 1396p(b)(1) (boldface in original).

Because recovery can be made only from the 

Medicaid recipient’s estate, much depends on what “estate” 

means. Federal law provides some guidance on that as well. 

The federal statute defining “estate,” 42 USC § 1396p(b)(4),

contains two parts. The first part provides that the Medicaid 

recipient’s estate includes whatever state probate law defines 

as the estate. The statute also gives states the option to 

choose to expand that definition, so that it includes not only 

the probate estate, but also other property interests that the 

Medicaid recipient had at the time of death. Specifically, the 

statute provides, in part:

“(4) For purposes of this subsection, the term ‘estate,’ 

with respect to a deceased individual—

“(A) shall include all real and personal property and 

other assets included within the individual’s estate, as 

defined for purposes of State probate law; and

“(B) may include, at the option of the State * **, any 

other real and personal property and other assets in which 

the individual had any legal title or interest at the time of 

death (to the extent of such interest), including such assets 

conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement.”

42 USC § 1396p(b)(4).

The permissive definition of “estate” in subparagraph (B) applies only to the extent of the interest that the 

Medicaid recipient held at the time of death. See 42 USC 

§ 1396p(b)(4)(B) (permissive definition includes interest held

at time of death, “to the extent of such interest”). The mere 

existence of a Medicaid recipient’s interest thus does not 

necessarily entitle a state to recover the full value of the 

asset. The state may recover only the value of the Medicaid 

recipient’s interest.

Estate recovery can occur only after the Medicaid 

recipient’s spouse also has died. 42 USC § 1396p(b)(2) (adding additional conditions).
Cite as 360 Or 668 (2016) 673

3. State Statutes

Oregon statutes generally parallel the federal provisions. ORS 416.350(2) authorizes recovery from a Medicaid 

recipient’s “estate,” and provides in relevant part:

“Medical assistance pursuant to ORS chapter 414 paid 

to or on behalf of an individual [in certain circumstances 

not relevant here] may be recovered from the estate of the 

individual or from any recipient of property or other assets 

held by the individual at the time of death including the 

estate of the surviving spouse.”

The estate recovery may not occur from a spouse until the 

spouse has died (and certain other conditions are met). Id.

(medical assistance “may not be *** recovered until after 

the death of the surviving spouse, if any”).

In a later subsection, the legislature has directed 

that Oregon will use the expanded, permissive definition of 

“estate” authorized by 42 USC § 1396p(b)(4)(B).

“(6) As used in this section:

“(a) ‘Estate’ includes all real and personal property 

and other assets in which the deceased individual had any 

legal title or interest at the time of death including assets 

conveyed to a survivor, heir or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust or other similar arrangement.”

ORS 416.350(6).

The department concedes that state law also limits 

estate recovery to the value of the Medicaid recipient’s interest in those assets. The existence of some fractional interest 

in an asset does not permit estate recovery of the full value 

of the asset. See ORS 416.350(4).

In addition, the Oregon legislature has authorized the 

setting aside of certain property transfers that otherwise would 

be subject to estate recovery. The general authority to set aside 

those transfers is found in ORS 411.620(2), which states:

“Except with respect to bona fide purchasers for value, 

the department, the authority, the conservator for the 

recipient or the personal representative of the estate of a 

deceased recipient may prosecute a civil suit or action to set 
674 Nay v. Dept. of Human Services

aside the transfer, gift or other disposition of any money or 

property made in violation of any provisions of ORS 411.630, 

411.708 and 416.350 and the department or the authority 

may recover out of such money or property, or otherwise, the 

amount or value of any public assistance or medical assistance obtained as a result of the violation, with interest, 

together with costs and disbursements incurred in recovering the public assistance or medical assistance.”

As relevant here, the legislature has specified that 

two different classes of transfer may be avoided for purposes of estate recovery. The first class consists of transfers of property made without adequate consideration. ORS 

416.350(2) provides, in part:

“Transfers of real or personal property by recipients of such 

aid without adequate consideration are voidable and may 

be set aside under ORS 411.620(2).”

The department admits that that statute does not apply to 

transfers that were completed before a person could be considered to be a “recipient[] of such aid.”

The second class of transfers that may be avoided 

are those transfers that the Medicaid recipient made 

with the intent to hinder or prevent estate recovery. ORS 

411.630(2) provides, in part:

“A person may not transfer, conceal or dispose of any 

money or property with the intent:

“*****

“(b) Except as to a conveyance by the person to create 

a tenancy by the entirety, to hinder or prevent the department or the authority from recovering any part of any claim 

it may have against the person or the estate of the person.”

C. Rule Amendments

With that statutory background, we turn to the 

challenged rule amendments. There are two rules at issue. 

The first rule, OAR 461-135-0832, defines the term “estate.” 

The second rule, OAR 461-135-0835, addresses the extent to 

which the department can recover from the spouse’s estate.2

2 Petitioner does not challenge the rules in their entirety. Instead, he only 

challenges the rule amendments that, beginning in 2008, added provisions 
Cite as 360 Or 668 (2016) 675

Prior to 2008, those rules contained a “loophole” 

that allowed Medicaid recipients and their spouses to avoid 

estate recovery. Before applying for Medicaid benefits, the 

department asserts, a future Medicaid recipient could transfer an asset to their spouse—an “interspousal transfer.” By 

doing so, the Medicaid recipient “could permanently prevent 

[the department] from recovering the recipient’s interest in 

marital property.”

