Hines v. Department of Public Aid ( 2006 )

Docket No. 100841.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
BETTY J. HINES, as Ex=r of the Estate of Beverly Tutinas,
Appellee, v. THE DEPARTMENT OF PUBLIC AID,
Appellant.
Opinion filed May 18, 2006.
JUSTICE KARMEIER delivered the judgment of the court,
with opinion.
Chief Justice Thomas and Justices Freeman, McMorrow,
Fitzgerald, and Garman concurred in the judgment and
opinion.
Justice Kilbride took no part in the decision.
OPINION
This appeal arises from the administration of the estate of
Beverly J. Tutinas, who died in 2001 leaving a home valued at
$69,641.89 and an automobile worth $2,000. A single issue is
presented for our review: May the Department of Public Aid 1
assert a claim against Beverly=s estate to obtain
reimbursement of $61,154.48 in Medicaid payments made on
behalf of her husband, who predeceased her? The circuit court
of Rock Island County determined that such a claim was
permissible under state and federal law. The appellate court
reversed and remanded, with one justice dissenting. 358 Ill.
App. 3d 225. We granted the Department=s petition for leave to
appeal. 177 Ill. 2d R. 315. For the reasons that follow, we now
affirm the judgment of the appellate court.
The relevant facts are not in dispute. Beverly and Julius
Tutinas were married for more than 48 years. They resided
together in Moline in a home to which they held joint title. The
couple also held joint title to an automobile. They had no
children.
In 1994, Julius= declining health required that he be cared
for in a nursing home. On July 7 of that year, the Department of
Public Aid approved Julius for medical assistance pursuant to
Title XIX of the Social Security Act, commonly known as the
Medicaid Act (42 U.S.C. '1396 et seq. (2000)).
Julius began receiving Medicaid payments in August of
1994. Those payments continued until he died in 1997 at the
age of 66. The payments totaled $61,154.48.
No probate estate was created for Julius following his
death. Because Julius and his wife, Beverly, held the marital
home and their automobile in joint title, full ownership of the
home and car passed to Beverly when Julius died. Beverly
lived on for several more years, eventually passing away in
May of 2001. Unlike Julius, Beverly neither applied for nor
received Medicaid payments.
1
Since this action commenced, the name of the Department of Public Aid
has changed. Effective July 1, 2005, it became known as the Department of
Healthcare and Family Services.
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Beverly left a will when she died naming her sisters, Shirley
A. Nelson and Betty J. Hines, as coexecutors. Beverly=s will
was admitted to probate by the circuit court of Rock Island
County on May 25, 2001, and letters of office were issued to
Betty Hines as independent executor (see 755 ILCS 5/28B2
(West 2002)).
Beverly=s estate consisted of only two items, her home and
the automobile she had once held in joint title with Julius. Both
items were liquidated during the administration of her estate.
The home was sold for $69,641.89, the car for $2000.
In July of 2001, the Department of Public Aid filed a claim
against the estate to recover the $61,154.48 in Medicaid
payments it had made on behalf of Julius between 1994 and
1997. Betty Hines, acting in her capacity as executor, filed a
notice that the claim was being disallowed. The Department of
Public Aid challenged the rejection of its claim on the grounds
that it was contrary to the applicable provisions of the Probate
Act of 1975 (755 ILCS 5/1B1 et seq. (West 2002)). Faced with
that challenge, Hines, as executor, petitioned the circuit court
pursuant to section 28B5 of the Probate Act (755 ILCS 5/28B5
(West 2002)) for instructions regarding the claim.
Following briefing and a hearing, the circuit court entered a
detailed order, recounting the pertinent facts of the case and
reviewing the governing law. In the circuit court=s view, section
5B13 of the Public Aid Code (305 ILCS 5/5B13 (West 2002))
and 89 Ill. Adm. Code '102.200, an administrative regulation
based on that statute, permitted the Department to seek
reimbursement from Beverly=s estate for the Medicaid
payments it had made on Julius= behalf. The circuit court
further concluded that the aforementioned provisions of Illinois
law do not conflict with and are not preempted by 42 U.S.C.
