Court Opinion

ID: 4096437
Source: CourtListenerOpinion
Date Created: 2016-11-08 17:02:39.774497+00
Date Added: 2024-06-11T07:45:31.485025
License: Public Domain

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
                               FILED 11-8-2016

            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

                                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.

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                         MCGOVERN v. AHCCCS
                          Opinion of the Court

¶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.

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                          MCGOVERN v. AHCCCS
                           Opinion of the Court

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

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                         MCGOVERN v. AHCCCS
                          Opinion of the Court

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.

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                          MCGOVERN v. AHCCCS
                           Opinion of the Court

(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.

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                         MCGOVERN v. AHCCCS
                          Opinion of the Court

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 court-
appointed 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).

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                         MCGOVERN v. AHCCCS
                          Opinion of the Court

(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.

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                        MCGOVERN v. AHCCCS
                         Opinion of the Court

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

                          AMY M. WOOD • Clerk of the Court
                          FILED: AA

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