In order to close that “loophole,” the department 

amended the two rules at issue. The amended rules themselves are the same in substance, if different in operation: 

Both of the amended rules now expressly provide that estate 

recovery may reach any interspousal transfers made in the 

60 months—five years—before the Medicaid recipient first 

applies for benefits.

The first amendment expanded the definition of the 

word “estate.” As amended through October 1, 2010, OAR 

461-135-0832 provided in part:

“(10) ‘Estate’ means:

“* ****

“(b) With respect to the collection of payments made 

for public assistance provided on or after July 18, 1995:

“* ****

“(B) For recipients who die on or after October 1, 

2008, all real property, personal property, or other assets, 

wherever located, in which a recipient had any legal title 

or ownership or beneficial interest at the time of death of 

the recipient, including real property, personal property, 

or other assets conveyed by the recipient to, subsequently 

acquired by, or traceable to, a person, including the recipient’s spouse and any successor-in-interest to the recipient’s 

spouse, through:

allowing the recovery of interspousal transfers within 60 months after the 

Medicaid recipient first applied for benefits. The rules have been amended since 

that time, but those amendments all retain essentially the same text. Following 

the lead of the parties and the Court of Appeals, we quote the versions of the rules 

as they existed on October 1, 2010, the last date covered by the limited record 

before us. See ORS 183.400(3) (record consists of rule at issue, relevant statutes, 

and “[c]opies of all documents necessary to demonstrate compliance with applicable rulemaking procedures”).
676 Nay v. Dept. of Human Services

“(i) Tenancy by the entirety;

“(ii) Joint tenancy;

“(iii) Tenancy in common;

“(iv) Not as tenants in common, but with the right of 

survivorship;

“(v) Life estate;

“(vi) Living trust;

“(vii) Annuity purchased on or after April 1, 2001; or

“(viii) Other similar arrangement, such as an interspousal transfer[3] of assets, including one facilitated by 

a court order, which occurred no earlier than 60 months 

prior to the first date of request established from the recipient’s and the recipient’s spouse’s applications, or at any 

time thereafter, whether approved, withdrawn, or denied, 

for the public assistance programs referenced in OAR 

461-135-0835(2).”

(Emphases omitted.) The amendment at issue here is OAR 

461-135-0832(10)(b)(B)(viii), which changed “[o]ther similar 

arrangement” to include a Medicaid recipient’s transfers to 

a spouse within the 60 months before applying for benefits.

The second amendment expanded the list of the 

spouse’s assets from which the department could recover 

Medicaid payments. As amended through October 1, 2010, 

OAR 461-135-0835(1) provided:

“(e) For a recipient who died on or after October 1, 

2008:

“* ****

“(B) * * * [T]he Department has a claim against the 

estate of the recipient’s spouse for public assistance paid 

to the recipient, but only to the extent that the recipient’s 

3 As amended, the same rule also defined “interspousal transfer”:

“‘Interspousal transfer’ means any transfer, or chain of transfers, that 

effectively transfers title or control of an asset, or an interest in an asset, 

from one spouse to another, including: direct transfers between spouses, 

transfers from one or both spouses to a trust, and transfers from one trust to 

another trust.”

OAR 461-135-0832(13).
Cite as 360 Or 668 (2016) 677

spouse received property or other assets from the recipient 

through any of the following:

“(i) Probate.

“(ii) Operation of law.

“(iii) An interspousal transfer, including one facilitated by a court order, which occurs:

“(I) Before, on, or after October 1, 2008; and

“(II) No earlier than 60 months prior to the first date 

of request (see OAR 461-135-0832) established from the 

applications of the recipient and the recipient’s spouse, or 

at any time thereafter, whether approved, withdrawn, or 

denied, for the public assistance programs referenced in 

section (2) of this rule.”

(Emphasis omitted.) The change at issue is OAR 461-135-

0835(1)(e)(B)(iii), which allows the department to recover 

property transferred up to 60 months before the Medicaid 

recipient applied for benefits, in addition to assets transferred by probate and operation of law.

D. Court of Appeals’ Decision

Petitioner requested judicial review from the Court 

of Appeals pursuant to ORS 183.400. He challenged the 

amendments to the rules, insofar as they allowed recovery of 

transfers to a spouse made within the 60 months before the 

Medicaid recipient applying for benefits. He asserted (among 

other things) that the department had exceeded its statutory 

authority under both state and federal law when it adopted 

those amendments, and so the amendments were invalid. 

See ORS 183.400(4)(b) (court will declare rule invalid if rule 

“[e]xceeds the statutory authority of the agency”).

The Court of Appeals agreed with petitioner 

and rejected the department’s assertion that the federal 

and state statutes allowed it to recover transfers that the 

Medicaid recipient had made prior to his or her death. Nay, 

267 Or at 259-63. As noted, the federal and state statutes 

defining “estate” provide that that term includes assets as 

to which the Medicaid recipient had an interest at the time 

of death. 42 USC § 1396p(b)(4)(B); ORS 416.350(6). The 

court rejected the department’s assertion that either Oregon 
678 Nay v. Dept. of Human Services

probate law or domestic relations law created an interest at 

the time of death in property that the Medicaid recipient 

had transferred before death. 267 Or App at 260-62.

The Court of Appeals also considered the department’s suggestion that generic terms included in both the 

state and federal definitions of “estate” are broad enough to 

allow the department to recover “assets that the Medicaid 

recipient fully transferred away during his or her life.” 267 

Or App at 248. The department noted, in that regard, that 

the state statute provides that “estate” additionally includes 

“assets conveyed to a survivor, heir or assign of the deceased 

individual through joint tenancy, tenancy in common, survivorship, life estate, living trust or other similar arrangement.” ORS 416.350(6)(a) (emphasis added). The federal 

statute, 42 USC § 1396p(b)(4)(B), is almost identical to 

the state statute, save that the last term is “other arrangement” rather than “other similar arrangement.” The department asserted that the generic concluding terms in both 

those statutes—“other similar arrangement” and “other

arrangement”—were broad enough to allow the department 

to recover transfers that the Medicaid recipient had made 

before death. See 267 Or App at 259.

