SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter is before me pursuant to the appeal of the Estate of Ada B. Nicholson (Appellant), from a final decision of the Respondent, South Carolina Department of Health and Human Services (Department), denying a waiver of undue hardship under the Medicaid program. The Administrative Law Court (ALC) has jurisdiction to hear this matter pursuant to S.C. Code Ann. § 1-23-600 (2005).

ISSUES ON APPEAL

1. Was the receipt of CLTC services from Medicaid equivalent to institutionalization?

2. Did the requirement that the applicant “actually” reside in the home at the time of the waiver preclude a waiver for Max?

STANDARD OF REVIEW

As set forth above, this case is before the Court as an appeal of an agency action pursuant to S.C. Code Ann. § 1‑23‑600(D) of the Administrative Procedures Act (APA) upon appeal from a Final Order of the Department. As such, the Administrative Law Judge sits in an appellate capacity under the APA rather than as an independent finder of fact. In South Carolina, the provisions of the APA -- specifically Section 1-23-380(A)(6) -- govern the circumstances in which an appellate body may reverse or modify an agency decision. That section states:

The court 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 agency;

(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.

S.C. Code Ann. § 1-23-380(A)(6) (Supp. 2005).

A decision is supported by “substantial evidence” when the record as a whole allows reasonable minds to reach the same conclusion reached by the agency. Bilton v. Best Western Royal Motor Lodge, 282 S.C. 634, 321 S.E.2d 63 (Ct. App. 1984). The well-settled case law in this state has also interpreted the “substantial evidence” rule to mean that a decision will not be set aside simply because reasonable minds may differ on the judgment. Lark v. Bi-Lo, 276 S.C.130, 276 S.E.2d 304 (1981). The fact that the record, when considered as a whole, presents the possibility of drawing two inconsistent conclusions from the evidence does not prevent the agency's finding from being supported by substantial evidence. Waters v. S.C. Land Resources Conservation Comm’n, 321 S.C. 219, 467 S.E.2d 913 (1996); Grant v. S.C. Coastal Council, 319 S.C. 348, 461 S.E.2d 388 (1995).

In applying the substantial evidence rule, the factual findings of the administrative agency are presumed to be correct. Rodney v. Michelin Tire Co., 320 S.C. 515, 466 S.E.2d 357 (1996), citing Kearse v. State Health and Human Services Finance Comm'n, 318 S.C. 198, 456 S.E.2d 892 (1995). Furthermore, the reviewing court is prohibited from substituting its judgment for that of the agency as to the weight of the evidence on questions of fact. Grant v. S.C. Coastal Council, 319 S.C. 348, 461 S.E.2d 388 (1995), citing Gibson v. Florence Country Club, 282 S.C. 384, 318 S.E.2d 365 (1984). Finally, the party challenging an agency action has the burden of proving convincingly that the agency's decision is unsupported by substantial evidence. Waters, supra, citing Hamm v. AT&T, 302 S.C. 210, 394 S.E.2d 842 (1994).

FACTS/BACKGROUND

Beginning in April 1996, Ms. Ada Nicholson received services from Community Long Term Care (CLTC), a program of services provided by the South Carolina Medicaid program to persons who elect to receive services in their home rather than seek admission to a nursing facility. Ms. Nicholson was later admitted to a nursing home. Her care, while in the nursing facility, was paid for by the South Carolina Medicaid program. Ms. Nicholson died July 25, 2004 while a resident at the Lila Doyle NCF in Seneca, South Carolina.

After Ms. Nicholson’s death, the Department placed a creditor’s claim against Ms. Nicholson’s estate pursuant to S.C. Code Ann. § 43-7-460 (2005) and 42 USC 1396p(b) for the care paid for under the state Medicaid program. Afterwards, the personal representative of Ms. Nicholson’s estate sought a hardship waiver, asserting that Ms. Nicholson’s son, Max Nicholson (Max), had lived with Ms. Nicholson for more than two years prior to her entering a nursing home. On May 16, 2005, the Department denied that request for the following reasons; Max’s income exceeded 185% of the federal poverty guidelines, he was not “actually residing in the home” when the waiver was requested, and he had not lived in the home for over two and a half years prior to Ms. Nicholson’s institutionalization. The Hearing Officer assigned to review this case subsequently concurred with the Department’s determination, finding that Max’s income exceeded 185% of the federal poverty guidelines, that he was not actually residing in the home at the time the waiver was requested, and that he had not resided in the home for more than two years before Ms. Nicholson began receiving CLTC Services, which the Hearing Officer found to be the functional equivalent of nursing home care. This appeal followed.

