ORDERS:
ORDER
STATEMENT
OF THE CASE
The
above-captioned matter is before the Administrative Law Court (“ALC” or “Court”)
as an appeal pursuant to S.C. Code Ann. §§ 44-6-190 (2002) and 1-23-600(D) and
(E) (as amended 2008). Allen Corbett (“Appellant”
or “Corbett”) challenges the final administrative decision (the “Decision”) by the
South Carolina Department of Health and Human Services (“HHS” or “Department”).
In
its Decision, the Department determined that certain expenditures from
Appellant’s Income Trust (“Income Trust”) were not allowable under the State of
South Carolina’s VENT Waiver program of Medicaid (“Waiver Program”).
Also, it ordered that the Trustee of Appellant’s Income Trust had to be replaced
because the Trustee failed to make monthly payments towards the Cost of Care
for services Appellant received under the Waiver Program. The Department further
ordered that if the Trustee was not removed, Medicaid benefits paid to Appellant
would be terminated.
Appellant
challenges the Decision on the grounds that it was arbitrary, capricious, and
erroneous as a matter of federal and state law. In response, the Department contends
that under federal and state law, Appellant – as an Income Trust Beneficiary –
is required to make monthly contributions to his Cost of Care if he retains any
income after mandatory deductions from his countable income. Further, it contends
that because Appellant failed to make these contributions to the state his Medicaid
benefits should be terminated.
After
timely notice to the parties, oral arguments were held on November 19, 2007 at
the Court in Columbia, South Carolina. Based upon the record, the parties’
briefs and their oral arguments, as well as applicable law, I conclude that:
(1) pursuant to the law of the State of South Carolina, the Trustee of the Income
Trust may not be removed by the Department; (2) the Trustee is reinstated to
perform his duties as Trustee for the Income Trust; and (3) all other findings
in the Decision are affirmed, including the requirement that Appellant must
make monthly contributions towards his Cost of Care.
BACKGROUND
Factual
Background
Appellant
became paralyzed and wheelchair-dependent at the age of ten when he contracted polio.
Notwithstanding his disability, Appellant obtained a formal education and worked
as a full-time professor at the University of South Carolina’s Darla Moore
School of Business (“USC”). On August 2, 2003, he was involved in an
automobile accident which resulted in his hospitalization for approximately six
months. While hospitalized, Appellant suffered several complications, went
into respiratory failure, and was placed on a ventilator for twenty-four hours
daily. Also, Appellant developed several serious conditions during his
hospitalization, including bed sores and the loss of use in his left hand. He received
rehabilitation treatment for the disability to his left hand at the Charlotte
Rehabilitation Institute. Presently, Appellant receives occupational therapy
to maintain function in his left hand and requires the use of a ventilator
eight or more hours each day.
When
Appellant was released from the hospital, his wife (“Mrs. Corbett”) substantially
reduced her hours of work (as a dietician at Providence Hospital in Columbia,
South Carolina) so she could provide care for him in their home. However, Mrs.
Corbett was subsequently diagnosed with cancer and this condition, made more
difficult with treatment, has significantly diminished her ability to provide
care for her husband. The care which has been provided to Appellant by his wife
and various attendants, together with medical treatment and rehabilitation, has
enabled him to continue his teaching at USC, albeit in a more limited manner.
Procedural
Background
Appellant
initially formed a Special Needs Trust to establish eligibility under the
Waiver Program of Medicaid. However, Appellant turned 65 on April 17, 2004,
and a Special Needs Trust only applies to disabled individuals under the age of
65. As a result, Appellant executed an Income Trust agreement on November 3,
2004, to maintain eligibility under the Waiver Program. Under the Waiver Program,
income trust beneficiaries are allowed to retain certain funds from their
countable income and any remaining income must be paid to the Department to be
put towards the individuals’ Cost of Care for receiving those services under
Medicaid.
On
May 15, 2005 and June 15, 2006, the Department sent to the Appellant two
letters which stated that he would be responsible for the payment of approximately
$3,000.00 each month towards his Cost of Care. In the June letter, the
Department stated that if the payments for his Cost of Care were not paid, the Trustee
would be replaced. Further, the letter stated that if either requirement was
not complied with, the services provided to Appellant under the Waiver Program
would no longer be provided to him.