The court found that argument unpersuasive. In 

context, the only assets that fell within either the federal or 

state definitions were those in which the Medicaid recipient 

had some property interest at the time that the Medicaid 

recipient died. The generic terms “other arrangement” and 

“other similar arrangement” shared the same qualities as 

the examples that preceded it in both statutes, 267 Or App 

at 247-48—“assets conveyed * * * through joint tenancy, tenancy in common, survivorship, life estate, [and] living trust,” 

42 USC § 1396p(b)(4)(B); ORS 416.350(6)(a). All those examples still involved only interests that the Medicaid recipient 

held at the time of death, but that were transferred by operation of law outside probate when the recipient died. 267 Or 

App at 248 (federal statute); id. at 254 (state statute).

The Court of Appeals thus held the rules invalid. 

The rule amendments allowed recovery of transfers made 

before the recipient’s death, even though the recovery of 

“such predeath transfers are antithetical to the definition 
Cite as 360 Or 668 (2016) 679

of estate as provided by federal and state law.” Id. at 263. 

Accordingly, the rule amendments exceeded federal and 

state statutory authority. Id.

The department sought review, which we allowed.

II. STANDARD OF REVIEW

We begin by focusing our attention on the standard 

of judicial review we should apply to determine whether the 

rule amendments are valid. As we will explain, the correctly 

identified standard of judicial review effectively determines 

the result in this case.

As noted, petitioner brought this action pursuant to 

ORS 183.400. That statute provides for a limited range of 

judicial review. The record before the court is quite limited:

“(3) Judicial review of a rule shall be limited to an 

examination of:

“(a) The rule under review;

“(b) The statutory provisions authorizing the rule; and

“(c) Copies of all documents necessary to demonstrate 

compliance with applicable rulemaking procedures.”

ORS 183.400(3). Furthermore, the court may hold the rule 

invalid only in limited circumstances:

“(4) The court shall declare the rule invalid only if it 

finds that the rule:

“(a) Violates constitutional provisions;

“(b) Exceeds the statutory authority of the agency; or

“(c) Was adopted without compliance with applicable 

rulemaking procedures.”

ORS 183.400(4).

Challenges to a rule’s validity under ORS 183.400 

are colloquially called “facial challenges,” see, e.g., Nay, 

267 Or App at 241, although that term is not used in the 

statute itself. Apparently because of that terminology, the 

department asserts that courts should review the validity of 

rules under essentially the standard of judicial review used 

to determine a facial challenge to the constitutionality of 
680 Nay v. Dept. of Human Services

a statute: that is, we should ask only whether there is any 

reasonably likely application of the rule that would comport 

with the statutes. See State v. Sutherland, 329 Or 359, 365, 

987 P2d 501 (1999) (“For a statute to be facially unconstitutional, it must be unconstitutional in all circumstances, i.e., 

there can be no reasonably likely circumstances in which 

application of the statute would pass constitutional muster.”). Here, the department asserts that the rules are valid 

if the department can “show that the interspousal transfer 

rules are capable of valid application.”

That is not the correct legal standard when an 

administrative rule is challenged, however. This court has 

explained that the standard for a facial challenge to the constitutionality of a statute is “foreign to the administrative 

law of this state” when the court is reviewing “what at bottom simply are challenges to the validity of an administrative rule.” See Friends of Columbia Gorge v. Columbia River 

(S055772), 346 Or 366, 375-76, 213 P3d 1164 (2009) (Court 

of Appeals had erred in concluding that a management plan 

should be reviewed under federal standard for determining the constitutionality of statute, which was whether the 

statute “cannot be applied consistently with the law under 

any circumstance” (internal quotation marks and citation 

omitted)). In fact, “this court, so far as we can determine, 

has never applied that standard to anything other than a 

constitutional challenge to a statute.” Id. at 376.

As this court had previously explained, the correct 

sequence and nature for analyzing a challenge under ORS 

183.400, is as follows:

“In the proper sequence of analyzing the legality of 

action taken by officials under delegated authority, the 

first question is whether the action fell within the reach 

of their authority, the question which in the case of courts 

is described as ‘jurisdiction.’ If that is not in issue, as it 

is not in this case, the question is whether the action was 

taken by procedures prescribed by statute or regulation. 

Assuming that proper procedures were followed, the next 

question is whether the substance of the action, though 

within the scope of the agency’s or official’s general authority, departed from a legal standard expressed or implied 

in the particular law being administered, or contravened 
Cite as 360 Or 668 (2016) 681

some other applicable statute. These steps are designed to 

assure that the challenged action, particularly an action 

challenged for arguably violating constitutional rights, in 

fact was authorized by the state’s or local government’s 

politically accountable policy makers.”

Planned Parenthood Assn. v. Dept. of Human Res., 297 Or 

562, 565, 687 P2d 785 (1984); see also Friends of Columbia 

Gorge, 346 Or at 376-77 (applying that standard).