'1396p(b), the section of the Medicaid Act pertaining to
adjustment or recovery of Medicaid payments.
Hines appealed. After determining that it had jurisdiction to
hear the appeal pursuant to Supreme Court Rule 304(b)(1)
(155 Ill. 2d R. 304(b)(1)), 2 the appellate court concluded that 42
2
Rule 304(b)(1) authorizes appeals from A[a] judgment or order entered
in the administration of an estate, guardianship, or similar proceeding which
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U.S.C '1396p(b) does not permit the Department to seek
recovery from the estate of a Medicaid recipient=s surviving
spouse under the facts present here and that the provisions of
Illinois law invoked by the Department in this proceeding
exceed the authority granted by the Medicaid Act. It therefore
held that the Department=s claim against Beverly=s estate must
be dismissed. Accordingly, it reversed the judgment of the
circuit court and remanded for further proceedings. 358 Ill. App.
3d at 233. One justice dissented.
The Department petitioned for leave to appeal. 177 Ill. 2d R.
315. That petition was allowed, and the matter is now before us
for a decision on the merits. As indicated at the outset of this
opinion, the sole question before us is whether the
Department=s claim against Beverly=s estate was permissible
under the Medicaid Act and the state statutes and regulations
implemented pursuant to that Act. This issue presents a
question of law, which we review de novo. Bowman v.
American River Transportation Co., 217 Ill. 2d 75, 80 (2005).
In undertaking our review, we begin with a brief discussion
of the purposes and operation of the Medicaid Act. The Act,
which originated in the 1960s, created a cooperative program
under which the federal government reimburses state
governments for a portion of the costs of providing medical
assistance to low income groups. Gillmore v. Illinois
finally determines a right or status of a party. 155 Ill. 2d R. 304(b)(1).
Committee comments to this rule indicate that orders allowing or
disallowing a claim fall within its provisions. See In re Estate of Stepp, 271
Ill. App. 3d 817, 819 (1995). Reasoning that the circuit court=s order had the
effect of allowing the Department=s claim, the appellate court determined it
possessed jurisdiction under this rule to review that order on the merits. We
agree.
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Department of Human Services, 218 Ill. 2d 302, 304-05 (2006).
States are not required to participate in the Medicaid program.
Once they elect to do so, however, they must design their own
plans and set reasonable standards for eligibility and
assistance. See 42 U.S.C. '1396(a)(17) (2000). Such plans
and standards must comport with the Medicaid Act and the
regulations promulgated thereunder by the United States
Department of Health and Human Services. See Cohen v.
Quern, 608 F. Supp. 1324, 1326 (N.D. Ill. 1984); Smith v.
Miller, 665 F.2d 172, 175 (7th Cir. 1981).
The Act provides that participating states must designate an
agency to administer their Medicaid plans. See 42 U.S.C.
'1396(a)(5) (2000); 42 C.F.R. '431.10(a) (2003). The agency
designated by Illinois to administer its Medicaid plan is the
Department of Public Aid. See 305 ILCS 5/2B12(3) (West
2002); American Society of Consultant Pharmacists v. Garner,
180 F. Supp. 2d 953, 958 (N.D. Ill. 2001).
Under the Act, two types of low income groups are eligible
for medical assistance: the categorically needy and the
medically needy. Categorically needy persons are those who
are automatically eligible to receive cash grants under one of
the general welfare programsBthe Aid to Families with
Dependent Children program (AFDC) (42 U.S.C. '601 et seq.
(2000)) or the Supplemental Security Income for the Aged,
Blind, or Disabled program (SSI) (42 U.S.C. '1381 et seq.
(2000)). See 305 ILCS 5/5B2(1) (West 2002); 42 C.F.R.
