Department of Health & Mental Hygiene v. Campbell

BELL, Chief Judge. This case presents the issue of whether guardianship commissions and attorneys’ fees of an attorney appointed guardian of the property of mentally incompetent Medicaid recipients constitute available income under the Maryland Medicaid Assistance Program, specifically whether such fees qualify as a personal needs allowance. 1 We shall hold, con ¹¹² trary to the conclusion of the Circuit Court for Baltimore City, that they are not. The Medicaid program, a jointly funded collaboration between a State and the federal government providing medical assistance to low income persons unable to afford to pay for their medical care, is a voluntary program, in which a State may elect, but is not compelled, to participate. 42 U.S.C. § 1396 et seq.; 42 C.F.R. §§ 430-456 . When a State elects to participate in the Medicaid program, it is required to develop, and submit for federal approval by the Health Care Financing Administration (hereinafter “HCFA”), the federal agency that administers the Federal Medical Assistance Program, 42 U.S.C. § 1396 , a State Medicaid Plan for the provision of medical assistance that complies with the Medicaid Act and the regulations promulgated by the Secretary of the Department of Health and Human Services. 42 U.S.C. § 1396 ; 42 C.F.R. § 430-456 .

If HCFA approves the State plan, then the State qualifies for federal funding. After the plan receives federal approval, alteration of it without federal approval, would jeopardize its federal funding. 42 U.S.C. § 1396 (c). Maryland has chosen to participate in the Medicaid program. It does so through the Maryland Medical Assistance Program, operated by the appellant.

See Md.Code (1982, 2000 Repl.Vol.) § 15-103 of the Health General Article. The Medical Assistance program provides reimbursement for the cost of health care services provided to certain indigent persons, i.e. “for indigent individuals or medically indigent individuals.” 2 § 15-103(a)(2)(i). See COMAR 10.09.24.01 (including ¹¹³ aged, blind or disabled persons within the category of persons for whom eligibility may be determined); COMAR 10.09.24.08D(4) (including “an aged, blind or disabled person” in the list of the “Medically Needy”). Thus, in Maryland, an individual who is aged, blind, or disabled, COMAR 10.09.24.03D(4), 3 and has an income that does not exceed $ 2500, Health Gen. § 15 — 109(b)(1), COMAR 10.09.24.08L and M, qualifies for Medical Assistance benefits.

An individual with assets that exceed the resource limit, but whose income is insufficient to meet the cost of care, may enter a long-term care facility, such as a nursing home. Such an individual is required to contribute all of his or her “available income” to the nursing facility to pay for the cost of care, with the program making up the difference. COMAR 10.09.24.10D (3); 4 see 42 C.F.R. § 435.832 (a). The Maryland Medical Assistance Program regulations do not define “available income.” COMAR 10.09.24.10D(2), however, prescribes how to determine “available income.” And ¹¹⁴ the regulations define income as “any property or service received by a person in cash or in-kind which can be applied directly, or by sale or conversion, to meet basic needs for food, shelter, and medical expenses.” COMAE 10.09.24.02B(23)(a).

Thus, available income is the difference between total income and any allowable deductions. See id. For institutionalized recipients, the following deductions are allowed from the recipient’s total income to determine available income: (1) a personal needs allowance 5 ; (2) a spousal or family allowance; (3) a residential maintenance allowance for a single person; and (4) incurred medical expenses that are not subject to payment by a third party. See COMAR 10.09.24.10D(2)(a)-(d).

I. Arthur L. Drager is the guardian of the property 6 for each ¹¹⁵ of seven Medicaid recipients (the appellees). 7 Each appellee is a resident of a nursing facility and receives Medicaid benefits to help pay for his or her care. The present controversy began when Mr. Drager requested that the Maryland Medical Assistance Program (“Program”) of the Department of Health and Mental Hygiene (the appellant) deduct his guardianship commissions with respect to his wards from their available incomes. 8 He sought commissions in the following amounts: $522.78 for Minnie Campbell, $294.62 for Lillian Cheatham, $416.27 for Melster Dystart, $ 689.04 for Mahalia LaCruze, $263.42 for Thomas Roundtree, $925.36 for Vivian Tazewell, and $829.37 for Daisy Watts. These requests were denied by the Medicaid Program, which advised Mr. Drager that the Department has “no provisions in [the] regulations to allow for such deductions.” Mr. Drager, on behalf of the appellees, appealed to the Office of Administrative Hearings (OAH), arguing that the commissions should be permitted as part of the personal needs allowance of each Medicaid recipient, that the Administrative Law Judges should follow prior OAH, Board of Review, and ¹¹⁶ Circuit Court decisions that permitted the deduction of such commissions, and that public policy considerations required a ruling favorable to the appellees. In each case, the ALJ affirmed the appellant’s decision, concluding that it had correctly held that the guardianship commissions are not a part of the personal needs allowance and, thus, are not a permissible deduction in calculating a Medicaid recipient’s available income. 9 The appellees’ other arguments were also rejected.