We do not understand petitioner to challenge the 

department’s “jurisdiction” to promulgate a rule in this area 

generally, or to assert that the department failed to follow 

the required rulemaking procedures. See Nay, 267 Or App 

at 242 (noting that petitioner does not challenge department’s compliance with rulemaking procedures). Instead, 

the initial question is whether the rules “depart[] from a 

legal standard expressed or implied in the particular law 

being administered, or contravene[] some other applicable 

statute.” Planned Parenthood, 297 Or at 565; see State ex rel 

Engweiler v. Felton, 350 Or 592, 620, 260 P3d 448 (2011) 

(evaluating whether rules “depart from the legal standard 

expressed or implied in the enabling statutes” (internal quotation marks, alterations, and citation omitted)).

Planned Parenthood further explained that that 

standard required examining whether the rule “corresponds 

to the statutory policy.” 297 Or at 573.

“To the extent that the rule departs from the statutory policy directive, it ‘exceeds the statutory authority 

of the agency’ within the meaning of those words in ORS 

183.400(4)(b).”

Id. The court added that that understanding was the only 

way to give meaning to the statutory direction to consider 

whether the rule “[e]xceeds the statutory authority of the 

agency”:

“‘Authority’ in that section cannot be taken to mean only 

the overall area of an agency’s authority or ‘jurisdiction,’ 

because that construction would leave rules open to substantive review only for constitutional violations under 

ORS 183.400(4)(a). In effect, such an interpretation would 

expand every official’s rulemaking power on matters within 
682 Nay v. Dept. of Human Services

his general assignment to the limits of constitutional law, 

whatever the legislative policy of the statute might be.”

Id.

In Planned Parenthood, this court held the rule at 

issue invalid under ORS 183.400(4)(b). The legislature had 

provided by statute that the agency could promulgate rules 

for medical assistance, taking into account two variables: 

medical need and financial need. 297 Or at 572. The agency 

had promulgated a rule that provided that women over 18 

could be reimbursed for only one elective abortion, while 

women 17 and under could be reimbursed for two. Although 

the legislature had authorized the agency to promulgate 

rules regarding reimbursement, the court concluded that 

the rule at issue departed from the legislature’s statutory 

policy directive. The rule rigidly assumed that a second elective abortion was automatically not medically necessary if 

the woman was 18 or older, but that it was medically necessary if the woman was 17 or younger. Id. at 573. Those rigid 

and arbitrary limits did not correspond with the legislative 

directive:

“We find it difficult to relate these arbitrary numerical rules 

either to the variable of medical need or to the variable of 

financial need implicit in the legislative program. Nor do 

we see how they allow for consideration of ‘[t]he conditions 

existing in each case,’ as commanded by ORS 414.042(1)(d) 

[the relevant statute].”

Id.

In Leo v. Keisling, 327 Or 556, 964 P2d 1023 (1998), 

this court similarly held that a rule did not conform to the 

legislature’s statutory policy directive.4

 The legislature had 

directed the Secretary of State to promulgate rules regarding statistical sampling of initiative petition signatures in 

order to “‘verify’” that the initiative petition had enough 

signatures to qualify to be on the ballot. Id. at 563 (quoting ORS 250.105(4)). The sampling rule promulgated by the 

4 Leo did not involve a challenge under ORS 183.400; it was an “as applied” 

challenge. However, the court applied the Planned Parenthood standard to conclude that the rule was invalid. See 327 Or at 562-63 (citing Planned Parenthood

and focusing on “whether the substance of the action departed from a legal standard expressed or implied in the law being administered”).
Cite as 360 Or 668 (2016) 683

Secretary of State, however, allowed initiatives to appear 

on the ballot unless there was an 80 percent chance that 

the initiative had not met the signature requirements. Id. at 

565-66. This court found the rule to be inconsistent with the 

statutory policy:

“Th[e] policy [in the rule] cannot be reconciled with the policy in the statutory directive: ‘to verify’ that a petition contains the required number of signatures, i.e., six percent of 

the total number of votes cast for all candidates in the last 

gubernatorial election.”

Id. at 566.

In Friends of Columbia Gorge, this court also 

applied the Planned Parenthood standard to hold invalid 

part of a management plan. That case is somewhat more 

difficult to analyze, because it involved a commission created by interstate compact and governed by federal law. See

346 Or at 369-72, 384. Although this court concluded that 

the Planned Parenthood standard applied to the challenge 

to the management plan, id. at 376-77, the court also held 

that the commission, pursuant to federal law, was entitled 

to deference when it resolved ambiguities and filled gaps in 

the federal statutory scheme. See id. at 377-84. Even so, the 

court concluded that two provisions of the plan violated the 

federal act at issue. Id. at 399, 408. In the first case, the federal act “‘require[d]’” the management plan to insure that 

development occurred without causing adverse cumulative 

effects to natural resources. Id. at 393 (quoting relevant federal statutes). The management plan had made “some effort” 

to prevent certain types of development from having adverse 

cumulative effects on natural resources, but “those efforts 

are incomplete.” Id. at 398 (emphasis in original). Because 

the management plan “fails to require that [certain types of] 

development take place without causing adverse cumulative 

effects to natural resources,” those portions of the management plan were invalid. Id. at 398-99 (emphasis in original). 

The second set of plan provisions were similarly defective. 

See id. at 405-08 (concluding that provisions of management 

plan “do not appear to be directed toward requiring that 

commercial, residential, and mineral resource development 

not cause adverse cumulative effects to cultural resources” 

(emphasis in original)).
684 Nay v. Dept. of Human Services

We note that in Planned Parenthood and Leo, the 

issue was whether the rule’s means of implementing the 

legislature’s statutory directive is consistent with the statute, not whether the outcome in some cases might correspond with the outcome that the legislature had directed. 

