In the Matter of Frances Balzarini, as Administrator of the Estate of John Balzarini, Deceased v. Suffolk County Department of Social Services
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publication in the New York Reports.
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In the Matter of Frances
Balzarini, as Administrator of
the Estate of John Balzarini,
Deceased,
Respondent,
v.
Suffolk County Department of
Social Services et al.,
Appellants.
Steven C. Wu, for appellant New York State Department
of Health.
Christopher A. Jeffreys, for appellant Suffolk County
Department of Social Services.
Lewis C. Edelstein, for respondent.
READ, J.:
On this appeal, we hold that "exceptional
circumstances" causing "significant financial distress" within
the meaning of the joint federal-state Medicaid program do not
encompass everyday living expenses in excess of the "minimum
monthly maintenance needs allowance" (MMMNA), an amount deemed
sufficient by Congress for an individual to live in the community
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No. 17
after his or her spouse residing in a nursing home becomes
eligible for Medicaid.
I.
Upon entering a nursing home in March 2005, John
Balzarini ("the husband"; in Medicaid parlance, "the
institutionalized spouse") applied to the Suffolk County
Department of Social Services (DSS) for Medicaid benefits.
The
husband's total monthly income was $2,542.47, consisting of
Social Security and a private pension; when making the Medicaideligibility determination, DSS calculated that $2,414.67 of this
monthly income was available to pay for the husband's nursing
home expenses, which were then $227.37 per day at the Medicaid
rate, or approximately $6,800 per month.
The husband's wife,
Francis ("the wife"; in Medicaid parlance, "the community
spouse") submitted a spousal refusal letter to DSS (see Matter of
Tomeck, 8 NY3d 724, 729-730 [2007]); she had a monthly income of
$2,444.77, also from Social Security and a private pension.
Since the wife's income exceeded $2,378, the MMMNA for 2005, DSS
did not allocate any of the husband's available monthly income
for the wife's support.
Instead, as of May 1, 2005, the
effective date of the husband's Medicaid coverage, his entire
available monthly income of $2,414.47 was paid over to the
nursing home, while Medicaid took care of the balance of his
monthly nursing home costs of roughly $4,400 ($6,800 - $2,414.47
= $4,385.53).
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The husband exercised his right to contest DSS's
determination in a fair hearing conducted by an administrative
law judge on behalf of the New York State Department of Health
(DOH) (see Social Services Law § 22; 18 NYCRR 358-2.30 [b]; 3583.1 [g] [1]).1
He argued that "exceptional circumstances"
resulted in the wife's "significant financial distress" at the
level of the MMMNA, justifying an award increasing her monthly
income allowance (see 42 USC § 1396r-5 [e] [2] [B]; Social
Services Law § 366-c [8] [b]).
At the hearing held on December
5, 2005, the husband's representatives2 sought to prove that the
wife incurred monthly living expenses totaling about $4,800,
including mortgage payments, common charges, home owners'
insurance and real property taxes for the condominium jointly
owned by the husband and wife, where the wife still resided;
transportation costs (car loan payments and bills for insurance
and gasoline); food, clothing, prescription drugs and utility
bills; and about $1,500 for a minimum monthly payment on creditcard debt of between $25,000 and $30,000, most of which was
incurred before the husband entered the nursing home.
1
Effective October 1, 1996, DOH replaced the former New York
State Department of Social Services as the agency responsible for
administering the Medicaid program at the State level (see L
1996, ch 474, §§ 233-248; see also Social Services Law § 363-a
[1]; Public Health Law § 201 [1] [v]).
2
The fair hearing took place without the husband's
participation. Instead, he was represented by the wife and their
son, an accountant, who both testified about the family's
finances, as well as by counsel.
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In a decision dated December 16, 2005, DOH affirmed
DSS's determination to limit the wife's income to the MMMNA.
The
decision cited the legislative history of the Medicare
Catastrophic Coverage Act of 1988 (MCCA) (42 USC § 1396r-5),
which suggested that "'exceptional circumstances' are those which
are not ordinary and which arise out of an emergency or
unanticipated need"; and noted that pursuant to 18 NYCRR 360-4.10
(a) (10), "'financial distress' may result from recurring or
extraordinary non-covered medical expenses, amounts to preserve,
maintain, or make major repairs to a homestead, and amounts
necessary to preserve an income producing asset."
DOH concluded
that the evidence presented at the fair hearing failed to fulfill
these legal criteria because the wife merely established that her
actual living expenses exceeded the MMMNA; "these costs
constitute expenses that are to be absorbed by the MMMNA"; and
"[b]y their very nature, exceptional circumstances do not include
usual household monthly expenses."
