Poindexter v. State of Illinois ( 2008 )

Docket No. 104853.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
ROBERT N. POINDEXTER et al., Appellants, v. THE STATE OF
ILLINOIS, Acting Through the Department of Human Services, et
al., Appellees.
Opinion filed April 3, 2008.
JUSTICE FITZGERALD delivered the judgment of the court,
with opinion.
Chief Justice Thomas and Justices Freeman, Kilbride, Garman,
Karmeier, and Burke concurred in the judgment and opinion.
OPINION
This appeal arises out of the state’s administrative efforts to
recover from plaintiffs costs of their respective spouses’ nursing
home care. Rather than exhausting administrative remedies, plaintiffs
filed a suit for declaratory and injunctive relief in the circuit court of
Sangamon County. They asserted that the state spousal support
provisions (305 ILCS 5/10–1 through 10–28 (West 2006); 89 Ill.
Adm. Code §103.10 et seq.) were preempted by the Medicare
Catastrophic Coverage Act of 1988 (MCCA) (42 U.S.C. §1396r–5
(2000)). The circuit court found in favor of plaintiffs and enjoined the
state from seeking spousal support. The appellate court reversed over
a dissent. 372 Ill. App. 3d 1021. We granted plaintiffs leave to appeal
(210 Ill. 2d R. 315(a)) and affirm the appellate court.
BACKGROUND
We first discuss the federal provision at issue, then the state
provision that is allegedly in conflict with it, and then the specific
procedural facts of this case.
A. Medicare Catastrophic Coverage Act
Medicaid is a cooperative federal-state program authorized under
Title XIX of the Social Security Amendments of 1965 (42 U.S.C.
§1396 et seq.). It provides medical services to both the categorically
needy and the medically needy. Hines v. Department of Public Aid,
221 Ill. 2d 222, 227 (2006). Under prior law, a couple needed to
deplete nearly all of their assets before either one could satisfy
Medicaid eligibility requirements, leaving the spouse who remained
in the community in a financially precarious position. H.R. Rep. No.
100–105, at 69 (1988), reprinted in 1988 U.S.C.C.A.N. 857, 892. In
1988, Congress attempted to fix the Medicaid system to prevent
“spousal impoverishment.” 42 U.S.C. §1396r–5 (2000); Hines, 221
Ill. 2d at 228. The MCCA provided a formula for allowing the
institutionalization of one spouse, while keeping the spouse
remaining in the community some distance from the poverty line.
H.R. Rep. No. 100–105, at 69 (1988), reprinted in 1988
U.S.C.C.A.N. 857, 892.
Another goal of the MCCA was “preventing financially secure
couples from obtaining Medicaid assistance.” Wisconsin Department
of Health & Family Services v. Blumer, 534 U.S. 473, 480, 151 L. Ed.
2d 935, 944, 122 S. Ct. 962, 967 (2002), citing H.R. Rep. No.
100–105, at 65 (1988), reprinted in 1988 U.S.C.C.A.N. 857, 888. The
MCCA prevented an “institutionalized spouse” from qualifying for
Medicaid by transferring his or her interest in assets to the
“community spouse.” See H.R. Rep. No. 100–105, at 73-74 (1988),
reprinted in 1988 U.S.C.C.A.N. 857, 896-97; Johnson v. Guhl, 91 F.
Supp. 2d 754, 761 (D. N.J. 2000) (with the MCCA, “Congress
intended to close the loophole where a couple could shelter resources
in the community spouse’s name while the institutionalized spouse
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received Medicaid”). Therefore, the MCCA tried to balance two
goals: “preventing impoverishment of the community spouse and
ensuring that no one avoided contributing his or her fair amount to
medical care.” Thomas v. Commissioner of the Division of Medical
Assistance, 425 Mass. 738, 740, 682 N.E.2d 874, 876 (1997).
To determine eligibility under these provisions, the state agency
takes a “snapshot” of the couple’s total current and forecasted
resources and income as of the beginning of the first continuous
period of institutionalization. See H.R. Rep. No. 100–105, at 73-74
(1988), reprinted in 1988 U.S.C.C.A.N. 857, 896-97; Mistrick v.