In both of those cases, it presumably would have been “reasonably likely” that the rule would sometimes lead to the 

same results as the statute. In Planned Parenthood, some 

of the women who would have been reimbursed under the 

rule would also have been reimbursed under the statute. 

In Leo, some of the initiatives that would have been placed 

on the ballot under the rule would also have been placed 

on the ballot under the statute. In neither case, however, 

did this court suggest that an agency could defend a rule 

that led to outcomes that are not permitted by the statute, by arguing that the rule sometimes led to outcomes 

that are permitted by the statute. See Planned Parenthood, 

297 Or at 573 (explaining that review for authority under 

ORS 183.400(4)(b) does not allow agency to ignore legislative policy of statute). Thus, we reject the department’s 

suggested standard of review.

III. DISCUSSION

The department asserts that we should first examine whether the rules are valid under state law before considering whether they are valid under federal law. See State 

v. Sarich, 352 Or 601, 617, 291 P3d 647 (2012) (noting “this 

court’s usual methodology of considering issues of state law 

before issues of federal law”). We agree, and begin by examining whether the rules are valid under state law.

A. Legal Standards Established By Rule Amendments

We must first identify the legal standard established by the amended rules. As we will explain, the two 

amendments establish the same basic legal standard.

The first amended rule, OAR 461-135-0832, defines 

“estate.” Again, the version of the rule at issue provides in 

relevant part:

“(10) ‘Estate’ means:

“* ****
Cite as 360 Or 668 (2016) 685

“(b) With respect to the collection of payments made 

for public assistance provided on or after July 18, 1995:

“*****

“(B) For recipients who die on or after October 1, 

2008, all real property, personal property, or other assets, 

wherever located, in which a recipient had any legal title 

or ownership or beneficial interest at the time of death of 

the recipient, including real property, personal property, 

or other assets conveyed by the recipient to, subsequently 

acquired by, or traceable to, a person, including the recipient’s spouse and any successor-in-interest to the recipient’s 

spouse, through:

“*****

“(viii) Other similar arrangement, such as an interspousal transfer of assets, including one facilitated by 

a court order, which occurred no earlier than 60 months 

prior to the first date of request established from the recipient’s and the recipient’s spouse’s applications, or at any 

time thereafter, whether approved, withdrawn, or denied, 

for the public assistance programs referenced in OAR 

461-135-0835(2).”

OAR 461-135-0832(10)(b)(B)(viii).

The second amended rule is OAR 461-135-0835, 

which describes the department’s claim against the estate 

of a Medicaid recipient. Again, the text of that amended rule

provides:

“(e) For a recipient who died on or after October 1, 

2008:

“* ****

“(B) *** [T]he Department has a claim against the 

estate of the recipient’s spouse for public assistance paid 

to the recipient, but only to the extent that the recipient’s 

spouse received property or other assets from the recipient 

through any of the following:

“* ****

“(iii) An interspousal transfer, including one facilitated by a court order, which occurs:

“(I) Before, on, or after October 1, 2008; and
686 Nay v. Dept. of Human Services

“(II) No earlier than 60 months prior to the first date 

of request (see OAR 461-135-0832) established from the 

applications of the recipient and the recipient’s spouse, or 

at any time thereafter, whether approved, withdrawn, or 

denied, for the public assistance programs referenced in 

section (2) of this rule.”

OAR 461-135-0835(1)(e)(B)(iii).

The two amended rules thus establish the same 

fundamental legal standard for recovering payments to a 

Medicaid recipient from the estate of the recipient’s spouse. 

The department must show that (1) an asset was transferred 

from the Medicaid recipient to the spouse, and (2) the transfer occurred within five years before the Medicaid recipient 

first applied for benefits. If the department so demonstrates, 

then the department may recover from the spouse’s estate 

up to at least the value of the amount transferred by the 

Medicaid recipient.

Under ORS 411.060, the department has general 

authority to “adopt and enforce rules necessary to ensure 

full compliance with federal and state laws relating to public assistance programs and functions administered by the 

department.” The department does not, however, assert that 

that generalized grant of rulemaking authority alone justifies it in adopting these particular rules. Instead, the department contends that its authority for the amended rules comes 

from the broad manner in which ORS 416.350(6)(a) defines 

the term “estate.” As noted, ORS 416.350(2) allows recovery 

from the Medicaid recipient’s “estate,” while ORS 416.350(6)(a)

defines “estate” to include “all real and personal property 

and other assets in which the deceased individual had any 

legal title or interest at the time of death.” The department 

maintains that, as to any interspousal transfer—even those 

made up to five years before the person applied for Medicaid 

benefits—the Medicaid recipient retains a “legal title or 

interest at the time of death.” The department contends that 

the Medicaid recipient has such a title or interest at the time 

of death in at least one of four ways: by the presumption 

of equal contribution to and common ownership of marital 

assets in the event of a marital dissolution (ORS 107.105(1)(f));

by the right of a spouse to an elective share under probate 
Cite as 360 Or 668 (2016) 687

law (ORS 114.600 to 114.725); by the statutory ability to 

avoid transfers without adequate consideration under ORS 

416.350(2); or by the statutory authority to avoid transfers 

made with intent to hinder or prevent estate recovery under 

ORS 411.630(2).5

We turn to the sources of law identified by the 

department, and begin with the presumption of equal contribution and common ownership under Oregon marital dissolution law.

B. Marital Dissolution Law

As petitioner notes, Oregon is a separate property 

state, meaning that a spouse may hold property solely in his 

or her own name. See Or Const, Art XV, § 5. That separate 

property is not subject to the debts of the other spouse, ORS 

108.050 (specifically adding that that is also true of “real or 

personal property acquired by the spouse’s own labor during 

the marriage”), and a spouse generally has no interest in 

property owned by the other spouse, ORS 108.060 (subject 

to exception for family expenses and education of children).