After
receipt of the letters, Mrs. Corbett made partial payments to the Department.
Also, on July 15, 2006, she wrote a letter on behalf of Appellant to the
Department in which she requested a fair hearing. In addition, Mrs. Corbett
contacted Mrs. Donna Day, a supervisor with the Department, and expressed concerns
about the June 16, 2006 letter. Thereafter, the Department reviewed
Appellant’s file, determined that proper advance notice of the applicable monthly
billing statements had not been provided to Appellant, and it waived all past
due amounts. In August 2006, the Department began billing Appellant the sum of
$3,343.28 each month.
An
administrative hearing (“hearing”) was held by the Department’s employee, James
S. Guignard (“Hearing Officer”), on October 17, 2006. Based upon the documentary
evidence and testimony presented at the hearing, the Hearing Officer recessed
the hearing and asked Department staff to determine if any of the additional documentation
submitted during the hearing or Appellant’s diminished income would change
Appellant’s Cost of Care determination. Also, he asked the staff to determine
whether certain expenditures that were previously excluded should be covered by
Medicaid. On January 23, 2007, the Hearing Officer resumed the hearing.
On
May 4, 2007, the Hearing Officer issued the Decision and outlined each expenditure
and disbursement the Trustee made on behalf of the Appellant. Further, he concluded
that the Appellant had failed to produce evidence of any mistake of law or fact
on the part of the Department. In addition, the Hearing Officer concluded that
the Department’s application of the State’s Medicaid law, “which is formatted
under and in conformity with Federal law,” has neither caused hardship nor
discriminated against Appellant. (R. at 16).
On
June 15, 2007, Appellant filed a Notice of Appeal with the Court, challenging
the Department’s Decision.
STANDARD
OF REVIEW
This
Court’s appellate review of final decisions of the Department is governed by
standards provided in S.C. Code Ann. § 1-23-380 (Act No. 334 of 2008, § 5
(effective June 16, 2008). Section 1-23-380 provides that this Court “may not
substitute its judgment for the judgment of the [Respondent] as to the weight
of the evidence on questions of fact.” § 1-23-380(5). However, this Court,
pursuant to § 1-23-380(5),
may
reverse or modify the decision if substantial rights of the appellant have been
prejudiced because the administrative findings, inferences, conclusions or
decisions are:
(a)
in violation of constitutional or statutory provisions;
(b)
in excess of the statutory authority of the [Respondent];
(c)
made upon unlawful procedure;
(d)
affected by other error of law;
(e)
clearly erroneous in view of the reliable, probative, and substantial evidence
on the whole record; or
(f)
arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion.
Id.; see
also Lark v. Bi-Lo, Inc., 276 S.C. 130, 276 S.E.2d 304 (1981)
(stating “‘[s]ubstantial evidence’ is not a mere scintilla of evidence nor the
evidence viewed blindly from one side of the case, but is evidence which,
considering the Record as a whole, would allow reasonable minds to reach the
conclusion that the administrative agency reached or must have reached in order
to justify its action.” Id. at 135, 276 S.E.2d at 306. “The findings of the agency are presumed correct and will be
set aside only if unsupported by substantial evidence.” Hull v. Spartanburg
County Assessor, 372 S.C. 420, 424, 341 S.E.2d 909, 911 (Ct. App. 2007)
(citing Kearse v. State Health and Human Servs. Fin. Comm'n, 318
S.C. 198, 200, 456 S.E.2d 892, 893 (1995). Accordingly, “[t]he
‘possibility of drawing two inconsistent conclusions from the evidence does not
prevent an administrative agency’s finding from being supported by substantial
evidence.’” Grant v. S.C. Coastal Council, 319 S.C. 348, 461 S.E.2d 388
(1995) (citing Palmetto Alliance, Inc. v. S.C. Pub. Serv. Comm., 282
S.C. 430, 432, 319 S.E.2d 695, 696 (1984)).