Division of Medical Assistance & Health Services, 154 N.J. 158, 171,
712 A.2d 188, 195 (1998); 42 U.S.C. §1396r–5(c)(1)(A) (2000).
Based on this snapshot, the agency attributes the couple’s resources
and income into spousal shares by a process of “deeming” and
“diversion.” See M. Farley, When “I Do” Becomes “I Don’t”:
Eliminating The Divorce Loophole to Medicaid Eligibility, 9 Elder
L.J. 27 (2001) (noting that the key provisions of the MCCA are the
“deeming” and “diversion” provisions).
The MCCA’s provisions consider both income and resources in
determining an applicant’s eligibility. Blumer, 534 U.S. at 481, 151
L. Ed. 2d at 944, 122 S. Ct. at 967. Under the income category, the
institutionalized spouse’s income cannot exceed the maximum level
set by the state. However, the community spouse’s income may not
be “deemed available” to the institutionalized spouse in determining
eligibility. 42 U.S.C. §1396r–5(b)(1) (2000). This is often called the
“name-on-the-check” rule. Blumer, 534 U.S. at 481, 151 L. Ed. 2d at
944, 122 S. Ct. at 967. Under this rule, a community husband’s
income that he retains for himself will not, under state law, be
counted against (or “deemed available” to) his institutionalized
spouse at the eligibility phase of the Medicaid process. Cf. Schweiker
v. Gray Panthers, 453 U.S. 34, 44, 69 L. Ed. 2d 460, 470, 101 S. Ct.
2633, 2640 (1981).
Next, the eligibility rules look at a couple’s total resources. The
state agency evaluates a couple’s assets collectively, regardless of
ownership. This collective evaluation of the couple’s assets closed the
loophole that allowed the couple to shelter resources solely in the
name of the community spouse. A couple’s total resources must be
below a certain statutorily prescribed level called the “Community
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Spouse Resource Allowance” (CSRA) before the institutionalized
spouse will be eligible. If the total resources are above this limit, the
couple must “spend down” to gain eligibility. Houghton v.
Reinertson, 382 F.3d 1162, 1165 (10th Cir. 2004); 42 U.S.C.
§1396r–5(c)(2) (2000).1
The CSRA also diverts some of the institutionalized spouse’s
resources where the community spouse has little of his or her own
resources. This may occur in the common case of a spouse who spent
his or her entire career working in the home. To avoid having to
“spend down” the entirety of a couple’s assets to qualify the
institutionalized spouse for Medicaid and thus impoverish himself or
herself in the process, the community spouse is allowed to keep the
CSRA. 42 U.S.C. §1396r–5(f)(2) (2000). In other words, the state
agency diverts some of the instititionalized spouse’s assets to the
community spouse to prevent spousal impoverishment. Conversely,
if the community spouse retains most of the wealth, then his or her
assets must be “spent down” only to the point of the CSRA.
The MCCA also provides diversion procedures regarding the
couple’s income to prevent spousal impoverishment. Once eligibility
is reached, the state agency reexamines the ailing spouse’s income to
determine how much must be contributed toward nursing home costs
and whether any of it should be left available to the community
spouse. The institutionalized spouse is permitted to divert a portion
of monthly income to the community spouse. This deduction from the
institutionalized spouse’s monthly income is known as the
“community spouse monthly income allowance” (CSMIA). 42 U.S.C.
§1396r–5(d)(1)(B) (2000). If the community spouse’s income falls
below the “minimum monthly maintenance needs allowance”
1
All nonexcludable resources of both spouses over and above the CSRA
are to be available to pay for nursing care costs of the institutionalized
spouse. See 42 U.S.C. §§1396r–5(c)(1)(A), (c)(2) (2000). The remaining
resources in excess of the community resource allowance are considered
available to the institutionalized spouse, who will be eligible for Medicaid
only if those remaining resources are less than or equal to $2,250. 20 C.F.R.
§416.1205 (2001). Any and all resources above the CSRA must then be
spent before an institutionalized spouse will be eligible for medicaid.