The statutory provision relied on by the department 

relates to property division on a marital dissolution. It provides, in part:

“(1) Whenever the court renders a judgment of marital 

annulment, dissolution or separation, the court may provide in the judgment:

“*****

“(f) For the division or other disposition between the 

parties of the real or personal property, or both, of either or 

both of the parties as may be just and proper in all the circumstances. In determining the division of property under 

this paragraph, the following apply:

“*****

5 On review, the department does not challenge the Court of Appeals conclusion that “other similar arrangements,” in the definition of “estate,” is not, in and 

of itself, broad enough to reach the interspousal transfers at issue. See 267 Or 

App at 259-60 (indicating that “other similar arrangements,” in context, refers 

only to “property in which the Medicaid recipient held an interest at the time of 

death or that was transferred on account of the Medicaid recipient’s death,” while 

the rule amendments allow recovery of assets transferred before the Medicaid 

recipient’s death).
688 Nay v. Dept. of Human Services

“(B) The court shall consider the contribution of a 

party as a homemaker as a contribution to the acquisition 

of marital assets.

“(C) Except as provided in subparagraph (D) of this 

paragraph, there is a rebuttable presumption that both 

parties have contributed equally to the acquisition of property during the marriage, whether such property is jointly 

or separately held.

“* ****

“(E) Subsequent to the filing of a petition for annulment or dissolution of marriage or separation, the rights 

of the parties in the marital assets shall be considered a 

species of co-ownership, and a transfer of marital assets 

under a judgment of annulment or dissolution of marriage 

or of separation entered on or after October 4, 1977, shall 

be considered a partitioning of jointly owned property.”

ORS 107.105(1)(f).

ORS 107.105 addresses property divisions in marital dissolution cases. There are two different types of 

property involved. “Marital property” is all property held 

by either spouse, regardless of whether it is held jointly or 

separately and regardless of when it was obtained. “Marital 

assets,” by contrast, are a subset of marital property. They 

are the assets obtained during the marriage by either 

spouse. See Kunze and Kunze, 337 Or 122, 133, 92 P3d 

100 (2004) (describing both types of property). For marital assets, there is a rebuttable presumption that both parties contributed equally to the acquisition of those assets, 

and that homemaking constitutes a contribution. ORS 

107.105(1)(f)(B), (C).

In making the property division, the court may 

award any marital property. It is not limited to awarding 

marital assets. Thus, the court may award to one spouse an 

asset that the other spouse obtained prior to the marriage 

and has always held separately. The court may also award 

to one spouse a marital asset as to which the other spouse 

rebutted the presumption of equal contribution. See Kunze, 

337 Or at 135 (so noting). The ultimate question is whether 

the division is “just and proper in all the circumstances.” 

ORS 107.105(1)(f); see Kunze, 337 Or at 133 (to achieve just 
Cite as 360 Or 668 (2016) 689

and proper division, “the statute empowers the court to distribute any real or personal property that either or both of 

the parties hold at the time of dissolution, including property that the parties had brought into the marriage”).

If the court awards marital assets obtained during 

the marriage, but held in the name of a single spouse, then 

ORS 107.105(1)(f)(E) applies: The parties are considered to 

hold the asset in a “species of co-ownership,” and the transfer is considered a division of “ jointly owned property.” As 

this court explained in Engle and Engle, 293 Or 207, 646 

P2d 20 (1982), that text was added to the statute to prevent 

adverse tax consequences to a married couple. But for that 

amendment, if the court awarded one spouse an asset that 

had been held solely in the name of the other spouse—even 

if it was a marital asset and even if the other spouse was 

presumed to have contributed equally to its acquisition—the 

transfer might not be considered a transfer of jointly owned 

property, and the transferring spouse would be subject to 

tax liability. See id. at 209-10 (noting that Court of Appeals 

had so held in that case). In Engle, the court was unwilling 

to say anything more about the “species of co-ownership” 

than that it prevented adverse tax consequences on a property division. 293 Or at 219, 219 n 11.

To summarize: ORS 107.105 deals with the factors 

that a court considers in making a just and proper division 

of all property held by either spouse on dissolution of marriage. For property acquired during the marriage, there 

is a rebuttable presumption that both spouses contributed 

equally. If property acquired during the marriage is held 

in one spouse’s name and the presumption of equal contribution is not rebutted, and if the trial court awards that 

property to the other spouse, then the property is treated 

as being held in a species of co-ownership and the award is 

considered a division of jointly owned property. The species 

of co-ownership thus appears to be a way to give effect to the 

presumption of equal contribution by both spouses, recognizing the different kinds of contributions spouses may make to 

marital assets during a marriage. See Engle, 293 Or at 211 

n 4 (quoting legislative history indicating that amendment 

regarding species of co-ownership was merely to “clarify the 
690 Nay v. Dept. of Human Services

effect” of existing statutory provision presuming equal contribution of both spouses and directing that homemaking 

constituted a contribution). In short, the statutory provision 

relied upon by the state, ORS 107.105(1)(f)(E), addresses 

the consequences if the trial court should decide to make a 

particular property division. The statute does not otherwise 

appear to require the trial court to make any particular 

property division.