The decision also noted that
the wife "conceded" that the credit card balances did not reflect
expenses for major repairs to the homestead or catastrophic
events; and presented "no bills or documentation of unpaid
recurring bills" or "verification of any medical costs" that she
had incurred.
In April 2006, the husband brought this CPLR article 78
proceeding (now pursued by the wife as administrator of the
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husband's estate)3 to contest DOH's decision upholding DSS's
determination.
He asked Supreme Court to "rais[e] the MMMNA . .
. to include the unsecured debt of the [institutionalized spouse]
and the community spouse"; specifically, the husband claimed that
the MMMNA should be increased by $2,536.67 a month.
In July
2006, Supreme Court transferred the matter to the Appellate
Division (see CPLR 7804 [g]).
In a decision issued in September 2008, the Appellate
Division concluded that "[w]ith the exception of the credit card
expenses," where DOH's determination was supported by substantial
evidence, the wife's "recurring monthly expenses" were "all
necessities of daily living" (55 AD3d 187, 194 [2d Dept 2008]).
The court further opined that because "reasonable, ordinary
expenses can be a sufficient basis upon which additional income
of the institutionalized spouse may be made available to the
community spouse" (id. at 191), the husband had "established
exceptional circumstances with respect to [the wife's] expenses .
. . for housing, utilities, automobile, Medicare, food, clothing,
medical care, and home maintenance," and so DOH's determination
was "not supported by substantial evidence and[] . . . must be
annulled to that extent" (id. at 195).
The Appellate Division
accordingly granted the petition in part "since the expenses that
are properly considered exceed [the wife's] income"; and remitted
the matter to DOH to calculate an increase in the MMMNA to take
3
The husband apparently died in March 2009.
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into account the wife's expenses in the specified categories
(id.).
In January 2009, the court granted DSS and DOH leave to
appeal, certifying to us the question of whether its opinion and
judgment had been properly made.4
II.
The spousal impoverishment provisions of the MCCA form
"a complex set of standards . . . designed to insure that the
community spouse retains necessary, but not excessive, income and
assets, which do not need to be depleted to make the
institutional spouse eligible for Medicaid" (Tomeck, 8 NY3d at
728).
In so doing, Congress corrected "a perceived flaw in the
Medicaid program" by eliminating the risk that a community spouse
would be reduced to penury (Matter of Golf v New York State Dept.
of Social Servs., 91 NY2d 656, 659 [1998]; see also Matter of
Schachner v Perales, 85 NY2d 316, 319-320 [1995] [discussing
prior law]).
New York enacted conforming legislation (Social
Services Law § 366-c), and the former New York State Department
of Social Services issued implementing regulations (18 NYCRR 3604.10).
The MCCA requires each state to establish the MMMNA for
the community spouse at a level equal to or exceeding 150 percent
4
The husband did not seek to cross appeal; therefore, so
much of the Appellate Division's opinion and judgment as affirmed
DOH's decision regarding credit-card debt is beyond our review
(see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d
144, 151 n 3 [2002]).
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of one-twelfth of the federal income official poverty line for a
family of two plus an excess shelter allowance for unusually high
housing expenses,5 subject to a cap of $1,500 per month in 1988
dollars (see 42 USC § 1396r-5 [d] [3], [4]).
The federal income
official poverty line is revised each year, and the cap is
indexed to the consumer price index for all urban consumers (see
id. at §§ [d] [3] [A] [i]; [g]).
New York has set the MMMNA
equal to the statutory cap (see Social Services Law § 366-c [2]
[h]); therefore, the MMMNA in New York is the maximum permitted
under federal law.
If the community spouse's income falls below the MMMNA,
the institutionalized spouse makes up the difference, assuming he
or she possesses sufficient income to do so (see 42 USC § 1396r-5
[d] [1] [B], [2]; Social Services Law §§ 366-c [2] [g]; [4] [b]
[providing for deduction for this purpose from institutionalized
spouse's monthly income]).
Further, if "either . . . spouse
establishes that the community spouse needs income, above the
level otherwise provided by the [MMMNA], due to exceptional
circumstances resulting in significant financial duress," then
"an amount adequate to provide such additional income as is
5
The "excess shelter allowance" of a community spouse is
equal to the community spouse's expenses for rent or mortgage
payments, taxes and insurance and, in the case of a condominium
or cooperative, required maintenance charges, as well as a
utility allowance, to the extent that these housing-related
expenses exceed 30 percent of 150 percent of one-twelfth of the
federal income official poverty line for a family of two (see 42
USC § 1396r-5 [d] [4]; Social Services Law § 366-c [k]).