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(MMMNA), the agency allocates a portion of the institutionalized
spouse’s income to the community spouse. 42 U.S.C. §1396r–5(d)(3)
(2000).2 Thus, if the name-on-the-check rule does not provide the
community spouse with this measure of sufficient income, the agency
must look to the institutionalized spouse’s income to bring the
community spouse’s income up to the MMMNA. 42 U.S.C.
§1396r–5(d)(6) (added by Pub. L. No. 109–71, eff. February 8, 2006).
Finally, the MCCA provides a “fair hearing” procedure through
which a couple may challenge the results of the state agency’s
“snapshot.” At the fair hearing, also known as an “(e)(2)(C) hearing,”
the state agency can address any dissatisfaction with the CSRA and
the MMMNA. 42 U.S.C. §1396r–5(e)(2)(C) (2000). For example,
“[i]f the couple succeeds in obtaining a higher CSRA, the
institutionalized spouse may reserve additional resources for
posteligibility transfer to the community spouse. The enhanced CSRA
will reduce the resources the statute deems available for the payment
of medical expenses; accordingly, the institutionalized spouse will
become eligible for Medicaid sooner.” Blumer, 534 U.S. at 483-84,
151 L. Ed. 2d at 946, 122 S. Ct. at 969.
B. Spousal-Support Provisions
After the institutionalized spouse has received benefits, a state
agency may seek recovery of nursing home costs from the community
spouse. Other states refer to this as a “pay and chase” system. Cf. 372
Ill. App. 2d at 1034 (referring to Connecticut’s system, whereby it
cannot refuse Medicaid eligibility based on a couple’s resources, but
then must seek contribution from the community spouse). The State
of Illinois’ spousal support provisions are found in article X of the
Illinois Public Aid Code (305 ILCS 5/10–1 through 10–28 (West
2
The MMMNA is calculated by multiplying the federal poverty level for
a couple by a percentage set by the states. Since 1992, that percentage must
be at least 150% (42 U.S.C. §§1396r–5(d)(3)(A), (d)(3)(B) (2000)), but the
resulting MMMNA may not exceed $1,500 per month in 1988 dollars. 42
U.S.C. §§1396r–5(d)(3)(C), (g) (2000). At the time of litigation in this case,
the Illinois MMMNA, called in Illinois the “Community Spouse
Maintenance Needs Standard,” was $2,378.
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2006)). When one spouse receives Public Aid, the other spouse is
liable to the agency providing the benefits. 305 ILCS 5/10–2 (West
2006). Section 10–11 of the Code provides that if the appropriate
state agency determines that a spouse owes support, the collections
unit of that agency may issue an administrative order reflecting the
amount owed to the state as reimbursement. 305 ILCS 5/10–11 (West
2006).
The regulations promulgated by the state provide that the Illinois
Department of Human Services “shall seek to obtain support for
recipients from legally responsible individuals and shall seek the
enforcement of support obligations.” 89 Ill. Adm. Code §103.10.
However, “the Department shall not seek to obtain support for
residents of long term care facilities if income of the spouse in the
community is less than or equal to the” MMMNA. 89 Ill. Adm. Code
§103.10. In other words, the state may only recover from a
community spouse whatever monies that spouse may have in addition
to the MMMNA. Above that limit, 1% per month of the community
spouse’s gross annual income earned above $7,000 will be assessed
as responsible-relative liability. 89 Ill. Adm. Code §103.20(a)(2);
§103, Table A. The responsible family member must submit a copy
of his or her most recent federal income tax return for this
determination; otherwise that person is held liable for the full amount
of the assistance provided. 89 Ill. Adm. Code §103.20.
An administrative support order becomes “final” if the person
receiving the order fails to timely seek an administrative hearing. 305
ILCS 5/10–12, 10–13 (West 2006). Review of administrative findings
may be made pursuant to section 10–11 of the Public Aid Code (305
ILCS 5/10–11 (West 2006)), and final agency determinations can be
challenged under the Administrative Review Law (735 ILCS 5/3–102
(West 2006)).
