Opinion ID: 2101834
Heading Depth: 1
Heading Rank: 3

Heading: Federal Law Question

Text: The Department contends that a state's Medicaid plan must comply with all requirements established by the U.S. Congress and is subject to approval by the Secretary of Health and Human Services. The Department correctly points out that failure to substantially conform to such requirements could result in a Secretary of Health and Human Services determination that the federal government's contribution to the state's Medicaid administration costs as well as payments to providers of medical assistance be limited or withheld. The Department directs our attention to Roloff v. Sullivan (7th Cir.1992), 975 F.2d 333, a decision rendered shortly after the Court of Appeals published its opinion on rehearing in Payne, 598 N.E.2d 608. In Roloff, plaintiffs raised concerns about Indiana's determination of Medicaid eligibility with respect to an applicant's resources. Urging Roloff as authority, the Department argues that Section 209(b) operates merely as a limited exception within the controlling threshold SSI eligibility requirements rather than providing a state not adopting the SSI guidelines an alternative, independent basis for establishing Medicaid eligibility. The Department asserts that Roloff correctly recognizes that the Section 209(b) exemption from SSI eligibility requirements confers Medicaid eligibility only when an applicant meets both the current SSI requirements and the Medicaid requirements under the state's January 1, 1972 regulations. In addition, the Department contends that to permit the 1972 Rule, in combination with Section 209(b), to override primary SSI eligibility requirements would be to inappropriately expand the availability of Medicaid benefits, resulting in additional costs that would become unduly burdensome to the State. The Department further argues that Indiana courts are bound by the federal courts' interpretation of federal legislation, and that to enter a finding inconsistent with Roloff would signal Indiana's unwillingness to observe intersovereign deference. Payne counters, in effect, that Section 209(b) is more than a mere Medicaid administrative exception within the threshold eligibility framework of SSI. Referring to our Court of Appeals' decision on rehearing in Payne, at 598 N.E.2d 608, he observes that the Second District properly considered 42 U.S.C. § 1396a(r)(2) [6] , construing this retroactive measure enacted in 1988 to permit Section 209(b) states to implement more liberal income and resource methodologies than those used by SSI states. Payne also criticizes the Department's reliance upon Roloff, asserting that the Seventh Circuit was notably cautious in its analysis and that decisions of lower federal courts are not binding upon or, in the present case, persuasive authority for state courts. He further points to other jurisdictions where resource spend-down has been permitted and suggests that adoption of the rationale in Roloff would subject needy applicants to tedious parsing of complex SSI regulations. Although U.S. Supreme Court decisions pertaining to federal questions are binding on state courts, lower federal court decisions may be persuasive but have nonbinding authority on state courts. Pennsylvania R.R. Co. v. F.E. Mathias Lumber Co. (1943), 113 Ind. App. 133, 136, 47 N.E.2d 158, 159. Decisions of the Seventh Circuit are entitled to our respectful consideration; yet, any holding consistent with Roloff is the product of substantive agreement on the merits rather than perfunctory deference to the Seventh Circuit. We endorse the Seventh Circuit's conclusion in Roloff that SSI eligibility is a threshold requirement to participation in Indiana's Medicaid program. Roloff, 975 F.2d at 340-41. In Section 209(b) states such as Indiana, after an applicant has met this threshold eligibility requirement, the inquiry then focuses upon whether the applicant would have been entitled to benefits under Medicaid regulations existent on January 1, 1972. Id.; Savage v. Toan (8th Cir.1986), 795 F.2d 643; Morris v. Morrow (4th Cir.1986), 783 F.2d 454. Thus, once an applicant has demonstrated SSI eligibility, he is then entitled to utilize Indiana's resource spend-down provision to, in turn, meet Indiana's standard resource allowance which is more restrictive than its federal counterpart. As noted by our Court of Appeals, 42 U.S.C. § 1396a(r)(2) does permit Section 209(b) states to use more liberal methodologies in determining income and resource standards than those used by SSI states in evaluating Medicaid eligibility. Payne, 598 N.E.2d 608. Required resource spend-down is one such more liberal methodology which may be employed by Indiana since SSI permits but does not require resource spend-down. Roloff, 975 F.2d at 342. However, we conclude that Indiana did not intend to extend Medicaid eligibility to those who would not even qualify for benefits under SSI's more liberal requirements, because it did not endorse the more restrictive eligibility requirements by opting for participation in Medicaid under Section 209(b). Thus, the resource spend-down component of eligibility employed by Indiana in 1972 applies only after SSI eligibility requirements have been met. To hold otherwise would be to ignore the apparent intent manifested by Indiana's choice to participate in Medicaid as a Section 209(b) state. We agree with the Court of Appeals' initial opinion, before rehearing, that in 1972 Indiana permitted a spend-down of excess resources to meet Medicaid eligibility and that this provision is potentially available to Payne in the present case. However, in accord with the Seventh Circuit opinion in Roloff, we vacate the Court of Appeals opinion on rehearing and instead find that meeting Supplemental Security Income eligibility requirements is a prerequisite for utilization of resource spend-down. We direct the trial court to remand this cause to the Department of Public Welfare for further determinations consistent with this opinion. In all other respects we affirm the judgment of our Court of Appeals pursuant to Ind. Appellate Rule 11(B)(3). SHEPARD, C.J., and DeBRULER, GIVAN and KRAHULIK, JJ., concur.