Further,
an
abuse of discretion occurs when an administrative agency’s ruling is based upon
an error of law, such as application of the wrong legal principle; or, when
based upon factual conclusions, the ruling is without evidentiary support; or,
when the trial court is vested with discretion, but the ruling reveals no
discretion was exercised; or, when the ruling does not fall within the range of
permissible decisions applicable in a particular case, such that it may be
deemed arbitrary and capricious. State v. Allen, 370
S.C. 88, 94, 634 S.E.2d 653, 656 (2006) (application of standard to circuit
court) (citing Fontaine v. Peitz, 291 S.C. 536, 539, 354 S.E.2d 565, 566
(1987); see also Converse
Power Corp, 350 S.C. 39, 47 564 S.E.2d 341, 345 (Ct. App. 2002) (quoting Deese
v. State Bd. of Dentistry, 286 S.C. 182, 184-85, 332 S.E.2d 539, 541 (Ct. App.
1985) (“A decision is arbitrary if it is without a rational basis, is based
alone on one's will and not upon any course of reasoning and exercise of
judgment, is made at pleasure, without adequate determining principles, or is
governed by no fixed rules or standards.”).
DISCUSSION
On
this appeal, Appellant raises the following issues:
1. Did
the Hearing Officer err as a matter of law in counting the payments made by the
Trustee for medical expenses as “income”?
2. Did
the Hearing Officer err as a matter of law in failing to deduct other allowable
deductions?
3. Did
the Hearing Officer err as a matter of law in refusing to allow deductions for
income taxes and was his decision arbitrary and capricious?
4. Is the
State prohibited from applying the post-eligibility rules to Mr. Corbett?
5. Are
the deductions from income which are approved by the State, based on a
reasonable assessment of need or are they arbitrary and capricious?
6. Does
the Hearing Officer or the Department have the authority to remove a trustee?
7. Did
the Hearing Officer exceed his constitutional authority by violating
Appellant’s constitutional due process rights and the Supremacy Clause?
8. Is
the decision of the Hearing Officer clearly erroneous in view of the reliable,
probative and substantial evidence on the whole record?
Appellant
raises a number of grounds on appeal which can generally be resolved into four
broad categories: (1) whether the Department violated Appellant’s due process
rights; (2) whether the Department erred in “counting” Appellant’s income in
the post-eligibility rules; (3) whether the Department erred in its finding that
the majority of Appellant’s expenditures/disbursements from
the Income Trust
were not allowable under the Waiver Program; and, (4) whether the Department erred
in removing the Trustee of the Income Trust based upon the expenditures and
disbursements.
Medicaid
(or the Medicaid Program) is a voluntary, federal-state program whereby the
federal government provides financial assistance to participating states for medical
assistance to needy individuals. 42 U.S.C. § 1396a; Doe v. Kidd, 501
F.3d 348, 351 (4th Cir. 2007); Pee Dee Health Care, P.A. v. Sanford, 509
F.3d 204, 206-7 (4th Cir. 2007). The federal agency responsible for
administering the Medicaid program is the Centers for
Medicare & Medicaid Services, Department of Health and Human Services
(“CMS”). Participation by a state in the Medicaid program is not
mandatory; however, if a state elects to participate in the program, it must
comply with all federal Medicaid laws and regulations. Doe, 501 F.3d at
351; see also Antrican v. Odom, 290 F.3d 178 (4th Cir. 2002), cert. denied Odom v. Antrican, 537 U.S. 973, 123 S.Ct. 467 (2002)
(“Although North Carolina may retain a special sovereignty interest in choosing
whether to participate in the Medicaid program, once it elects to participate,
it is not entitled to assert that interest to insulate itself from the
requirements of the federal program.”). The agency given the responsibility to
administer and supervise all Medicaid programs in South Carolina is the Department.
S.C. Code Ann. § 44-6-30(1); Doe, 501 F.3d at 351. In order for the
State of South Carolina to qualify as a Medicaid provider under this program, the
Department must submit a plan to the CMS. The plan must describe the nature and scope of this state’s Medicaid program and it
must provide assurance that it will be administered in conformity with federal
laws and other applicable official issuances of CMS. 42 C.F.R. § 430.10; Pee
Dee Health Care, P.A., 509 F.3d at 207.
Medicaid’s Waiver Program was created under 42
U.S.C. §1396n(c). This program allows a state to provide Medicaid services to
individuals in their home or community rather than requiring them to receive those
services in an institution. See Doe, 501 F.3d at 351 citing Bryson v. Shumway, 308 F.3d 79, 82 (1st Cir. 2002) (“[The program]
allow[s] states to experiment with methods of care, or to provide care on a
targeted basis, without adhering to the strict mandates of the Medicaid
system.”). Further, the state must certify to CMS that the average per-person
cost of care offered through the Waiver Program does not exceed the average
cost of providing that care in an institutional setting. 42 U.S.C. § 1396n
(c)(2)(D); 42 C.F.R. § 441.302(e). Services provided under the Waiver
Program must comply with federal Medicaid law. See Antrican, 290 F.3d
178 (4th Cir. 2002).
South
Carolina’s Waiver Program plan was submitted to CMS and was accepted as set
forth in the “State Medicaid Manual” (“SMM” or the “Manual”). The Manual outlines
the agreement between CMS and the State of South Carolina for the services which
will be provided to qualified persons through the waiver – among other services
– under the Home and Community Based Services.
Due
Process Considerations
I. Promulgation
of Regulations
First, Appellant asserts that the Manual contains
policies (“Policies”) which the Department uses to determine whether an
individual is entitled to services under federal Medicaid law. Further, he asserts
that since these Policies are determinative of eligibility by disabled persons for
medical assistance and care under the Waiver Program, they must be promulgated
as regulations in this state; otherwise, Appellant argues they do not have the
force and effect of law. Thus, Appellant maintains that these Policies, as enumerated
in the Manual, are not binding and cites S.C. Code Ann. § 1-23-10(4) in support
of his position:
‘Regulation’ means each agency
statement of general public applicability that implements or prescribes law or
policy or practice requirements of any agency. Policy or guidance issued by an
agency other than in a regulation does not have the force or effect of law. . .
.
Id. In response, the Department asserts that CMS approved this State’s Medicaid
Plan on October 1, 2006, and that it is not necessary to promulgate regulations
concerning the Waiver Program as provided for in the plan.
S.C.
Code Ann. § 1-23-10(1) defines “agency” or “state agency” as meaning “each
state board, commission, department, executive department or officer,
other than the legislature, the courts . . . authorized by law to make
regulations or to determine contested cases.” § 1-23-10(1) (emphasis added). HHS
is defined as a “department” in S.C. Code Ann. § 44-6-5(1) (Supp. 2007).
Furthermore, it is authorized by statute to “[f]ormulate for consideration and promulgation criteria, standards, and procedures that ensure assigned programs are
administered effectively, equitably, and economically and in accordance with
statewide policies and priorities.” S.C. Code Ann. § 44-6-40 (emphasis added). This
agency is subject to the State’s rule-making process contained in the APA. See §§ 1-23-10 through 1-23-160. The APA requires the Department to implement its
policy statements in regulations which are promulgated for review and comment
by the public and for review by our General Assembly.
In this matter, CMS’s approval of the State’s Medicaid Plan
or Manual does not make it a binding document. In order for a policy
manual to create a “binding” rule it must be promulgated as a regulation. Home Health Serv., Inc. v. S.C. Tax Comm’n, 312 S.C. 328, 440 S.E.2d 375
(1994). “[W]hether an agency’s action or statement amounts to a rule – which must
be formally enacted as a regulation – or a general policy statement – which does
not have to be enacted as a regulation – depends on whether the action or
statement establishes a ‘binding norm.’” Sloan v. S.C. Bd. of Physical
Therapy Exam’rs, 370 S.C. 452, 636 S.E.2d 598 (2006). In determining
whether a policy statement establishes a “binding norm,” an important
consideration is the extent to which the challenged policy leaves the agency
free to exercise its discretion to follow or not follow the policy at issue in
a particular situation. Home Health Serv. Inc. v. S.C. Tax Comm’n, 312
S.C. 324, 328, 440 S.E.2d 375, 378 (1994). If the policy at issue “so fills
out the statutory scheme” that the agency will only look to whether the policy’s
criteria are met in taking action or rendering a decision, the policy will be
considered a “rule” or “regulation.” Id. As long as the agency remains
free to consider the individual facts in taking action or rendering a decision,
the policy at issue will not be considered a “binding norm.” Id. Thus,
to determine whether a policy or guideline establishes a “binding norm,” courts
look to the actions of the agency, not to the labels given by the agency.
The
Manual has never been promulgated as a regulation yet the Department clearly treats
it as a binding document. Because the Manual has not been promulgated as a
regulation, it is not binding. Notwithstanding, the
Department is the agency in South Carolina that the General Assembly has
granted the sole authority to ultimately resolve issues concerning the
provisions of the Medicaid services at issue in this case. As such, the
Department’s interpretation of Medicaid law and regulations is entitled to due
respect and consideration. However, that respect and consideration is limited. Accordingly, based upon applicable law, I conclude that the Manual is not a
“binding” document and does not have the force and effect of law. Notwithstanding,
the Court gives due respect and consideration to the Department’s interpretation
of the applicable federal Medicaid law and finds that it is not contrary to any
statute or regulation in this state.
II. Length
of Appeal Process
Secondly, Appellant argues that his due process rights were violated because the
Department did not issue a final agency determination within the time constraints
set forth in 42 C.F.R. § 431.244 (f)(1). In reply, the Department asserts that
it issued its decision within a reasonable time. Further, the Department
asserts that if the Court determines that the length of time it took to decide Appellant’s
appeal was unreasonable, it must consider those actions by Appellant that contributed
to the delay.
42
C.F.R. § 431.244(f)(1) does not mandate that the agency that conducts a fair
hearing must issue the decision within ninety (90) days. Rather, it states
that “ordinarily” the agency must take final administrative action
within ninety days from the date the Appellant first files a request for a
hearing. § 431.244 (f)(1) (emphasis added). This section simply gives a
general guideline to the agency that hears these matters. Moreover, even if the
Department violated the timeframe contained in § 431.244, Appellant has not
shown that he was prejudiced by such failure. Appellant’s assertion is that “he
has been forced to remain in a state of uncertainty for more than a year” due
to the appeal. However, the record shows that his actions contributed to the Department’s
delay in reaching a final determination.
On
July 28, 2006, Appellant completed and submitted Form 3260 ME, Request for Fair
Hearing for Medicaid Applicant/Beneficiary. By letter dated August 10, 2006, the
Hearing Officer informed Appellant that a fair hearing was scheduled for August
30, 2006 and that the hearing was being scheduled with less than thirty days
notice “in an effort to move [his] case along.” However, Appellant’s wife gave
notice to the Hearing Officer on August 12, 2006 that this date was not acceptable
and requested a date with at least thirty days notice. Thereafter, the hearing
was rescheduled for October 17, 2006.
Appellant
presented additional information during the hearing concerning his expenditures
and disbursements from the Trust. Because this information had not been
provided to the Department prior to the hearing, the Hearing Officer recessed
the Hearing so Department staff could review the documentation. On January
23, 2007, the Hearing was resumed by the Hearing Officer after the Department
had utilized the information provided by Appellant to recalculate the figures
involved. On May 4, 2007, slightly more than three months after the
conclusion of the final hearing, the Hearing Officer issued a final order.
Appellant
cites Doe v. Kidd, 501 F.3d 348 (4th Cir. 2007) in support of his
argument that the Department failed to timely issue a final order. In Doe,
the Fourth Circuit Court of Appeals held that an individual may pursue an
action against an agency pursuant to the provisions of 42 U.S.C. § 1983 if
it fails to comply with the reasonable promptness provision of the Medicaid
Act. Doe, 501 F.3d at 357. However, the Court of Appeals neither held
that the agency violated the involved statute nor did it define the term “reasonable
promptness.” See generally, Doe; 42 C.F.R. §
431.244(f)(1). Rather, the Court of Appeals simply held that an individual may
pursue an action against the agency for a violation of § 431.244(f)(1). Here,
as referenced earlier, the Department and its Hearing Officer were presented
with novel issues and massive amounts of documents pertaining to Appellant’s
case. Both took the issues and documents under advisement to ensure that a
fair and correct determination was reached in the matter. Given the
complexity of matters involved in this case and the extraordinary amount of
documents presented for review and consideration, the Court finds that the length
of time the Hearing Officer took to conduct the hearing and issue a final
decision in this matter was reasonable.
Post-Eligibility
Treatment of Income
Thirdly,
Appellant contends that the Department improperly considered income in his
Trust as being available to him. To support his contention, he cites 42 U.S.C.
§ 1396p(d)(4)(B). In response, the Department asserts that it was proper to
consider this income in determining the entire amount available to him as the
Manual states that income placed in an Income Trust (also referred to as a
Miller Trust) is subject to “post-eligibility rules.” The Manual defines the
post-eligibility treatment of income, either included or not included in the
Income Trust, at Section 3259.7 (C)(5). It reads:
Post-eligibility
Treatment of Income. – All of the post-eligibility treatment of income
rules in 42 CFR 435.725, 733, 735, and 832, as well as § 1924 of the Act, apply
in cases involving Miller trusts, as follows.
a. Income
Not Placed in a Miller Trust. – Income retained by the individual (i.e.,
not placed in a Miller trust) is income to the individual, according to
SSI policy. Thus, such income is subject to the post-eligibility rules.
b. Income
Placed in a Miller Trust. – Income placed in a Miller trust is
income for SSI purposes although it is not counted as available in determining
Medicaid eligibility. Thus, such income is also subject to the
post-eligibility rules.
(emphasis in
original).
Appellant misinterprets
the language of 42 U.S.C. § 1396p(d)(4)(B). Income placed in an Income Trust
is not considered “available” to him for determining his Medicaid eligibility;
however, the income is considered income available to him for Supplemental
Security Income (“SSI”) purposes. In his brief, Appellant cites a memorandum
dated March 17, 1994 and a supplement to the memorandum dated May 25, 1994 to
support his contention that the Department erred in considering income placed
in his Trust as available to him. Appellant did not provide a copy of the
memorandum and supplement (in its entirety) to the Court. It is unclear who
authored the memorandum and supplement or for what reason they were issued:
therefore, the Court ascribes no validity to this assertion.
In
the alternative, Appellant asserts that if the post-eligibility rules are applicable,
42 C.F.R. § 435.726 does “not give the State absolute discretion in
establishing limitations on medical and remedial care. The federal government only
requires that the State set ‘reasonable limits.’” Appellant opines that the
limits imposed by the Department are “patently unreasonable.” 42 C.F.R.
435.726 (c)(4) provides that a state may establish “reasonable limits”
on the deductions allowed to an individual under the Medicaid program for
medical or remedial care that is not subject to payment by a third party such
as Medicare or other health insurance. Id. (emphasis added). In other
words, the Department may place a cap on any deductions given to an individual
participating in Medicare for medical care he or she received, if that
individual’s supplemental health insurance does not cover the medical care. Further,
these deductions must be allowed under state law but not covered under the
state’s Medicaid plan. Id. The Department submitted its proposed
reasonable limits to CMS, and CMS approved the proposal on October 1, 2006.
The proposal is located at Attachment 2.6-A, Supplement 3 to the Manual. Although
the Department has not promulgated the Manual as a regulation, this Court does
give deference to its interpretation of federal Medicaid law. It seems unlikely
that CMS would have approved the Department’s proposal if it had considered it “patently
unreasonable,” as suggested by Appellant. The reasonableness of the
Department’s proposal is determined by CMS, not by one individual. Accordingly,
I affirm the finding of the Department in its Decision regarding this issue.
Income
Trust Expenditures and Disbursements
Fourthly,
Appellant asserts that the Department erred in its Order by finding that the
majority of the disbursements and/or expenditures made by the Trustee from the
Income Trust were not allowable under the Waiver Program. Appellant asserts
that these expenditures are “medically necessary” and that it will create an “undue
burden” on him if they are not provided. In response, the Department opines
that these expenditures are neither covered by Medicaid nor by the state’s
policy which allows “necessary medical or remedial care.”