C. Procedural History
The State of Illinois, acting through the Illinois Department of
Public Aid (Public Aid) and the Illinois Department of Human
Services (Human Services), administratively adjudged and sought
spousal support from certain plaintiffs for their institutionalized
spouses. Rather than proceeding with further administrative options,
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on July 22, 2004, plaintiffs Robert Poindexter, Mirl Whitaker,
Maurice Hardy, Virginia McCulley, and Roger Meredith filed a
complaint, in the circuit court of Sangamon County, for declaratory
and injunctive relief against the state, Public Aid, Human Services,
and the directors of the relevant state agencies (hereinafter,
defendants).
Plaintiffs alleged that each plaintiff was the “community spouse”
of an “institutionalized spouse” receiving medical assistance under
the Medicaid program administered by the State of Illinois. Plaintiffs
claimed that article X and its implementing regulations conflicted
with the MCCA, and thus were preempted pursuant to the supremacy
clause of the United States Constitution (U.S. Const., art. VI, cl. 2).
The MCCA, according to plaintiffs, prohibited the collection of
income from the community spouse after the eligibility determination.
They principally cited section 1396r–5(b)(1), which provides as
follows: “During any month in which an institutionalized spouse is
in the institution, except as provided in paragraph (2), no income of
the community spouse shall be deemed available to the
institutionalized spouse.” 42 U.S.C. §1396r–5(b)(1) (2000).
According to plaintiffs, this section prohibits the state from seeking
a contribution for the nursing home costs from the community spouse
as long as the institutionalized spouse remained in the institution.
Therefore, plaintiffs sought a declaration that Illinois’ spousal support
provisions, article X and its companion regulations, conflict with the
MCCA and thus are preempted under the supremacy clause (U.S.
Const., art. VI, cl. 2). Plaintiffs sought to permanently enjoin the
defendants from undertaking any further collection efforts. They
additionally asked for an order accounting for all the monies
defendants had received from plaintiffs and requiring defendants to
refund those sums, and to pay their litigation costs, expenses, and
reasonable attorney fees.
Defendants filed a motion to dismiss under section 2–619(1) of
the Code of Civil Procedure (735 ILCS 5/2–619(1) (West 2006))
based on plaintiffs’ alleged failure to exhaust their administrative
remedies as provided by the Public Aid Code and the Administrative
Review Law. According to documents submitted by defendants to the
trial court, plaintiff Poindexter had been issued an administrative
order requiring him to pay $19,902 to reimburse Human Services for
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payments made on behalf of his wife. Human Services also issued
Poindexter an ongoing assessment for her continued care of $1,210
a month. Poindexter did not seek a hearing from Human Services
within the time provided by the Code. He also did not seek review of
a subsequent order denying him a hearing because the request for a
hearing he eventually made was untimely. Defendants also contended
that plaintiffs Meredith and Hardy were subject to administrative
support orders, but they also failed to seek administrative hearings
with Human Services to contest the orders. Defendants’ documents
further showed that plaintiff Whitaker refused to answer a subpoena
directed to him by Human Services requesting information regarding
his income. Plaintiff McCulley also failed to provide Human Services
with requested information, although a Human Services local office
had information that her income from an annuity, beginning in
November 2003, exceeded $8,300 per month. The trial court denied
the defendants’ motion to dismiss.3
The original plaintiffs filed a motion entitled “Argument,” which
the trial court treated as a motion for summary judgment. In ruling in
favor of plaintiffs, the trial court noted the MCCA makes it clear that
income is attributable to the spouse to whom it is paid, i.e., the
“name-on-the-check” rule. Among other findings, the trial court
stated:
“[T]he MCCA does not distinguish between eligibility and
post-eligibility support, it rather plainly states: ‘During any
month in which an institutionalized spouse is in the
institution; except as provided in paragraph (2), no income of
the community spouse shall be deemed available to the
institutionalized spouse.’ The MCCA expressly states that ‘no
income’ of a community spouse may be deemed available to
3
The trial court later allowed motions to join by Orville Davis,
Catherine Josephson, Margaret Gonet, and Mary Lou Dickens. They all
alleged that they were community spouses of institutionalized spouses, that
the issues were the same as those of the other plaintiffs, and that granting
the motion would be in the interests of judicial economy. The record does
not reveal that defendants filed a specific motion to dismiss as to these
plaintiffs.
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an institutionalized spouse in ‘any month,’ during which the
institutionalized spouse receives medical assistance.”
