Court Opinion

ID: 9469874
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:51:05.105473+00
Date Added: 2024-06-11T17:41:36.505930
License: Public Domain

DECKER, Senior District Judge,
dissenting.
In this action, appellants are primarily challenging two aspects of the Indiana transfer of assets rule, described in the majority’s opinion, which appellants claim violate the requirements of the Boren-Long Amendment, Pub.L. 96-611, 94 Stat. 3567 (Dec. 28, 1980). The parts of the Indiana regulation under attack here include (1) the five-year “reach-back” provision, which determines the particular transfers that may be considered for the purposes of applying the transfer of assets rule, and (2) the formula for determining the period of ineligibility after a transfer for inadequate consideration is discovered. The majority concludes that both of those aspects of the Indiana rule comply with the requirements of federal law. Because I am unable to agree with that conclusion, I dissent.
Section 5(b) of the Boren-Long Amendment, adding to 42 U.S.C. § 1396a, allows a state to deny Medicaid payments to an individual who would not otherwise have been eligible for such benefits if he had not “disposed of resources for less than fair market value.” If a state chooses to so deny benefits, it may develop a procedure that “is not more restrictive than the procedure specified in section 1613(c) of [the Social Security] Act.” Section 1613(c), 42 U.S.C. § 1382b(c), was added by Section 5(a) of the Boren-Long Amendment. It provides that assets owned by an otherwise eligible individual “within the preceding 24 months if such individual ... gave away or sold such [assets] at less than fair market value” may be considered for the purpose of determining eligibility for benefits.
In its opinion, the majority suggests that the Indiana five-year reach-back regulation “seems inconsistent” when compared with the two-year Boren-Long provision. Supra at 1215. I would go beyond “seems inconsistent.” If the requirements of the BorenLong Amendment apply to Indiana’s transfer of assets rule, it is clear that Indiana’s five-year reach-back conflicts with the federal law and, therefore, is invalid. Two district courts which have considered this *1218issue in reviewing other states’ transfer of assets rules have had no difficulty in reaching that conclusion. See Dokos v. Miller, 517 F.Supp. 1039, 1045 n.8 (N.D.Ill.1981); Beltran v. Myers, 4 Medicare & Medicaid Guide (CCH) ¶ 31,465 (C.D.Cal. July 30, 1981), aff’d, 677 F.2d 1317 (9th Cir. 1982).
Appellees argue that the Boren-Long limitations do not apply to Indiana. Appellees’ argument relies on Indiana’s special position in the Medicaid program as a “Section 209(b)” state. Section 209(b), 42 U.S.C. § 1396a(f), provides that states which so choose may limit their Medicaid coverage to those individuals who would have been eligible under the state plan that was in effect on January 1, 1972. Section 209(b) was enacted when Congress otherwise widely expanded Medicaid eligibility in 1972. The Medicaid plan in effect in Indiana on January 1, 1972, included a transfer of assets rule which had a five-year reach-back provision. Appellees argue that that provision is protected by Section 209(b) from Congressional change.
The majority accepts appellees’ argument. Given that the Boren-Long Amendment was added to Pub.L. 96-611 on the floor of Congress, its legislative history is understandably sparse. Nonetheless, relying on its assumption that Congress did not intend to broaden Medicaid eligibility in states like Indiana, which have restrictive transfer of assets rules, the majority concludes that the Boren-Long Amendment does not apply to Section 209(b) states in general, and to Indiana in particular. I am unable to accept such result oriented reasoning.
It is a truism that in construing a statute, the court should first consider the words of the statute itself. The first phrase of 42 U.S.C. § 1396a(j)(l), as added by BorenLong, provides that it applies “[njotwithstanding any other provision of this title.” Given that Section 209(b) is in the relevant title, the quoted language, on its face, evidences Congressional intent to apply the Boren-Long Amendment to all states — Section 209(b) states included. The majority dismisses the impact of the opening phrase, by claiming that it merely applies to the first sentence of Section 1396a(j)(l) and “mean[s] that notwithstanding any statutory provision that might appear to entitle an applicant to Medicaid benefits, he may be denied them if he transferred assets at less than their fair market value.” Supra at 1215. The difficulty with that reasoning is that the opening phrase then becomes wholly redundant; the rest of the sentence clearly provides that people who would be eligible under other Medicaid provisions may lose that eligibility by improperly transferring assets.
Given the clarity of the Boren-Long language, it is not strictly necessary to go on and consider the other sources, scarce as they are in this case, for divining Congressional intent. In order to fully address the majority’s arguments, however, I would note that whatever the history of the Boren-Long Amendment, it does not support the majority’s position.
The majority’s analysis is based on its assumption that applying the Boren-Long Amendment’s two-year reach-back provision to Indiana would expand Indiana’s Medicaid coverage beyond what it was before Boren-Long was passed. That conclusion fails to take into account the legal situation facing Congress at the time it passed Boren-Long, which furnishes a more plausible explanation for the legislation.