'435.100 et seq. (2003). The medically needy are persons who
are ineligible to receive cash grants under AFDC or SSI
because their resources exceed the eligibility threshold for
those programs, but who still lack the ability to pay for medical
assistance. See 305 ILCS 5/5B2(2) (West 2002); 42 C.F.R.
'435.300 et seq. (2003). People who fall into the second
category are called MANG (Medical Assistance-No Grant)
recipients. See 89 Ill. Adm. Code '120.10(a) (Conway-Greene
CD-ROM March 2002). Gillmore v. Illinois Department of
Human Services, 218 Ill. 2d at 304-05. Julius was a MANG
recipient.
To qualify for Medicaid as a MANG recipient, a person must
have low income and low assets, and the person must Aspend
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down@ any resources over the statutory and regulatory limits.
See 89 Ill. Adm. Code '120.10(d) (amended at 24 Ill. Reg.
7361, eff. May 1, 2000). ASpend down@ requirements pose an
obvious hardship to the spouses of medical assistance
recipients, who face the prospect of being left with virtually
nothing to live on once the couple=s income and resources are
reduced to the level necessary to qualify for Medicaid. To
ameliorate that hardship, Congress enacted the Medicare
Catastrophic Coverage Act of 1988 (MCCA) (Pub. L. No.
100B360), which includes provisions to protect, financially, the
spouse who was not receiving medical assistance. These
provisions, commonly called the spousal impoverishment
provisions, allow the spouse to retain a certain level of
resources and income and protect those amounts from use as
payment for an institutionalized spouse=s nursing home care.
See 42 U.S.C. '1396rB5 (2000); Cleary v. Waldman, 167 F.3d
801, 805 (3d Cir. 1999).
The Medicaid Act affords an additional element of financial
protection to the families of Medicaid recipients by limiting the
circumstances in which a state may seek reimbursement for
the payments it made on the recipient=s behalf. The Act, as
amended by the Omnibus Budget Reconciliation Act of 1993
(OBRA) (Pub. L. No. 103B66, '13612(a)), expressly provides
that A[n]o adjustment or recovery of any medical assistance
correctly paid on behalf of an individual under the State plan
may be made,@ except in three specified circumstances. 42
U.S.C. '1396p(b) (2000). Only one of those exceptions is
relevant here. It is set forth in subsection (1)(B) of the statute,
which provides:
AIn the case of an individual who was 55 years of
age or older when the individual received such medical
assistance, the State shall seek adjustment or recovery
from the individual=s estate ***.@ 42 U.S.C.
'1396p(b)(1)(B) (2000).
The statute further provides that any adjustment or recovery
under the foregoing paragraph may only be made after the
death of the Medicaid recipient=s surviving spouse, if he or she
has one. 42 U.S.C. '1396p(b)(2) (West 2000).
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Congress has determined that for the purposes of 42
U.S.C. '1396(b), the definition of a deceased recipient=s
estate shall include all real and personal property and
other assets included within the individual=s estate as
defined by the particular state=s probate law. 42 U.S.C.
'1396p(b)(4)(A) (2000). Where the deceased recipient
received or is entitled to receive benefits under Aa long-
term insurance policy in connection with which assets or
resources in the manner described in clause (ii) [of
subsection (b)(1)(C) of the statute], the definition of the
deceased recipient=s estate shall also include:
Aany other real and personal property and other
assets in which the individual had any legal title or
interest at the time of death (to the extent of such
interest), including such assets conveyed to a survivor,
heir, or assign of the deceased individual through joint
tenancy, tenancy in common, survivorship, life estate,
living trust, or other arrangement.@ 42 U.S.C.
'1396p(b)(4)(B) (2000).
In addition, the Act provides that a state may, at its option,
adopt this second, more expansive definition of estate to all
cases, not just those involving long-term care insurance
policies. 42 U.S.C. '1396p(b)(4)(B) (2000).
Under the foregoing provisions, the Department clearly had
a right to seek reimbursement from Julius= estate, as defined
by Illinois law, following Beverly=s death. That, however, is not
what it is attempting to do. Through this action, it seeks
reimbursement from the estate of Beverly, his surviving
spouse, even though she, herself, received no Medicaid
payments.