(Emphases in original.)
The trial court enjoined defendants from seeking any support from
community spouses for any month in which the institutionalized
spouse is receiving Medicaid. It also ordered that the plaintiffs
recover costs and expenses.
Defendants appealed, and the appellate court reversed. The
appellate court first rejected the defendants’ argument that plaintiffs
failed to exhaust administrative remedies. The appellate court found
that the issue raised was purely one of law and “is not an issue that
falls within the particular expertise of an administrative agency,
especially considering it involves the interpretation of a federal
statute.” 372 Ill. App. 3d at 1025. The court noted that unlike the
situation presented in Arvia v. Madigan, 209 Ill. 2d 520 (2004), none
of plaintiffs’ claims are specifically required by statute to be brought
before an administrative law judge. Further, following Arvia,
plaintiffs’ claims are purely constitutional and there are no factual
disputes. 372 Ill. App. 3d at 1025-26.
Next, the appellate court addressed the preemption issue. The
court examined the language of the MCCA and stated:
“The introductory language of the MCCA clearly states
that the provisions of the MCCA are for the purposes of
determining Medicaid eligibility, which would not include
issues involving ongoing spousal support. To read the
subsection that states ‘no income of the community spouse’
that plaintiffs rely on as extending beyond the scope of an
eligibility determination would essentially render the
introductory language meaningless.” 372 Ill. App. 3d at 1029.
The court also noted that the word “deem” is a term of art in the
Medicaid context, used for purposes of determining eligibility. 372
Ill. App. 3d at 1029. Assets owned by each spouse are added together,
and each spouse is “deemed” to own half, irrespective of any state’s
laws concerning community property. 372 Ill. App. 3d at 1029-30,
citing Schweiker, 453 U.S. at 44-45, 69 L. Ed. 2d at 470, 101 S. Ct.
at 2640-41. Since the MCCA clearly indicates that it is intended to
apply to determinations of eligibility, the clause plaintiffs rely on, “no
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income of the community,” is clearly only in relation to
determinations of eligibility. 372 Ill. App. 3d at 1029. Justice Knecht
dissented, stating, in part: “I agree with the trial court: the MCCA
restricts the State from seeking support from the income of a
community spouse, even if his or her income is more than the
monthly needs allowance, for his or her ‘institutionalized spouse’
receiving Medicaid.” 372 Ill. App. 3d at 1036 (Knecht, J., dissenting).
We granted leave to appeal (210 Ill. 2d R. 315(a)).
ANALYSIS
We address two issues: whether plaintiffs were required to
exhaust administrative remedies before they sought declaratory and
injunctive relief in circuit court; and whether the MCCA preempts
state spousal support provisions.
I
We first address defendants’ contention that plaintiffs’ complaint
for declaratory relief pursuant to the Illinois declaratory judgment
statute (735 ILCS 5/2–701(a) (West 2006)) should be dismissed due
to failure to exhaust administrative remedies.4 Section 2–619 permits
a dismissal after the trial court considers issues of law or easily
4
Plaintiffs initially challenge this argument by claiming that defendants
were required to raise it in a cross-appeal. We disagree. Rule 318(a) (155
Ill. 2d R. 318(a)) provides that in all appeals “any appellee, respondent, or
coparty may seek and obtain any relief warranted by the record on appeal
without having filed a separate petition for leave to appeal or notice of
cross-appeal or separate appeal.” This court has invoked Rule 318(a) in
finding that allowance of one party’s petition for leave to appeal brings
before this court the other party’s requests for cross-relief. See Heastie v.
Roberts, 226 Ill. 2d 515, 546 (2007); Tri-G, Inc. v. Burke, Bosselman &
Weaver, 222 Ill. 2d 218, 242 (2006); Weatherman v. Gary-Wheaton Bank
of Fox Valley, N.A., 186 Ill. 2d 472, 490 (1999). We do note, however, that
plaintiffs correctly point out that the cover of defendants’ brief did not
request cross-relief. Rule 315(h) provides: “If the brief of the appellee
contains arguments in support of cross-relief, the cover of the brief shall be
captioned: ‘Brief of Appellee. Cross-Relief Requested.’ ” 210 Ill. 2d R.