Shortly ' before the passage of BorenLong, several state transfer of assets rules had been overturned by the courts as contravening the earlier federal requirement that only “actually available resources be considered for eligibility purposes.” Dokos, supra, 517 F.Supp. at 1044 (emphasis in original). See Caldwell v. Blum, 621 F.2d 491 (2d Cir. 1980), cert. denied, 452 U.S. 909, 101 S.Ct. 3039, 69 L.Ed.2d 412 (1981); Fabula v. Buck, 598 F.2d 869 (4th Cir. 1979); Udina v. Walsh, 440 F.Supp. 1151 (E.D.Mo.1977); Buckner v. Maher, 424 F.Supp. 366 (D.Conn.1976), aff’d, 434 U.S. 898, 98 S.Ct. 290, 54 L.Ed.2d 184 (1977); Owens v. Roberts, 377 F.Supp. 45 (M.D.Fla.1974). But see Dawson v. Myers, 622 F.2d 1304 (9th Cir. 1980), vacated sub nom. Beltran v. *1219Myers, 451 U.S. 625, 101 S.Ct. 1961, 68 L.Ed.2d 495 (1981). Therefore, when Congress passed a national transfer of assets rule by enacting Boren-Long, it did so at a time when there was a very strong possibility that soon there would be no such rules, on either the state or federal level. It was merely an accident of history that the standards adopted by Congress were less strict than the potentially invalid standards then in effect in Indiana. Applying Boren-Long to Indiana would not require a finding by this court that Congress actually intended to relax the Medicaid eligibility standards in Indiana or elsewhere.
Nor does the language from Senator Long’s statement on the floor of Congress support the majority’s interpretation. Senator Long said,
“Under this provision, an individual applying for SSI benefits would have to continue to count as his own any belongings which he had given away within the 2 prior years. In the case of medicaid eligibility, the amendment makes explicit the intent of the earlier Senate provision to grant the States more flexibility. The amendment would permit the States to establish disposal of asset disqualification rules for medicaid purposes which differ in detail from the SSI rule.”
126 Cong.Rec. S16505-06 (1980). It is clear that the flexibility given to the states involved the authority, given to them explicitly, to provide for varying terms of disqualification after an improper transfer was discovered. See 42 U.S.C. § 1396a(j)(2). Senator Long reinforces that conclusion by stating further,
“Generally, State rules could not be more restrictive than the Federal SSI rule except that the period of disqualification could be longer than 24 months in cases where a very large disposal of assets— more than $12,000 — is involved.”
Id. at S16506. Nowhere in his comments does Senator Long suggest that the states would have the flexibility to lengthen the federally mandated two-year reach-back provision. Because I believe that the states do not have that flexibility, and because I believe that the clear language of the Boren-Long Amendment indicates that it should apply to all states, I would reverse that portion of the district court decision upholding Indiana’s five-year reach-back provision.
The second element of the Indiana rule that is being attacked in this suit as being inconsistent with federal law involves the method by which Indiana has chosen to calculate the period of ineligibility after an improper transfer involving more than $12,-000 is discovered. Essentially, the controversy boils down to whether Indiana may exclude consideration of normal living expenses in determining the period of ineligibility. As the rule is now written, Indiana only allows persons to “spend down” their excess assets, as determined by the transfer of assets rule, by spending the money on medical expenses. As the majority notes, the effect of the Indiana rule is to extend the period of ineligibility for people who transfer assets for inadequate consideration beyond the time that the applicant would have been ineligible had he held onto the asset in question and used it to meet normal living expenses. The majority concludes that such a punitive action on the part of Indiana is proper under Boren-Long, which requires that the period of ineligibility “bear a reasonable relationship to [the] uncompensated value” of the disposed assets. 42 U.S.C. § 1396a(j)(2). Again, I cannot agree.
It is true that the key phrase “reasonable relationship” is nowhere defined in BorenLong. However, the states are not given carte blanche to determine what is reasonable. It is my opinion that the options of the states are limited by the language in 42 U.S.C. § 1382b(c)(l) which provides:
“In determining the resources of an individual ... there shall be included . .. any resource . . . owned by such individual ... within the preceding 24 months if such individual . . . gave away or sold such resources ... at less than fair market value ...”
In my view, that language states Congress’ unmistakable intent to treat transferred as*1220sets in the same manner as assets that were retained. I can find no support for the differential treatment given under the Indiana rule.
The majority suggests that that conclusion reads Section 1396a(j)(2) out of BorenLong. My own analysis differs. If the amount of the uncompensated value of the disposed assets is large, the state may prescribe a period of ineligibility to correspond in a reasonable way to the time that it would otherwise have taken the applicant to spend the resources represented by the asset. If the uncompensated value is so small that the applicant would have been eligible for benefits even if he had retained the asset, I do not believe that he should be denied benefits because of the transfer. Though that case is apparently not before us, I would hold such a state regulation per se unreasonable.
Finally, there is no indication in any legislative history that Congress intended to punish asset transferors in the manner that Indiana has done. It is important to note that the transfer of assets rule is not strictly limited to “fraudulent” transfers, but rather, any uncompensated transfer is presumed fraudulent unless the applicant presents convincing evidence to prove' otherwise. 42 U.S.C. § 1382b(c)(2). Further, if the transfer was truly fraudulent and made for the purpose of improperly receiving benefits, Congress has already provided sanctions under 42 U.S.C. § 1396L The states should not be allowed to add to the sanctions mandated by Congress. I would reverse the district court opinion on this point as well.