Nothing in the Medicaid Act authorizes such recourse. As
we have just indicated, the Act provides three and only three
exceptions for when the state may seek reimbursement for
costs correctly expended on behalf of a Medicaid recipient. All
are specifically directed to the estate of the recipient. No
provision is made for collection from the estate of the
recipient=s spouse.
Where, as here, the language of a statute is clear and
unambiguous, the court must enforce it as written. It may not
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annex new provisions or substitute different ones, or read into
the statute exceptions, limitations, or conditions which the
legislature did not express. People ex rel. Department of
Professional Regulation v. Manos, 202 Ill. 2d 563, 568 (2002),
quoting Bronson v. Washington National Insurance Co., 59 Ill.
App. 2d 253, 261-62 (1965). Moreover, as the appellate court
correctly observed, it is a basic principle of statutory
construction that A >the enumeration of exceptions in a statute
is construed as an exclusion of all other exceptions.= @ 358 Ill.
App. 3d at 232, quoting People ex rel. Sherman v. Cryns, 203
Ill. 2d 264, 286 (2003). In cases such as this, where a statute
specifies exceptions to a general rule, no exceptions other than
those designated will be recognized. In re Estate of Tilliski, 390
Ill. 273, 283, 61 N.E.2d 24 (1945). The appellate court was
therefore correct to conclude that the Medicaid Act cannot be
construed as permitting the state to look to the estate of a
spouse of a recipient of medical assistance for reimbursement
of costs correctly paid on the recipient=s behalf.
Section 5B13 of the Illinois Public Aid Code (305 ILCS
5/5B13 (West 2004)) does give the Department a claim against
the estate of a person or Athe estate of the person=s spouse@
for amounts expended for the person for the type of nursing
home care received by Julius. The right to collection conferred
by this statute, however, is expressly limited. Under the
statute=s terms, the Department may assert its claim for
reimbursement only to the Aextent permitted under the federal
Social Security Act.@ 305 ILCS 5/5B13 (West 2004). Such a
limitation is required by the primacy of federal law. Although a
state possesses wide discretion in administering its Medicaid
programs, that discretion is qualified by its mandate to adhere
to federal statutes and corresponding federal regulations. See
Smith v. Miller, 665 F.2d at 178. As we have just explained,
federal law does not authorize a state to seek reimbursement
of Medicaid payments from the estate of a recipient=s spouse. If
section 5B13 of the Public Aid Code were read to authorize
collection from the estate of a recipient=s spouse, it would
therefore exceed what is permitted by the Social Security Act
and could not serve as the predicate for the Department=s
claim against Beverly=s estate. See In re Estate of Budney, 197
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Wis. 2d 948, 950, 541 N.W.2d 245, 246 (App. 1995); In re
Estate of Craig, 82 N.Y.2d 388, 394, 624 N.E.2d 1003, 1006,
604 N.Y.S.2d 908, 911 (1993). The same is true for 89 Ill. Adm.
Code '102.200, the administrative regulation based on that
statute invoked by the circuit court in support of its decision.
While the Medicaid Act does not authorize the Department
to proceed against Beverly=s estate, that does not end our
inquiry. As we have just discussed, the Act bestows on Illinois
the option of defining the estate of a Medicaid recipient such as
Julius more expansively than under this state=s normal probate
law. 42 U.S.C. '1396p(b)(4)(B) (2000). Under the Act, assets
conveyed to a spouse the way the house and automobile were
conveyed to Beverly could have been defined by the Illinois
General Assembly to remain part of the Medicaid recipient=s
estate for purposes of recovering Medicaid payments.
Reported decisions indicate that some other states have
elected to take this approach. See In re Laughead, 696 N.W.2d
312 (Iowa 2005) (under Iowa Code section 249A.5(2)(c), the
estate of a medical assistance recipient includes any real
property, personal property or other asset in which the recipient
had any interest at the time of the recipient=s death, to the
extent of such interests, including but not limited to interests in
jointly held property); Estate of DeMartino v. Division of
Medical Assistance & Health Services, 373 N.J. Super. 210,
861 A.2d 138 (2004) (N.J. Stat. Ann. '30:4DB7.2 (West 1997)
defines deceased Medicaid recipient=s estate to include Aassets
conveyed to a survivor, heir or assign of the recipient through
joint tenancy, tenancy in common, survivorship, life estate,
living trust or other arrangement@); State of Nevada
Department of Human Resources v. Ullmer, 120 Nev. 108,
___, 87 P.3d 1045, 1050 (2004) (statutes broaden the
definition of Aestate@ to include Aassets conveyed to a survivor,
heir or assign of the [deceased] [Medicaid] recipient through
joint tenancy, tenancy in common, survivorship, life estate,
living trust or other arrangement@); In re Estate of Jobe, 590
N.W.2d 162, 164 (Minn. App. 1999) (Minnesota statute
expressly allows claims for recovery of medical assistance
costs rendered for predeceased spouse up to value of assets
that Awere marital property or jointly owned property *** during
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the marriage); In re Estate of Knudson, 132 Idaho 213, 216,
970 P.2d 6, 9 (1998) (Medicaid recipient=s estate defined by
Idaho statute to include community property of surviving
spouseBMedicaid Act preempts recovery from surviving
spouse=s estate except to the extent of such community
property).
For a brief period, the General Assembly took that
approach as well. It exercised the option conferred on states by
42 U.S.C. '1396p(b)(4)(B) and, in 1995, amended section
5B13 of the Public Aid Code (305 ILCS 5/5B13 (West 2004)) to
make the more expansive definition of estate applicable in all
proceedings to recover amounts correctly paid on behalf of
Medicaid recipients in Illinois. After only a year, however, the
legislature changed its position. In 1996, it enacted new
legislation which expressly limited the more expansive
definition of estate to the only situation where the Medicaid Act
requires it to be used, namely, where the deceased recipient
Ahas received (or [was] entitled to receive) benefits under a
long-term care insurance policy.@ See 305 ILCS Ann. 5/5B13,
Historical & Statutory Notes, at 189 (Smith-Hurd 2001). That
limitation was in effect when both Julius and Beverly died, and
it remains in effect today.
The existence of this statutory limitation distinguishes our
case from In re Estate of Schwab, 1998 N.D. 226, 586 N.W.2d
847, a decision cited by the Department in support of its
position. The North Dakota statutes at issue in Schwab did not
define a recipient=s estate as Illinois has, and the matter was
left to the court to delineate. It is therefore of no use in
resolving this case. Our legislature has spoken clearly on the
matter, and we are bound to follow the law as written.
Because no long-term care insurance policy was involved
here, Julius= estate consists only of that property that would be
regarded as part of his estate under the Probate Act of 1975
(755 ILCS 5/1B1 et seq. (West 2004)). 305 ILCS 5/5B13 (West
2004). Under Illinois probate law, property held in joint tenancy
is never part of the estate of the joint owner who dies first.
Upon the death of one joint tenant, title to the property
automatically vests in the surviving joint tenant. See In re
Estate of Alpert, 95 Ill. 2d 377, 381 (1983). Accordingly, the
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house and automobile at issue in this case cannot be deemed
part of Julius= estate for purposes of the Department=s action
for reimbursement of the Medicaid payments made on his
behalf. The proceeds from the sale of that property are
therefore not subject to the Department=s claim under section
5B13 of the Public Aid Code (305 ILCS 5/5B13 (West 2004)).
For the foregoing reasons, the Department=s claim for
reimbursement should not have been permitted by the circuit
court. The appellate court=s judgment reversing the circuit
court=s order and remanding the cause to the circuit court for
further proceedings is therefore affirmed.
Affirmed.
JUSTICE KILBRIDE took no part in the consideration or
decision of this case.
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