Court Opinion

ID: 4108056
Source: CourtListenerOpinion
Date Created: 2016-12-16 19:10:46.357299+00
Date Added: 2024-06-11T14:15:14.461787
License: Public Domain

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 deci-
sion 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 inter-
est 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 peti-
tioner 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 owner-
ship in marital dissolution; (3) rule amendments departed from legal standards
expressed in laws regarding right of spouse to claim elective share under pro-
bate 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 admin-
istrative 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 recov-
ery 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 ver-
sion 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 amend-
ments should be evaluated against the versions of the stat-
utes 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 amend-
ments 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 assis-
    tance correctly paid under a State plan
    	 “(1)  No adjustment or recovery of any medical assis-
    tance 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 subsec-
    tion (a)(1)(B) of this section, the State shall seek adjust-
    ment 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 indi-
   vidual through joint tenancy, tenancy in common, survi-
   vorship, life estate, living trust, or other arrangement.”
42 USC § 1396p(b)(4).
	       The permissive definition of “estate” in subpara-
graph (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) (add-
ing additional conditions).
Cite as 360 Or 668 (2016)	673

       3.  State Statutes
	       Oregon statutes generally parallel the federal provi-
sions. 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 indi-
   vidual through joint tenancy, tenancy in common, survivor-
   ship, 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 inter-
est 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 assis-
    tance obtained as a result of the violation, with interest,
    together with costs and disbursements incurred in recover-
    ing the public assistance or medical assistance.”
	        As relevant here, the legislature has specified that
two different classes of transfer may be avoided for pur-
poses of estate recovery. The first class consists of trans-
fers 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 con-
sidered 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 depart-
    ment 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 trans-
fer 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 them-
selves 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 recipi-
    ent’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 appli-
cable 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 inter-
    spousal 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 recip-
    ient’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 facili-
   tated 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 trans-
ferred 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 depart-
ment’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, sur-
vivorship, life estate, living trust or other similar arrange-
ment.” 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 arrange-
ment” rather than “other similar arrangement.” The depart-
ment 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, ten-
ancy in common, survivorship, life estate, [and] living trust,”
42 USC § 1396p(b)(4)(B); ORS 416.350(6)(a). All those exam-
ples still involved only interests that the Medicaid recipient
held at the time of death, but that were transferred by oper-
ation 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 unconstitu-
tional, 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 mus-
ter.”). 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 con-
stitutionality of a statute is “foreign to the administrative
law of this state” when the court is reviewing “what at bot-
tom simply are challenges to the validity of an administra-
tive 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 determin-
ing 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 author-
   ity, 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 depart-
ment’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 quo-
tation 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 statu-
   tory 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 sub-
   stantive 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 elec-
tive abortion was automatically not medically necessary if
the woman was 18 or older, but that it was medically neces-
sary 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 regard-
ing 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 (quot-
ing 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 con-
clude 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 stan-
dard 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 pol-
   icy in the statutory directive: ‘to verify’ that a petition con-
   tains 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 cre-
ated 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 fed-
eral act “ ‘require[d]’ ” the management plan to insure that
development occurred without causing adverse cumulative
effects to natural resources. Id. at 393 (quoting relevant fed-
eral 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 manage-
ment 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 stat-
ute, not whether the outcome in some cases might corre-
spond with the outcome that the legislature had directed.
In both of those cases, it presumably would have been “rea-
sonably 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 stat-
ute, 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 legis-
lative policy of statute). Thus, we reject the department’s
suggested standard of review.
                      III. DISCUSSION
	        The department asserts that we should first exam-
ine whether the rules are valid under state law before con-
sidering 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 exam-
ining whether the rules are valid under state law.
A.  Legal Standards Established By Rule Amendments
	       We must first identify the legal standard estab-
lished 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 recipi-
   ent’s spouse and any successor-in-interest to the recipient’s
   spouse, through:
   	   “* * * * *
   	 “(viii)  Other similar arrangement, such as an inter-
   spousal 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 recip-
   ient’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 facili-
   tated 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 trans-
fer 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 pub-
lic assistance programs and functions administered by the
department.” The department does not, however, assert that
that generalized grant of rulemaking authority alone justi-
fies it in adopting these particular rules. Instead, the depart-
ment 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 con-
tribution and common ownership under Oregon marital dis-
solution 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 pro-
vides, in part:
    	 “(1)  Whenever the court renders a judgment of marital
    annulment, dissolution or separation, the court may pro-
    vide 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 cir-
    cumstances. In determining the division of property under
    this paragraph, the following apply:
    	   “* * * * *

	5
        On review, the department does not challenge the Court of Appeals conclu-
sion 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 prop-
   erty during the marriage, whether such property is jointly
   or separately held.
   	   “* * * * *
   	 “(E)  Subsequent to the filing of a petition for annul-
   ment 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 mar-
ital 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 mari-
tal assets, there is a rebuttable presumption that both par-
ties 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 dis-
tribute any real or personal property that either or both of
the parties hold at the time of dissolution, including prop-
erty 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 trans-
fer 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 prop-
erty 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 mar-
riage. 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 contri-
bution 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, recogniz-
ing 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 con-
tribution 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 acqui-
sition 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 prop-
erty 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 mar-
ital 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 prop-
erty was obtained, as long as the Medicaid recipient trans-
ferred it to the spouse. The marital dissolution presump-
tion is only a presumption, and it can be rebutted; the rule
amendments are absolute on their face. The marital disso-
lution 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 stan-
dards found in the rule amendments depart from the statu-
tory 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 deter-
mined 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 pro-
bate 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 recipi-
ent 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 stan-
dards found in the amended rules. We again assume, for
purposes of argument, that the elective share under pro-
bate 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 num-
ber 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 correspon-
dence 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 trans-
ferred 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 amend-
ments 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) pro-
vides 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 cre-
   ate 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 dif-
ferent 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 amend-
ments require no showing of any intent as to the transfer;
textually, an interspousal transfer made within the rele-
vant 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 gen-
eralized 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 hin-
der or prevent estate recovery.
	        The rule amendments at issue here show no connec-
tion 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 trans-
fers 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 appro-
priate 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 dissolu-
tion, 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 depart-
ment’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.