315(h).
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proved issues of fact. 735 ILCS 5/2–619 (West 2006); Czarobski v.
Lata, 227 Ill. 2d 364 (2008). The question on appeal is “whether the
existence of a genuine issue of material fact should have precluded
the dismissal or, absent such an issue of fact, whether dismissal is
proper as a matter of law.” Kedzie & 103rd Currency Exchange, Inc.
v. Hodge, 156 Ill. 2d 112, 116-17 (1993). Our review proceeds de
novo. Czarobski v. Lata, 227 Ill. 2d at 369.
Defendants first argue that plaintiffs Poindexter, Meredith, and
Hardy failed to exhaust administrative remedies, including failing to
raise their constitutional claim at the administrative level. Defendants
cite two statutes as affirmative matter to defeat the plaintiffs’
complaint: (1) before filing suit, plaintiffs failed to exhaust their
administrative remedies, as required by section 10–11 of the Public
Aid Code (305 ILCS 5/10–11 (West 2006)); and (2) plaintiffs were
required to file an administrative review complaint under the
Administrative Review Law (735 ILCS 5/3–102 (West 2006)).
Plaintiffs respond that this is a facial challenge to the statute, falling
within a recognized exception to the exhaustion doctrine.
Courts apply the exhaustion doctrine to declaratory judgment
actions. Beahringer v. Page, 204 Ill. 2d 363, 374 (2003). Generally,
a party aggrieved by an administrative action must first pursue all
available administrative remedies before resorting to the courts.
Canel v. Topinka, 212 Ill. 2d 311, 320 (2004). The purpose of the
exhaustion doctrine is to allow administrative bodies to develop a
factual record and to permit them to apply the special expertise they
possess. Canel, 212 Ill. 2d at 320-21. Exhaustion also minimizes
interruption of the administrative process. Moreover, the aggrieved
party might succeed before the administrative body, obviating the
need for judicial involvement, thereby conserving judicial resources.
Canel, 212 Ill. 2d at 320-21. If a challenging party alleges that a
facially valid statute has been applied in an arbitrary or discriminatory
manner, “ ‘the rule generally prevails that recourse must be had in the
first instance to the appropriate administrative board.’ ” Beahringer,
204 Ill. 2d at 374, quoting Bank of Lyons v. County of Cook, 13 Ill. 2d
493, 495 (1958). The exhaustion doctrine also precludes review
where the Administrative Review Law provides a remedy. Canel, 212
Ill. 2d at 321.
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A party who challenges the validity of a statute on its face,
however, is not required to exhaust administrative remedies. Arvia,
209 Ill. 2d at 532. “The reason for this exception is apparent:
administrative review is confined to the proofs offered and the record
created before the agency.” Arvia, 209 Ill. 2d at 532-33. “A facial
attack to the constitutionality of a statute, which presents purely legal
questions, is not dependent for its assertion or its resolution on the
administrative record.” Arvia, 209 Ill. 2d at 533; see also Canel, 212
Ill. 2d at 321 (“An aggrieved party may seek judicial review of an
administrative decision without complying with the exhaustion of
remedies doctrine where a statute *** is attacked as unconstitutional
on its face”); Landfill, Inc. v. Pollution Control Board, 74 Ill. 2d 541,
550 (1978) (“Exhaustion is not required where a statute or rule under
which an administrative body purports to act is challenged as
unauthorized, since the judicial determination will affect the
jurisdiction of the administrative body in all matters, not only in the
instant circumstances”). Further, there is virtually no chance the
aggrieved party will succeed before an agency where the issue is the
agency’s own assertion of authority. Landfill, 74 Ill. 2d at 550-51.
Here, we are asked to decide whether the MCCA preempts the
spousal support law: a direct challenge to the authority of the
defendants to act in this manner. There has been no allegation that the
defendants misapplied the statute or regulation at issue or applied it
in an arbitrary manner. The complaint alleges Illinois’ provisions
conflict with federal law in violation of the United States
Constitution. Therefore, this matter falls squarely within an exception
to the exhaustion requirement, and defendants’ argument on this point
is rejected.