The Board of Review, to which the decisions were appealed, affirmed. The appellees sought judicial review in the Circuit Court for Baltimore City, and the cases were consolidated for hearing. Pressing the same arguments they had made before the AL Js, the appellees sought, in the Circuit Court, not just the deduction of the guardianship commissions, but attorneys’ fees to be paid on the same basis. Accepting their argument that guardianship commissions should be deducted from a recipient’s income as a part of the personal needs allowance, the Circuit Court reversed.

As to the guardianship commissions, the court ordered: “that the guardianship commissions calculated in accordance with the Annotated Code of Maryland, Estates and Trusts Article Sections 13-218 and 14-103, and approved by the Trust Clerk for the Circuit Court for Baltimore City for services rendered on behalf of [the named appellee] shall not be considered as ‘available income’ as set forth in COMAR 10.09.24.10D and shall be deducted prior to the ¹¹⁷ calculation of available income for [the named appellee]....” and “That the Baltimore City Department of Social Services Long Term Medical Assistance Unit be and is hereby directed to allow guardianship commissions in [a stated amount] to be paid unto Arthur L. Drager for services rendered by him in his capacity as Guardian of the Property of [the named appellee].” The trial court reasoned: “[I]n our guardianship docket, a lot of indigent people would be out on the street but for our appointing guardians and having Counsel represent the guardian, and then be able to get the benefits that they’re entitled to under the law. So, I don’t view it as sort of gilding the lily, I view it as essential to life and to living, and, therefore I will sign the Orders authorizing the fees be paid.” The court also granted the appellee’s request for, and ordered the Department to allow, a counsel fee of $600, for each case. We issued the writ of certiorari on our own motion, while this case was pending in the Court of Special Appeals. We now reverse the judgment of the Circuit Court for Baltimore City.

II

Our review of a decision by the Department of Health and Mental Hygiene, an administrative agency of the State, is governed by Md.Code (1984, 1999 Repl.Vol.) § 10-222 of the State Government Article, section (h) of which provides: “(h) In a proceeding under this section, the court may: “1. remand the case for further proceedings; “2. affirm the decision of the agency; or “3. reverse or modify the decision if any substantial right of the petitioner may have been prejudiced because a finding, conclusion, or decision of the agency: “c) results from an unlawful procedure; ¹¹⁸ “d) is affected by any other error of law; “e) is unsupported by competent, material, and substantial evidence in light of the entire record as submitted; or “f) is arbitrary or capricious.” Thus, the issue for the reviewing court is whether the administrative agency committed an error of law, or whether its decision ig supported by substantial evidence, or is “arbitrary or capricious.” Insurance Comm’r of State of Md. v. Equitable Life Assurance Soc’y of U.S., 339 Md. 596, 614-15 , 664 A.2d 862, 871-72 (1995). The question whether guardianship commissions are an allowable deduction from a Medical Assistance recipient’s available income under COMAR 10.09.24.10D(2)(d), as a “personal needs allowance,” is solely one of law. As to the review of questions of law, we have pointed out, see Office of People’s Counsel v. Maryland Public Service Comm’n, 355 Md. 1, 14 , 733 A.2d 996, 1003 (1999) (quoting Commissioners of Cambridge v. Eastern Shore Public Serv. Co., 192 Md. 333, 339 , 64 A.2d 151, 154 (1949)) and citing Mayor & Council of Crisfield v. Public Serv.

Comm’n, 183 Md. 179, 189 , 36 A.2d 705, 710 (1944) and Baltimore Gas and Elec. Co. v. Dep’t of Health and Mental Hygiene, 284 Md. 216, 230-31 , 395 A.2d 1174, 1181 (1979), that “[questions of law ... are ‘completely subject to review by the courts,’... although the agency’s interpretation of a statute may be entitled to some deference.” See also, Total Audio-Visual Systems, Inc. v. Department of Labor, Licensing and Regulation, 360 Md. 387, 394 , 758 A.2d 124, 128 (2000); Board of Physician Quality Assurance v. Banks, 354 Md. 59, 69 , 729 A.2d 376, 381 (1999). We have noted also that the deference under these circumstances is by no means dispositive, nor otherwise as great as that applicable to factual findings or mixed questions of law and fact. See Baltimore Bldg. and Constr.

Trades Council v. Barnes, 290 Md. 9, 14 , 427 A.2d 979, 982 (1981). Accordingly, this Court is not bound by the agency’s legal conclusions; we are, in short, “under no constraints in reversing an administrative decision which is premised solely upon an erroneous conclusion of law.” Peo ¹¹⁹ ple’s Counsel for Baltimore County v. Maryland Marine Mfg. Co., 316 Md. 491, 497 , 560 A.2d 32, 38 (1989); See also Board of Physician Quality Assurance v. Banks, 354 Md. 59, 67 , 729 A.2d 376, 380 (1999).

III

As noted above, the trial court ordered, in respect to each appellee, that the guardianship commissions “be considered as ‘available income’ ... and shall be deducted prior to calculation of available income.” That order must have been premised on the appellees’ written memorandum of law, which the court indicated it considered, because the appellees’ oral argument consisted only of rebuttal of some of the arguments advanced by the appellant. Other than the policy arguments that the trial court specifically rejected as “for a legislative body or regulatory body,” 10 the only basis for relief offered by the appellees in their written memorandum was that the commissions were a part of the “personal needs allowance.” We must assume, therefore, that the “personal needs allowance” is the basis on which the court decided the case, and we review its judgment with that in mind. 11 By statute, Maryland prescribes the eligibility requirements for the Medical Assistance Program — as relevant to the ¹²⁰ case sub judice, indigence or medical indigence, § 15-103(a)(2)(l), and an income, for one person, of $2500, § 15-109(b)(1). These requirements have been elucidated and further refined by regulations, the validity of which, substantively and procedurally, have not been, and are not now being, challenged. 12 As noted, COMAR 10.09.24.04D (4) defines “Medically Needy” as including “an aged, blind, or disabled person” and COMAR 10.09.24.08L and M confirm the eligibility limitation for the Medical Assistance Program. COMAR 10.09.24.10D, in pertinent part, provides: “D. Current Eligibility. “(1) Excess Resources.

When the countable resources are greater than the medically needy resource level, eligibility does not exist. “(2) Determination of Available Income. The following amounts shall be deducted from total income in the following order: “(a) A personal needs allowance of: “(i) $40 a month for an institutionalized person other than a person who meets the requirements of § D(2)(a)(iii) of this regulation.” 13 ¹²¹ “Personal needs allowance” is not further defined in the regulations. Insight into meaning may be obtained from perusal of the pertinent sections of the federal statute and the accompanying regulations. 42 U.S.C. § 1396a(a)(50) provides for a monthly personal needs allowance for certain institutionalized individuals and couples. Section 1396a (q)(l)(A) elaborates.

In pertinent part, it provides: “(q) Minimum monthly personal needs allowance deduction; ‘institutionalized individual or couple’ defined. “(1)(A) In order to meet the requirement of subsection (a)(50), the State plan must provide that, in the case of an institutionalized individual or couple described in subparagraph (B), in determining the amount of the individual’s or couple’s income to be applied monthly to payment for the cost of care in an institution, there shall be deducted from the monthly income (in addition to other allowances otherwise provided under the State plan) a monthly personal needs allowance— “(i) which is reasonable in amount for clothing and other personal needs of the individual (or couple) while in an institution, and “(ii) which is not less (and may be greater) than the minimum monthly personal needs allowance described in paragraph (2). “(B) In this subsection, the term ‘institutionalized individual or couple’ means an individual or married couple— “(i) who is an inpatient (or who are inpatients) in a medical institution or nursing facility for which payments are made under this title throughout a month and “(ii) who is or are determined to be eligible for medical assistance under the State plan. “(2) The minimum monthly personal needs allowance described in this paragraph [subsection] is $ 30 for an institutionalized individual and $ 60 for an institutionalized couple ¹²² (if both are aged, blind, or disabled, and their incomes are considered available to each other in determining eligibility).” As the federal regulations, 42 C.F.R. § 435.882 (c)(1), confirm, the deduction is for “clothing and other personal needs of the individual while in the institution.” As noted above, the Administrative Law Judges determined that the appellant’s reading of the applicable regulation was the correct one, that “the personal needs that are contemplated by the statutory personal needs allowance are incidental items used for clothing or for grooming one’s body,” items such as “haircuts, pedicures, shampoos and chewing gum, and not guardian’s commissions or other legal fees” and, accordingly, concluded that such fees could not be designated as a part of the “personal needs allowance” and excluded from available income. We agree. Guardianship commissions are not clothing, and they are not the kind of personal needs contemplated by the COMAR 10.09.24.10D. The amount of the “personal needs allowance” is $40.00.

That amount will accommodate, to be sure, the cost of personal items necessary for grooming and even some entertainment. It will not accommodate the cost of an item such as guardianship fees, which, as in this case, is likely to exceed, by far, the maximum amount of the allowance. Again, we agree with the appellant when it argues: “... Maryland’s regulatory scheme demonstrates that the Maryland regulation does not include guardianship commissions within the personal needs allowance.

While the $40 provided for in the regulation may be sufficient to pay for toiletries, clothing and other small items, it clearly is not sufficient to pay for larger and more expensive items such as guardianship commissions, which, as this case demonstrates, can be hundreds of dollars. If the