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necessary" shall be substituted for the MMMNA (42 USC 1396r-5 [e]
[2] [B]).
Concomitantly, Social Services Law § 366-c (8) (b)
provides that
"[i]f either spouse establishes that the community
spouse needs income above the level established by the
social services district as the [MMMNA], based upon
exceptional circumstances which result in significant
financial distress (as defined by the commissioner in
regulations), [DOH] shall substitute an amount adequate
to provide additional necessary income from the income
otherwise available to the institutionalized spouse."
The implementing regulations, in turn, define "significant
financial distress" as
"exceptional expenses which the community spouse cannot
be expected to meet from the [MMMNA] or from amounts
held in resources. Such expenses may be of a recurring
nature or may represent major one time costs, and may
include but are not limited to: recurring or
extraordinary noncovered medical expenses; amounts to
preserve, maintain or make major repairs on the
homestead; and amounts necessary to preserve an incomeproducing asset" (18 NYCRR 360-4.10 [a] [10]).
"Exceptional" means "out of the ordinary" or "uncommon"
or "rare" (Webster's Third New International Dictionary,
Unabridged [Merriam-Webster, 2002] [http://unabridged.merriamwebster.com (Jan. 19, 2011)]).
As we explained in Schachner,
section 366-c of the Social Services Law therefore "contemplates
that an increase [in the MMMNA] is available only to alleviate
true financial hardship that is thrust upon the community spouse
by circumstances over which he or she has no control, as
exemplified by the circumstances enumerated in 18 NYCRR 360-4.10
(a) (10)" (Schachner, 85 NY2d at 325 [emphasis added]).
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Here, by contrast, the wife seeks an increased award to
pay for everyday living expenses.
But Congress created the MMMNA
precisely to cover just such ordinary and therefore, by
definition, non-exceptional items.
Indeed, the Centers for
Medicare and Medicaid Services, the federal office that oversees
Medicaid, has suggested that a reasonable definition for
"exceptional circumstances resulting in extreme financial duress"
is "[c]ircumstances other than those taken into account in
establishing maintenance standards for spouses" (see State
Medicaid Manual, § 3710.1 (10-89) (Rev 39)
[http://www.cms.hhs.gov/Manuals/PBM/itemdetail.asp?itemID=CMS0219
27] (Jan. 19, 2011)] [emphasis added]).
Plainly stated, the spousal impoverishment provisions
are not meant to enable the community spouse "to maintain [his or
her] prior life-style and have the public subsidize it" -- i.e.,
Medicaid dollars would have to make up for any monies diverted
from the institutionalized spouse's medical care to the community
spouse (Matter of Gomprecht v Gomprecht, 86 NY2d 47, 52 [1995]
[Family Court may not make an award in an amount greater than
MMMNA to community spouse absent showing of exceptional
circumstances within meaning of Social Services Law § 366-c]).
Instead, "the narrow purpose of the legislation providing for the
[MMMNA was] to protect the community spouse from financial
disaster when the primary income-providing spouse [became]
institutionalized"
(Schachner, 85 NY2d at 323).
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Congress
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established the MMMNA at an amount it deemed sufficient to
achieve this narrow purpose.
Thus, the spousal impoverishment
provisions do not guarantee a community spouse the same standard
of living -- even if reasonable rather than lavish by some lights
-- that he or she enjoyed before the institutionalized spouse
entered a nursing home.
Congress itself has decided what is a
reasonable basic living allowance for the community spouse: the
MMMNA.
The tradeoff for a married couple, of course, is that the
institutionalized spouse's costly nursing home care is heavily
subsidized by the taxpayer, as happened here (see p 2, supra).
Consequently, substantial evidence supports DOH's
determination denying the wife an increase in the MMMNA.
All the
wife attempted to show at the fair hearing was that she could not
maintain her existing lifestyle if all of the husband's income
was applied toward his medical care.
She therefore did not
demonstrate that her "significant financial distress" was caused
by "exceptional circumstances" within the meaning of the spousal
impoverishment provisions of federal and state law.
Accordingly, the order of the Appellate Division
insofar as appealed from should be reversed, with costs; the
petition dismissed; and the certified question answered in the
negative.
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Order, insofar as appealed from, reversed, with costs, petition
dismissed and certified question answered in the negative.
Opinion by Judge Read. Chief Judge Lippman and Judges Ciparick,
Graffeo, Smith, Pigott and Jones concur.
Decided February 15, 2011
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