We next reject defendants’ argument that six of the other
plaintiffs, Whitaker, McCulley, Davis, Josephson, Gonet, and
Dickens, should have been dismissed because they had not yet
received final administrative orders, citing National Marine, Inc. v.
Illinois Environmental Protection Agency, 159 Ill. 2d 381 (1994). We
first note that defendants never filed a motion to dismiss as to
plaintiffs Whitaker, Davis, Josephson, Gonet, or Dickens.
Nevertheless, even if defendants’ motions as to those plaintiffs were
not forfeited, we would reject it. In National Marine, we noted that
in cases involving challenges to administrative actions, application of
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the ripeness doctrine prevents courts “ ‘ “from entangling themselves
in abstract disagreements over administrative policies” ’ ” and
“ ‘ “protect[s] the agencies from judicial interference until an
administrative decision has been formalized and its effects felt in a
concrete way by the challenging parties.” ’ ” National Marine, 159 Ill.
2d at 388, quoting Bio-Medical Laboratories, Inc. v. Trainor, 68 Ill.
2d 540, 546 (1977), quoting Abbott Laboratories v. Gardner, 387
U.S. 136, 148-49, 18 L. Ed. 2d 681, 691, 87 S. Ct. 1507, 1515 (1967).
There, the Illinois Environmental Protection Agency had issued a
notice informing the plaintiff that it could be potentially liable for a
“ ‘release or a substantial threat of a release of a hazardous
substance’ ” on the property pursuant to section 4(q) of the Act.
National Marine, 159 Ill. 2d at 383, quoting Ill. Rev. Stat. 1991, ch.
111½, par. 1004(q). This court noted that the “complaint, in essence,
sought to obtain judicial review of the Agency’s issuance of the 4(q)
notice prior to the Agency’s initiation of cost-recovery/enforcement
proceedings before the Pollution Control Board (Board) or the circuit
court.” National Marine, 159 Ill. 2d at 385. We found, “at this
preliminary stage in the administrative process, it is not clear whether
the Agency will even initiate a cost-recovery/enforcement proceeding
against plaintiff before one of these bodies. Clearly, under the
circumstances, plaintiff’s complaint is premature.” National Marine,
159 Ill. 2d at 390-91.
None of those considerations are present in this case. Both parties
admit that there are no issues of fact and that an interpretation of the
MCCA in light of the spousal support laws is all that is required. The
monetary amounts have been determined and are not challenged by
the community spouses. Unlike National Marine, in this case there
are no abstract issues that this court faces. We therefore reject
defendants’ exhaustion argument and turn to consideration of whether
article X is preempted by the MCCA.
II
As to the preemption issue, plaintiffs submitted to the trial court
a brief entitled “Argument,” which the defendants, the trial court and
the appellate court treated as a motion for summary judgment.
Because both parties agree that this case requires only an
interpretation of the MCCA in light of Illinois’ spousal support
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provisions, and admit that there are no issues of fact, we will do the
same. Summary judgment is appropriate where the pleadings show
that there is no genuine issue as to any material fact. 735 ILCS
5/2–1005(c) (West 2006). All cases involving summary judgment are
reviewed de novo. Sun Life Assurance Co. of Canada v. Manna, 227
Ill. 2d 128 (2007); see also Kinkel v. Cingular Wireless, LLC, 223 Ill.
2d 1, 15 (2006) (“[w]hether state law is preempted by a federal statute
is a question of law, subject to de novo review”).
The supremacy clause of the United States Constitution provides
that “[t]his Constitution, and the Laws of the United States *** shall
be the supreme Law of the Land *** any Thing in the Constitution or
Laws of any State to the Contrary notwithstanding.” U.S. Const., art.
VI, cl. 2. “State law is preempted under the supremacy clause in three
circumstances: (1) when the express language of a federal statute
indicates an intent to preempt state law; (2) when the scope of a
federal regulation is so pervasive that it implies an intent to occupy
a field exclusively; and (3) when state law actually conflicts with
federal law.” Village of Mundelein v. Wisconsin Central R.R., 227 Ill.
2d 281, 288 (2008), citing English v. General Electric Co., 496 U.S.