Appellant
seeks to have the following expenditures deemed permissible under the Waiver Program:
personal attendant care, dental care, repairs made to his vehicle,
rehabilitation services, legal services, real property and personal income
taxes, and other miscellaneous services provided to him. The Department denied
these expenditures as either unauthorized by the Waiver Program or because the
services were provided by entities or individuals who were not approved under
the Waiver Program. Appellant agrees that some, if not all, of the services or
expenditures are not expressly authorized by the Waiver Program, or that the
services were provided by individuals or entities not approved under the Wavier
Program. Notwithstanding, Appellant contends that because of his unique and
critical situation, these medically-necessary services should be provided under
the “undue burden” provision of the Waiver Program which reads:
When application of
the trust provisions discussed [above] would work an undue hardship those
provision do not apply. . . . [The undue hardship] policy must be described in
your Medicaid State Plan. [The state has] considerable flexibility in
implementing an undue hardship provision. However, [the state’s] hardship
provision must meet the requirements discussed below.
A. Undue Hardship
Defined.—Undue hardship exists when application of the trust provision would
deprive the individual of medical care such that his/her health or his/her life
would be endangered. Undue hardship also exists when application of the trust
provisions would deprive the individual of food, clothing, shelter, or other
necessities of life.
(R. at 940).
This
Court sits in an appellate capacity when reviewing matters appealed from the
Department. It is required by law to affirm the final decision by the
Department unless it is clearly erroneous in view of the reliable, probative,
or substantial evidence in the record or is affected by an error of law. Byerly
Hosp. v. S.C. State Health and Human Services Commission, 319 S.C. 225,
229, 460 S.E.2d 383, 385-86 (1995) (“[Appellate Court] must affirm administrative agency decision if decision is
supported by substantial evidence, and Court may not substitute its judgment
for that of agency upon questions as to which there is room for difference of
intelligent opinion.”); Commissioners of Public Works v. S.C. Dep’t of
Health and Envtl. Control, 372 S.C. 351, 358, 641 S.E.2d 763, 766-67 (Ct.
App. 2007) (“[Appellate court] may not substitute its judgment for that of an [administrative
agency] as to the weight of the evidence on questions of fact unless the [agency’s]
findings are clearly erroneous in view of the reliable, probative and
substantial evidence in the whole record.”); Smith v. Newberry County
Assessor, 350 S.C 572, 577-78, 567 S.E.2d 501, 504 (Ct. App. 2002).
As
noted by the Hearing Officer, Appellant has the burden of proof to show that
the state’s Medicaid policies, with reference to the Waiver Program, create an
undue burden or hardship upon him. S.C. Dep’t of Corrections v. Mitchell,
Op. No. 4352 (S.C. Ct. App. filed March 10, 2008) (“[W]hen appealing an
agency’s decision, the burden rests squarely on the appellant to prove that
substantive rights were prejudiced based on one of six statutory criteria
listed [in S.C. Code Ann. § 1-23-380(A)(6)].”) (citing Pressley
v. Lancaster County, 343 S.C. 696, 704, 542 S.E.2d 366, 370 (Ct. App.
2001) (“The party challenging a governmental body’s decision bears the burden
of proving the decision is arbitrary.”); Waters v. S.C. Land Res.
Conservation Comm’n, 321 S.C. 219, 226, 467 S.E.2d 913, 917 (1996) (“The
burden is on appellants to prove convincingly that the agency’s decision is
unsupported by the evidence.”). The Hearing Officer based his decision upon
the witnesses’ testimony and all documents presented during the administrative
hearings. In his Decision, he concluded that the Department had deducted all
qualifying expenditures from inclusion within Appellant’s countable income. He
found that the Department had not placed an undue burden upon Appellant by
excluding certain expenditures from his Income Trust Account. The substantial
evidence in the record supports the Hearing Officer’s determination, and Appellant
has simply not provided any evidence to this Court to show that the Department
erred in reaching its Decision.
