Haynes v. Dept. of Human Resources

470 S.E.2d 56 (1996)

121 N.C. App. 513

Herman HAYNES, Petitioner-Appellant, v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, Respondent-Appellee.

No. COA95-74.

Court of Appeals of North Carolina.

February 6, 1996.

*57 Central Carolina Legal Services, Inc. by Stanley B. Sprague and Richard Wells, Greensboro, for petitioner-appellant.

Attorney General Michael F. Easley by Associate Attorney General Kathryn J. Thomas, for respondent-appellee.

EAGLES, Judge.

We first note that the proper scope of appellate review of a trial court's consideration of a final agency decision is whether the trial court committed any error of law. Amanini v. N.C. Dept. of Human Resources, 114 N.C.App. 668, 675, 443 S.E.2d 114, 118-19 (1994). This is a two step process which requires us to determine "(1) ... whether the trial court exercised the appropriate scope of review and, if appropriate, (2) ... whether the court did so properly." Id. at 675, 443 S.E.2d at 118-19. Because petitioner's assignments of error raised questions of law, the proper scope of review for the trial court was de novo. Id. at 677, 443 S.E.2d at 119. The trial court determined that respondent committed no error of law. We must *58 now determine whether the trial court was correct.

Pursuant to Medicaid eligibility requirements, petitioner could not have resources in reserve (equity) in excess of $1500 to receive Medicaid benefits. The North Carolina Administrative Code defines equity as "the tax value of a resource less the amount of debts, liens, or other encumbrances." N.C.Admin.Code tit. 10, r. 50A.0201(33) (Nov. 1994). Petitioner argues that respondent violated the "availability" requirement of 42 U.S.C. § 1396a(a)(17)(B) when it considered petitioner's house available although the house "could not be sold." 42 U.S.C. section 1396a provides in pertinent part that "[a] State plan for medical assistance must ... (17)(B) provide for taking into account only such income and resources as are, as determined in accordance with standards prescribed by the Secretary, available to the applicant." N.C.Admin.Code tit. 10, r. 50B.0311(1) (Dec. 1994) provides:

The value of resources currently available to any budget unit member shall be considered in determining financial eligibility. A resource shall be considered available when it is actually available and when the budget unit member has a legal interest in the resource and he, or someone acting in his behalf, can take any necessary action to make it available.

Here, respondent argues that petitioner's house was "available" because petitioner had a legal interest in his house. Accordingly, respondent contends the house was properly considered a resource in determining petitioner's eligibility for Medicaid. However, the applicable North Carolina Administrative Code provision states that a resource shall be considered available when it is actually available and when the [petitioner] has a legal interest in the resource. See Correll v. Division of Social Services, 103 N.C.App. 562, 567, 406 S.E.2d 633, 636 (1991) (stating that "only resources actually available to an applicant are included in `reserve'"), rev'd on other grounds, 332 N.C. 141, 418 S.E.2d 232 (1992) (emphasis added).

Without deciding whether petitioner had a legal interest in the house, we conclude that the evidence petitioner presented at the hearing established that the house was not actually available. Petitioner presented evidence at the 27 April 1994 hearing that a real estate broker had examined petitioner's property. The real estate broker stated that the house "was in very poor condition, with no suitable kitchen floor, holes in the walls, etc." The real estate broker determined that the market value of the property was $20,000 to $25,000 "as is," but that the house might have a market value of $31,000 if petitioner made $5,000 in repairs. Petitioner's nephew testified at the hearing that he had attempted in vain to sell the house. One potential buyer considered purchasing the house for rental property, but he told petitioner's nephew that he would not pay even $28,000 for petitioner's house because it needed such major repairs. Petitioner's nephew testified that another potential buyer wanted to purchase the house, but he could not obtain financing. Petitioner's nephew testified that the real estate broker explained to him that a house cannot be financed when it is in such poor shape. This evidence showed that it was not feasible for petitioner to liquidate the property because it would not even bring enough money for petitioner to pay off the two outstanding mortgages on the property. Despite this evidence, the local hearing officer ruled that the house was reserve property and the trial court affirmed. Because we conclude that petitioner's house was not actually available, we hold that the hearing officer erred in classifying the house as reserve property and considering its value in determining petitioner's eligibility for Medicaid and that the trial court erred in affirming the hearing officer's decision. Petitioner was entitled to medicaid benefits because he had no available assets in excess of $1500.

Having determined that petitioner was entitled to benefits, we need not address petitioner's remaining arguments.

Reversed and remanded.

ARNOLD, C.J., and JOHN C. MARTIN, J., concur.