72, 78-79, 110 L. Ed. 2d 65, 74, 110 S. Ct. 2270, 2275 (1990). The
determination of whether state law is preempted turns on the intent of
Congress. Village of Mundelein, 227 Ill. 2d at 288, citing Wisconsin
Public Intervenor v. Mortier, 501 U.S. 597, 604, 115 L. Ed. 2d 532,
542, 111 S. Ct. 2476, 2481 (1991).
Here, although plaintiffs apparently contend that all three
circumstances are present in this case, their arguments as to the first
two circumstances amount to little more than one-sentence
conclusions. See In re Marriage of Bates, 212 Ill. 2d 489, 517 (2004)
(“A reviewing court is entitled to have issues clearly defined with
relevant authority cited”). Rather, plaintiffs’ argument centers on the
third circumstance of preemption, whether the state law actually
conflicts with federal law. Plaintiffs contend that MCCA section
1396r–5(b)(1) prohibits defendants from collecting spousal support
under article X. Defendants argue that section 1396r–5(b)(1) applies
only to eligibility determinations. They emphasize eligibility language
throughout the MCCA, and also point out that the “deemed eligible”
language contained in subsection (b)(1) applies only to eligibility
determinations. We agree with defendants.
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A careful review of the language of the MCCA reveals an
absence of consideration of the spousal support laws of which
plaintiffs complain. Rather, it sets out a mechanism of deeming and
diversion to implement the MCCA’s twin goals of ameliorating
spousal impoverishment and “preventing financially secure couples
from obtaining Medicaid assistance.” Blumer, 534 U.S. at 480, 151
L. Ed. 2d at 944, 122 S. Ct. at 967, citing H.R. Rep. No. 100–105, at
65 (1988). To achieve this, Congress directed that the state agency,
in making its eligibility determination, take a “snapshot” of the
couple’s current and future resources to determine what income
needed to be deemed to the institutionalized spouse and what income
needed to be diverted to the community spouse. This is indicated in
several ways.
We first examine the introductory section, subsection (a), which
reveals it is aimed at determining “eligibility,” as it states:
“(a) Special treatment for institutionalized spouses
(1) Supersedes other provisions
In determining the eligibility for medical assistance of
an institutionalized spouse *** the provisions of this
section supersede any other provision of this subchapter
*** which is inconsistent with them.” (Emphasis added.)
42 U.S.C. §1396r–5(a)(1) (2000).
This indicates the statute concerns rules enabling institutionalization
of an ailing spouse. Thus, the remainder of the statute is to be read
with this eligibility determination in mind. Notably absent from this
section is any language prohibiting a state from obtaining
reimbursement of medical expenditures through spousal support laws.
Next, we note that the MCCA’s provisions concerning “rules for
treatment of income,” found in subsection (b), relate to this eligibility
determination. It contains two subsections: (b)(1), entitled “separate
treatment of income”–the name-on-the-check rule–which relates to
deeming; and (b)(2), entitled “attribution of income,” which relates
to diversion.
The name-on-the-check rule properly assures that the Medicaid
eligibility determination for the ailing spouse takes into account only
income over which the ailing spouse has actual control. It provides:
“(1) Separate Treatment of Income
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During any month in which an institutionalized spouse is
in the institution, except as provided in paragraph (2), no
income of the community spouse shall be deemed available
to the institutionalized spouse.” (Emphasis added.) 42 U.S.C.
§1396r–5(b)(1) (2000).
This provision prevents the state agency from looking at a community
spouse’s income to prevent the receipt of benefits by an ailing spouse.
Furthermore, this section of the statute does not reference spousal
support laws in any way.
Moreover, this section–the name-on-the-check rule–uses a term
of art, “deemed available,” which points to eligibility determinations.
The United States Supreme Court explained the genesis of this
“deemed available” language, stating, “Until 1989, the year the
MCCA took effect, States generally considered the income of either
spouse to be ‘available’ to the other. We upheld this approach in Gray
Panthers, observing that ‘from the beginning of the Medicaid
program, Congress authorized States to presume spousal support.’ ”
Blumer, 534 U.S. at 479, 151 L. Ed. 2d at 944, 122 S. Ct. at 967,
quoting S. