Opinion ID: 2101834
Heading Depth: 1
Heading Rank: 2

Heading: State Law Question

Text: Indiana's resource spend-down provision in effect in 1972 provides in part: (c) Possession of intangible personal property with an available liquid cash value in excess of the standard resource allowance shall render an applicant ineligible for assistance, and utilization of some of the resources down to the amount of the standard resource allowance is necessary before the applicant can be found eligible. (d) Possession of intangible personal property with an available cash value which has increased to be in excess of the standard resource allowance shall not make a recipient ineligible for assistance providing the recipient is willing to make the necessary adjustments and taken immediate steps to do so. Burns' Ind. Admin. Rules and Regulations, Rule (52-1206)-2 (Supp. 1975) (the 1972 Rule). The Department argues that Indiana's 1972 spend-down provision is ambiguous and thus should be subject to administrative rather than judicial interpretation unless plainly erroneous or inconsistent with the rule itself. The Department urges that the trial court's de novo review of Indiana's Medicaid provisions effective on January 1, 1972, was improper because the issue is one of fact rather than law. The Department further argues that the 1972 Rule's language utilization of some of the resources down to the limit of the standard resource allowance was too broadly construed by the Court of Appeals. The Department contends that a state Medicaid regulation issued in 1984, in effect in 1988 at the time of Payne's application for assistance, limits the interpretation of the 1972 Rule. This regulation states in pertinent part: (a) An applicant or recipient is ineligible for medical assistance for any month in which the total equity value of all non-exempt resources exceeds the applicable limitation, set forth below, on the first day of the month: (1) $1,500 for the applicant or recipient, including the amount determined in (b) below, if applicable; or (2) $2,250 for the applicant or recipient and his spouse. Ind. Admin. Code tit. 470, r. 9.1-3-17 (1988) (the 1988 Rule) (current version at Ind. Admin. Code tit. 405, r. 2-3-15 (1992)). Specifically, the Department argues that the Court of Appeals improperly interpreted utilization of some of the resources down to the limit of the standard resource allowance to permit the application of incurred medical expenses as an offset to excess resources. The Department, applying the 1988 rule, posits that the term utilization means liquidating resources and actually making payment toward medical expenses to reduce resources to the maximum eligibility level by the first day of the month in order to qualify for Medicaid assistance for that month. The Department urges that under this interpretation, Payne, who did not liquidate resources or actually pay toward medical expenses by the first day of the months at issue, is therefore ineligible for Medicaid assistance for those months. Payne responds that resource spend-down was permitted under the 1972 Rule, and that, as a result, the Department may not now, through application of the 1988 Rule, disallow resource spend-down because such a prohibition, under Section 209(b), would be impermissibly more restrictive of his Medicaid eligibility than Indiana's 1972 provisions. Accordingly, he urges that he should be allowed to apply his incurred but unpaid medical expenses as an offset to his resources in determining his eligibility for Medicaid assistance. Payne in effect calculates that each dollar of his resources above the standard allowance should be figuratively erased by applying a corresponding dollar from his medical expenses (reducing his otherwise eligible medical expenses by a like amount) until his resources diminish to the resource limitation level. Payne contends that the trial court's judgment on this issue in his favor was properly entered as a matter of law. A determination of the status of Indiana legislation in 1972 is a question of law, one properly subject to de novo analysis upon judicial review. Stockton v. Department of Pub. Welfare (1988), Ind. App., 533 N.E.2d 148, 151. Moreover, while a reviewing court owes some deference to an administrative agency's conclusions of fact, no such deference need be accorded an agency determination of a matter of law. Board of Trustees of Pub. Employees' Retirement Fund of Ind. v. Miller (1988), Ind., 519 N.E.2d 732, 733. Resolution of the state law question requires that we first interpret the 1972 Rule. In interpreting an administrative regulation, the rules applicable to construction of a statute apply to construction of the regulation. Empire Gas of Rochester, Inc. v. State (1985), Ind. App., 486 N.E.2d 1036, 1044; Indiana State Dep't of Welfare, Medicaid Div. v. Stagner (1980), Ind. App., 410 N.E.2d 1348, 1352. Therefore, just as a statute susceptible to more than one interpretation is ambiguous and open to construction, P.B. v. T.D. (1990), Ind., 561 N.E.2d 749, 750, an administrative regulation