DISCUSSION

The Department is charged with the administration of the Medicaid program in South Carolina. Medicaid is a joint state and federal program designed to assist with the medical needs of persons meeting certain financial and medical criteria. Under the Medicaid program, federal law requires a state to recover any costs incurred in providing medical care to a decedent from that person’s estate. The Medicaid Estate Recovery program was mandated by the federal Omnibus Budget Reconciliation Act of 1993 (OBRA ‘93), as codified in 42 U.S.C. §1396p(b). This legislation requires the states to set up procedures which conform to guidelines issued by the Secretary of the Federal Department of Health and Human Services to waive certain claims against estates of Medicaid recipients in instances of undue hardship.

CLTC Services

Appellant argues that the Department can not seek recovery of the CLTC Medicaid medical assistance provided to Ms. Nicholson because those services are not the functional equivalent of institutional care as set forth in 42 USC 1396p(c))(1)(C)(ii). The date of institutionalization is indeed a component of the analysis of Section 1396(p)(c). However, Section 1396(p)(c) addresses the narrow issue of recovering the transfer of assets and the consideration of the date of institutionalization provides the reference point to implement the “look-back date.” On the other hand, Section 1396p(b) addresses the instances in which the State may seek recovery for medical expenses under Medicaid. It provides that the State may recover for the payment of medical assistance to an individual who was 55 years or older when they received the assistance for home and community-based services. Likewise, S.C. Code Ann. § 43-7-460 (A)(2) (2005) provides that the State must seek recovery of medical assistance paid to an individual who was:

fifty-five years of age or older when the individual received medical assistance, but only for medical assistance consisting of nursing facility services, home and community-based services, and hospital and prescription drug services provided to individuals in nursing facilities or receiving home and community-based services.

(emphasis added).

Here, neither Section 1396p(b) nor 43-7-460 establish that an individual must be the functional equivalent of institutionalized before the State may seek recovery for the medical assistance it has paid. To the contrary, other sections of the Federal statute clearly reference the need for institutionalization before the State may seek recovery under those provisions. “It is well-settled that statutes dealing with the same subject matter are in pari materia and must be construed together, if possible, to produce a single, harmonious result.” Grant v. City of Folly Beach, 346 S.C. 74, 79, 551 S.E.2d 229, 231 (2001). Therefore, I find that a determination that the provision of the services was the functional equivalent to institutionalization is not required to seek recovery for payment.

Undue Hardship

The Department denied the hardship wavier application, in part, because Max did not begin living with Ms. Nicholson before she was institutionalized. The Department reasoned that since Max did not move in with his mother until after she began receiving CLTC services, he did not live in her home the requisite two years before she became institutionalized. Appellant argued that Max qualifies for the waiver because the term institutionalization means confinement to a nursing facility and not enrollment in the CLTC program.

42 USC 1396p (b)(3) requires that the State establish procedures for granting a waiver of any claim in cases of undue hardship. In response to that requirement, South Carolina enacted S.C. Code Ann. § 43-7-460 (2005). Section 43-7-460 allows the estate of an individual who has received medical assistance under Title XIX State Plan for Medical Assistance to obtain a waiver of the State’s rights to recover that assistance in three instances.^[1] In particular, S.C. Code Ann. §43-7-460 (C) provides in pertinent part that:

Recovery under this section must be waived by the department upon proof of undue hardship, asserted by an heir or devisee of the property claimed pursuant to 42 U.S.C. 1396p(b)(3). Until conflicting hardship standards and criteria are issued by the Secretary of the United States Department of Health and Human Services, the following are considered instances of undue hardship in which recovery must be waived:

(1) with respect to the decedent’s home property, if the decedent could have transferred the home property on or after the date of his or her Medicaid application without incurring a penalty under 42 U.S.C. 1396p(c), if the property could have been transferred without a penalty to a:

* * *

(d) surviving child of the deceased who lived in the home for a period of at least two years immediately before the decedent became institutionalized and who provided care which allowed the decedent to delay institutionalization.

However, hardship under this item only applies if the individual to whom the property could have been transferred without penalty is actually residing in the home at the time the hardship is claimed. . . .

* * *

(2) with respect to the decedent's home and one acre of land surrounding the house, if an immediate family member:

(a) has resided in the home for at least two years immediately prior to the recipient's death;

(b) is actually residing in the home at the time the hardship is claimed;

(c) owns no other real property or agrees to sell all other interest in real property and give the proceeds to the department; and

(d) has annual gross family income that does not exceed one hundred eighty-five percent of the federal poverty guidelines.

The date of institutionalization is relevant in determining whether a waiver should be granted under Section 43-7-460 (C)(1)(d). Likewise, as set forth above, the date of institutionalization is a factor in determining whether Ms. Nicholson could have transferred her home without incurring a penalty under 42 USC 1396p(c))(1)(C)(ii). The South Carolina statutes offer no guidance as to what services are considered to be institutionalization. However, 42 USC 1396p(h)(3) clearly defines the term “institutionalized individual” under Section 1396p (the Medicaid Estate Recovery program of the Social Security Act). An “institutionalized individual” under that provision is defined as an inpatient in a nursing facility, a medical institution, or who is described in section 1369(a)(10)(A)(ii)(VI) of the Social Security Act. 42 USC 1396a(a)(10)(A)(ii)(VI) sets forth that individuals eligible under the subchapter are persons described in Section 1396d(a) “whom there has been a determination that but for the provision of home or community-based services described in subsection (c), (d), or (e) of section 1396n of this title they would require the level of care provided in a hospital [or] nursing facility. . . and who will receive home or community-based services pursuant to a waiver granted by the Secretary under subsection (c), (d), or (e) of section 1396n of this title.” 42 U.S.C.A. § 1396d (a) provides that “[t]he term ‘medical assistance’ means payment of part or all of the cost of . . . (7) home health care services . . . [or] home and community care (to the extent allowed and as defined in section 1396t of this title) for functionally disabled elderly individuals.”^[2]

The record sets forth that Ms. Nicholson was 65 years of age or older when she began receiving home health care services. However, there was no evidence that, but for the provision of those services described, she would require the level of care provided in a nursing facility. Moreover, the evidence reflects that Max moved into his mother’s home in June of 1996, two years before his mother, Ms. Nicholson, entered a nursing home. Therefore, the substantial evidence does not support the Department’s determination that Max did not reside in the home two years prior to his mother’s institutionalization.^[3]

Nevertheless, the Appellant must also meet the other requisites of Section 43-7-460 to be granted a waiver. Undue hardship under Section 460 (C)(1)(d) only applies if Max was “actually residing in the home at the time the hardship is claimed.” Similarly, Section 460 (C)(2) also requires that the family member actually reside in the home at the time the hardship is claimed, and furthermore adds the requirement that the family members income not exceed “one hundred eighty-five percent of the federal poverty guidelines.”

A common element of both instances of undue hardship is that the family member must be “actually residing” in the home when the hardship is claimed. Here, Max was incarcerated with the South Carolina Department of Corrections on October 24, 2002. Therefore, Max was not physically present on the property for two years prior to his mother’s death or at the time the hardship waiver application was submitted. Appellant nevertheless argues that, even though Max was incarcerated at the time the hardship waiver was filed, he one day intends to return to his mother’s home, therefore this Court should find that he was “residing” in the home for purposes of the application of this statute.

The cardinal rule of statutory construction is to ascertain and effectuate the intent of the legislature. Charleston County Sch. Dist. v. State Budget and Control Bd., 313 S.C. 1, 437 S.E.2d 6 (1993). The text of the statute is the best evidence of the legislative intent of the statute. Knotts v. S.C. Dep’t of Natural Res’s, 348 S.C. 1, 558 S.E.2d 511 (2002). The Court, therefore, should refer to the language of the statute to determine whether the statute’s meaning is clear on its face. Kennedy v. S.C. Ret. Sys., 345 S.C. 339, 549 S.E.2d 243 (2001). If the statute’s language is plain and unambiguous, there is no basis for employing rules of statutory interpretation “and the court has no right to look for or impose another meaning.” Kennedy, 345 S.C. at 346, 549 S.E.2d at 246 (quoting Paschal v. State Election Comm’n, 317 S.C. 434, 436, 454 S.E.2d 890, 892 (1995)). Furthermore, the court must read the language of the statute in such a way as to harmonize it with its subject matter and in accordance with its general purpose. Id. at 472, 589 S.E.2d at 768.

The term “actually residing” or “actually reside(s)” is only used in South Carolina Code Section 43-7-460. The plain meaning of the term “actually residing,” especially when read in the context of the statute, appears to require Max to have been living in his mother’s home when the application was made. Furthermore, “[w]here a word is not defined in a statute, our appellate courts have looked to the usual dictionary meaning to supply its meaning.” Lee v. Thermal Engineering Corp., 352 S.C. 81, 91-92, 572 S.E.2d 298, 303 (Ct. App. 2002). Merriam-Webster Online Dictionary defines “reside” as “to dwell permanently or continuously: occupy a place as one's legal domicile.” Merriam-Webster Online (2005). Furthermore, “residence” is defined as “the place where one actually lives as distinguished from one's domicile or a place of temporary sojourn.” The above definitions clearly indicate that the family member must be living in the home when the application is made. Moreover, when viewed in light of the emphasis added by the adverb “actually,” the requirement that the family member must be living in the home when the application is made is even further stressed. Therefore, even if Max could be viewed as residing in the home when the application was made, Appellant has not established that the Department erred in determining that Max was not “actually residing” in the home when the application was made. Thus, since Appellant failed to meet the requirements of both Section 460 (C)(1)(d) and Section 460 (C)(2), Appellant is not eligible or entitled to a waiver for undue hardship.^[4] Therefore,

IT IS HEREBY ORDERED that the Department’s decision should be upheld.

AND IT IS SO ORDERED.

______________________________

Ralph King Anderson, III

Administrative Law Judge

September 26, 2006

Columbia, South Carolina