We do not, however, find it necessary to determine 

whether the presumption of equal contribution to the acquisition of marital assets creates a property interest within 

the meaning of ORS 416.350(6)(a). Even if the marital 

dissolution statute did create the sort of interest in property at death described by the definition of “estate” in ORS 

416.350(6)(a), that would not resolve the issue before us. To 

determine the validity of the rule amendments, we must 

compare the legal standards contained in Oregon’s marital 

dissolution statute with the legal standards found in the 

rule amendments.

In comparing the legal standards, we find major 

variations. The presumption of equal contribution on a marital dissolution applies only to assets obtained during the 

marriage (marital assets); the rule amendments at issue 

apply to all property, without regard to when that property was obtained, as long as the Medicaid recipient transferred it to the spouse. The marital dissolution presumption is only a presumption, and it can be rebutted; the rule 

amendments are absolute on their face. The marital dissolution presumption is simply a factor used by the courts to 

make a just and proper distribution of all marital property, 

whether separately or jointly owned; the rule amendments 

directly attach to a particular asset, apparently in a fixed 

amount. The rule amendments thus use broader criteria 

than the marital dissolution statute, and they would allow 

the department to make estate recovery in situations where 

ORS 107.105(1)(f)(E) would not. Accordingly, the legal standards found in the rule amendments depart from the statutory standards found in the marital dissolution statutes.6

6 Engle specifically left open whether the “species of co-ownership” provision 

would apply if the marital asset had been a gift to one spouse. See 293 Or at 

214. In 2011, the legislature amended ORS 107.105(1)(f) to specifically state that 
Cite as 360 Or 668 (2016) 691

C. Elective Share Under Probate Law

The department alternatively contends that the 

rule amendments are valid because Oregon probate law—

specifically, the statutes relating to the elective share—gives 

a Medicaid recipient a “legal title or interest at the time of 

death” in the property that the recipient had transferred to 

the spouse. We turn now to that contention.

The elective share statutes are found in ORS 114.600 

to 114.725. The elective share is a surviving spouse’s right to 

claim a share of what is called the “augmented estate.” ORS 

114.605(1). The amount of that share is a percentage of the 

augmented estate. ORS 114.605(2). The percentage is determined solely by the number of years that the parties were 

married, with the highest fractional share being 33 percent. 

Id. The augmented estate itself is all of the decedent’s probate and nonprobate assets (as defined), plus essentially all of 

the surviving spouse’s assets (called the “surviving spouse’s 

estate”). ORS 114.630 (defining augmented estate generally); 

see ORS 114.675 (defining surviving spouse’s estate). If the 

surviving spouse takes the elective share, the elective share 

is first decreased by the amount of the surviving spouse’s 

estate. ORS 114.700(1). Only if that calculation still leaves 

some portion of the elective share unpaid will the surviving 

spouse be paid from the decedent’s estate. ORS 114.700(2).7

property acquired by gift during the marriage, as long as it was always held 

separately, is not subject to the presumption of equal contribution. Or Laws 2011, 

ch 306, § 1 (adding new ORS 107.105(1)(f)(D)).

If one spouse transfers an asset to another, it is possible that that statutory 

amendment could terminate the presumption of equal contribution. We need not, 

and do not, decide that question here.

7 There are a number of other limitations on the elective share. One is 

obvious: Because the definition of “estate” requires us to consider the interest 

at the time of the Medicaid recipient’s death, the elective share requires us to 

assume counterfactually that, at that moment, the deceased Medicaid recipient is in fact alive to claim the elective share from his or her deceased spouse. 

See ORS 114.600(1) (requiring that the election must be made “before the death 

of the surviving spouse”). The elective share is subject to other limitations as 

well. E.g., ORS 114.610 (procedurally, election must be made within nine months 

after spouse’s death); ORS 114.620 (right to elective share may be waived); ORS 

114.725 (if couple was “living apart at the time of the decedent’s death, whether 

or not there was a judgment of legal separation,” surviving spouse may be denied 

elective share, or may be limited to an amount that is “reasonable and proper”). 

We do not discuss those limitations in detail here, because they are not necessary 

to a determination of the issue before us.
692 Nay v. Dept. of Human Services

Thus, to simplify: On the death of a person, that 

person’s spouse can seek an elective share. If the spouse 

takes an elective share, the value of all of the decedent’s 

assets and the spouse’s assets are added together. The 

spouse will get a fraction of that sum, based entirely on 

how many years the couple had been married. But that 

amount is not awarded directly from the decedent’s estate. 

Instead, the spouse’s elective share is first “paid out” with 

the spouse’s own assets. Only if that does not fully satisfy 

the elective share will the spouse receive money from the 

decedent’s estate.

We now compare those legal standards to the standards found in the amended rules. We again assume, for 

purposes of argument, that the elective share under probate law constitutes the sort of interest in property at death 

described by the definition of “estate” in ORS 416.350(6)(a). 

Even so, we find major differences in the legal standards. 

The elective share fraction depends entirely on the number of years of marriage; the rule amendments focus solely 

on the amount transferred during a particular period. The 

elective share considers the whole value of the augmented 

estate; the rule amendments ignore anything other than 

the transferred asset. In fact, the legal standards are so 

different that it is difficult to find any points of correspondence at all. One cannot say that the rule amendments 

would lead to the same estate recovery, even in the most 

rough way, as the elective share statutes. Furthermore, the 

amended rules would allow the department to make estate 

recovery in situations where the elective share would not. 

The legal standard in the rule amendments thus also 

depart from the statutory standards found in the elective 

share statutes.