subject to multiple interpretations is likewise ambiguous and open to construction. The language of the 1972 Rule pertaining to utilization of some of the resources down to the amount of the resource allowance is ambiguous, thus warranting our construction. The 1972 Rule establishes that possession of intangible personal property in excess of the standard resource allowance renders a Medicaid applicant ineligible for assistance. However, the rule also provides that utilization of some of the resources down to the amount of the standard resource allowance is necessary before the applicant can be found eligible. Burns' Ind. Admin. Rules and Regulations, Rule (52-1206)-2(c) (Supp. 1975). We find that this regulation permits a Medicaid applicant, under circumstances discussed infra, to spend down resources exceeding Indiana's standard resource allowance to establish eligibility for Medicaid assistance. This provision essentially affords an applicant, ineligible because of excess resources, a potential means to cure the disqualification which otherwise would preclude the availability of Medicaid assistance. There is nothing in the language of the 1972 Rule which either by express terms or unmistakable implication constrains us to interpret utilization of some of the resources down to the amount of the standard resource allowance as requiring a Medicaid applicant to liquidate resources and make a payment toward medical expenses before Medicaid eligibility can be established. We agree with the Court of Appeals that an applicant's failure to liquidate resources and make medical payments does not suggest that an applicant would be denied medical assistance for the month requested and that the applicant would have to reapply after the excess resources were spent down... . Payne, 592 N.E.2d at 722. Moreover, we note that, prior to the administrative hearing, the Department, when requested to admit that the resource spend-down provision had been a part of the state's Medicaid program as of January 1, 1972, did not deny this request but merely produced copies of applicable regulations in effect in 1972. We also observe that the Department's Medicaid Manual, in effect until its 1984 appeal, recognized resource spend-down. Ind. Admin. Code tit. 470, r. 9-3-2(22.2), 9-4-3(12) (1979). We next address the Department's contention that the 1988 Rule limits construction of the 1972 Rule by requiring a Medicaid applicant to meet the standard resource allowance. In construing a statutory provision, a statute must be considered as a whole, each part examined not in isolation but with reference to all the other companion provisions. Hinshaw v. Board of Comm'rs of Jay County (1993), Ind., 611 N.E.2d 637, 639; Walgreen Co. v. Gross Income Tax Div. (1947), 225 Ind. 418, 421, 75 N.E.2d 784, 785. This Court will construe an individual provision so as to harmonize it with other sections of the enactment. Hinshaw, 611 N.E.2d at 639; Indiana Dep't of State Revenue v. Indianapolis Pub. Transp. Corp. (1990), Ind., 550 N.E.2d 1277, 1278. While state participation in Medicaid is voluntary, a state choosing to participate must nevertheless conform to the relevant provisions of federal legislation pursuant to the Social Security Act. Harris v. McRae (1980), 448 U.S. 297, 301, 100 S.Ct. 2671, 2679, 65 L.Ed.2d 784, 794. See also Schweiker v. Gray Panthers (1981), 453 U.S. 34, 101 S.Ct. 2633, 69 L.Ed.2d 460. A legislative enactment of the U.S. Congress and a state administrative regulation are not fellow components of one provision. Yet, in the present case, because the enabling legislation of the Social Security Act, the Congressional mandate of Section 209(b), and Indiana's 1972 Rule are concurrently applicable, the 1972 Rule must be read in conjunction with and as subject to Section 209(b) provisions. Section 209(b) requires that a state opting to participate in the Medicaid program under its provisions may not establish Medicaid eligibility more restrictively than the state's eligibility requirements in effect on January 1, 1972. Applying the 1988 Rule's liquidation and payment limitation to the 1972 Rule to determine Medicaid eligibility in Indiana is plainly more restrictive than applying only the 1972 eligibility requirements. As such, because it fails to conform to the relevant, explicit provisions of Section 209(b), the 1988 Rule may not properly be applied to construe the 1972 Rule. Therefore, because Indiana's Medicaid program in effect in 1972 potentially could have allowed Payne to utilize incurred medical expenses as an offset against his excess resources to establish Medicaid eligibility, the Department's 1988 Rule absolutely precluding his eligibility for Medicaid assistance for any month when the total value of his non-exempt resources exceeded the standard resource allowance is impermissibly more restrictive under Section 209(b) than the 1972 Rule. Unless otherwise ineligible for Medicaid assistance, Payne is entitled to spend down his resources to establish his Medicaid eligibility for the months of July through November of 1988. [5]