In
addition, the Hearing Officer found that Appellant failed to use the services
of providers approved by Medicaid. Rather, he “exercised his freedom of
choice” be selecting providers that did not participate in the Waiver Program. See 42 U.S.C. § 1396a(a)(23) (stating that participants of the Medicaid
program must seek care from Medicaid providers). The Court is certainly
sympathetic to Appellant’s medical and physical conditions; however, the Court
is constrained by the record in this matter. Appellant agreed to be bound by
the limitations of the Waiver Program when he initiated the application for
benefits of the program, and he must seek and use services provided by
individuals or entities approved by Medicaid.
Removal of
Trustee
Finally, Appellant asserted that neither the Hearing Officer nor the Department has
the authority to remove the Trustee of his Trust. Rather, he contends that
any action by the Department, which is the remainder beneficiary of his Trust,
may be initiated by and determined by the Probate Court in this state. In
support of this contention, Appellant cites S.C. Code Ann. § 62-7-201 (Supp.
2007) (“[T]he probate court has exclusive jurisdiction of proceedings initiated
by interested parties concerning the internal affairs of trusts.”). The Court
notes that the Department did not address this issue in its appellate brief.
In the
Decision, the Hearing Officer held that Mrs. Corbett, in her capacity as Trustee
of Appellant’s Trust, must be removed as Trustee because she failed to pay
Appellant’s Cost of Care and she distributed funds from the Trust for expenses
other than those allowed by the Department in its Order. He cited authority for
such pursuant to SMM § 304.19.09 Non-Compliance with Terms of the Income Trust
and § 304.19.12 Income Trust Dissolution. (R. at 17-18, 155).
As
noted earlier herein, because the Manual has not been promulgated as a
regulation and as such, it is not a binding document in South Carolina. The
provisions of the Manual do not control the administration of trusts in South
Carolina. The South Carolina Trust Code, codified at S.C. Code Ann. §§
62-7-101 et seq., provides that the “probate court has exclusive
jurisdiction of proceedings initiated by interested parties concerning the
internal affairs of trusts.” § 62-7-201(a). § 62-7-201(a)(4) provides that
these proceedings include the appointing or removing of a trustee.
The Hearing Officer has authority pursuant to regulation to preside over administrative hearings involving the Department. S. C. Code Ann. § 44-60-90 (Supp. 2007);
S.C. Code Reg. 126-154 (Supp. 2007). However, no Hearing Officer with the
Department has the authority to remove the trustee of a trust since jurisdiction
over matters pertaining to the administration of trusts rests with the probate
or circuit courts of the State. In addition, the terms
of Appellant’s Income Trust specifically provide that if any administration
issues arise concerning the Trustee and his/her duties, “any interested party
may, with notice to all beneficiaries, petition the probate court for
appointment of a successor trustee.” (R. at 1246). This is the correct
procedure to have Mrs. Corbett removed as Trustee and the Department, as a
remainder beneficiary of the Trust, may initiate such action before the probate
court. Accordingly, the Court finds that the provision in the Decision
removing Mrs. Corbett as Trustee of Appellant’s Trust is reversed.
ORDER
For
the reasons set forth above,
IT
IS HEREBY ORDERED that Respondent’s Decision is AFFIRMED in part,
and REVERSED in part.
IT
IS FURTHER ORDERED that Mrs. Corbett must be reinstated as Trustee of
Appellant’s Income Trust within thirty (30) days from the date of this Order.
AND
IT IS SO ORDERED.
______________________________
Marvin F.
Kittrell
Chief Judge
July 16, 2008
Columbia, South Carolina
See Comm’r of Public Works v. S.C. Dep’t
of Health and Envtl. Control, 372 S.C. 351, 641 S.E.2d 763, 767 (Ct. App.
2007) (“Generally, ‘the construction of a statute by the agency charged with
its administration will be accorded the most respectful consideration and will
not be overruled absent compelling reasons.’ Indeed, the courts will typically
defer to agency interpretation. We note, however, ‘[t]he primary rule of
statutory construction is that the Court must ascertain the intention of the
legislature.’ Where the terms of the statute are clear, the court must apply
those terms according to their literal meaning, without resort to subtle or
forced construction to limit or expand the statute’s operation. Thus, the court
will reject the agency’s interpretation where it is specifically contrary to
the statute or regulation.”) (citations omitted).
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