D. Other Avoidable Transfers

Finally, the department asserts that the rule 

amendments are valid because the Medicaid recipient 

retains an interest at death as to assets that were transferred with inadequate consideration or with actual intent 

to hinder or prevent estate recovery, two statutes mentioned 

previously. We will assume for purposes of argument that 

both statutes create the sort of interest in property at death 
Cite as 360 Or 668 (2016) 693

described by the definition of “estate” in ORS 416.350(6)(a). 

We briefly consider each in turn.

1. Transfers Without Adequate Consideration

By law, transfers for inadequate consideration can 

be avoided under ORS 416.350(2), which provides, in part:

“Transfers of real or personal property by recipients of such 

aid without adequate consideration are voidable and may 

be set aside under ORS 411.620(2).”

The department contends that the rule amendments are 

valid under that statute.

Again, we find broad differences between the legal 

standards contained in that statute and the amended rules. 

As the department concedes, that statute does not apply 

to transfers made by someone before they either became a 

Medicaid recipient or at least applied for such aid, because 

the statute applies only to transfers made “by recipients 

of such aid.” The rule amendments, on the other hand, 

expressly apply to transfers made before someone applies 

for Medicaid—up to five years before that time. The statute 

makes voidable only those transfers made without adequate 

consideration. The rule amendments on their face apply 

without regard to the amount of consideration. Thus, the 

amended rules again would allow the department to recover 

in situations where the statute would not. The rule amendments depart from the statutory legal standard.

2. Transfers With Intent to Hinder or Prevent Estate 

Recovery

In addition, transfers that the Medicaid recipient 

made with the intent to hinder or prevent estate recovery 

are forbidden by ORS 411.630(2); that in turn permits them 

to be recovered under ORS 411.620. ORS 411.630(2) provides in part:

“A person may not transfer, conceal or dispose of any 

money or property with the intent:

“*****

“(b) Except as to a conveyance by the person to create a tenancy by the entirety, to hinder or prevent the 
694 Nay v. Dept. of Human Services

department or the authority from recovering any part of 

any claim it may have against the person or the estate of 

the person.”

Here again, the rule amendments create a very different legal standard from that found in the statute. The 

statute requires a showing that the transfer was made with 

a very specific and particular intent: to hinder or prevent the 

department from making estate recovery. The rule amendments require no showing of any intent as to the transfer; 

textually, an interspousal transfer made within the relevant time period is invalid without any need to consider the 

transferor’s intent. The rule amendments thus would allow 

the department to make estate recovery in circumstances 

where the statute would not.

E. Summary: Rules Are Invalid Under State Law

The legislature did not grant the department generalized authority to determine what transactions should 

be set aside. Instead, the legislature reserved that task to 

itself. It defined “estate” to include property interests that 

the Medicaid recipient held at the time of death. It also 

authorized the department to recover certain transfers—

transfers made without adequate consideration by a 

Medicaid recipient, and transfers made with intent to hinder or prevent estate recovery.

The rule amendments at issue here show no connection to those limitations. They do not refer to the sources of 

law that they supposedly effectuate (e.g., property division 

under marital dissolution law, elective share under probate 

law). They do not incorporate the limitations found in those 

sources of law (e.g., the presumption of equal contribution on 

marital dissolution is rebuttable; the amount of the elective 

share is limited by number of years of marriage). The rule 

amendments instead allow the department to recover transfers based on an unrelated set of legal criteria. Because the 

amended rules “departed from a legal standard expressed or 

implied in the particular law being administered,” Planned 

Parenthood, 297 Or at 565, the department exceeded its 

authority in adopting them, and they are invalid under ORS 

183.400(4)(b).
Cite as 360 Or 668 (2016) 695

F. Court of Appeals’ Consideration of Federal Law

The department nonetheless asks us to reverse the 

Court of Appeals insofar as it concluded that the rules are 

inconsistent with federal law. In the event that the rules are 

held invalid, the department intends to ask the legislature 

to amend the state statutes in a way that would allow it to 

recover such transfers; it believes that the decision of the 

Court of Appeals would preclude that.

In this particular case, we conclude that it is appropriate for us to vacate that part of the Court of Appeals’ 

opinion. Because we agree with petitioner that the amended 

rules are invalid under state law, they are simply invalid. It 

is unnecessary for us to decide whether, or to what extent, 

the rules might also be invalid under federal law.

IV. CONCLUSION

The department promulgated rule amendments 

that allow it to obtain estate recovery from transfers 

made to a spouse within the five years before a person 

applies for Medicaid. Our standard for judicial review is 

whether the department exceeded its statutory authority, 

ORS 183.400(4)(b), and more specifically whether the rule 

amendments depart from a legal standard expressed or 

implied in the particular law being administered, Planned 

Parenthood, 297 Or at 565. Because “estate” is defined to 

include any property interest that a Medicaid recipient 

held at the time of death, the department asserted that 

the Medicaid recipient had a property interest that would 

reach those transfers. In doing so, it relied on four sources: 

the presumption of common ownership in a marital dissolution, the right of a spouse to claim an elective share under 

probate law, the ability to avoid a transfer made without 

adequate consideration, and the ability to avoid a transfer 

made with intent to hinder or prevent estate recovery. In 

all instances, the rule amendments departed from the legal 

standards expressed or implied in those sources of law. 

Accordingly, the rule amendments exceeded the department’s statutory authority under ORS 183.400(4)(b). The 

Court of Appeals correctly held the rule amendments to be 

invalid.
696 Nay v. Dept. of Human Services

The decision of the Court of Appeals is affirmed in 

part and vacated in part. The rule amendments to OAR 

461-135-0832(10)(b)(B)(viii) (2010) and OAR 461-135-0835

(1)(e)(B)(iii) (2010) are held invalid.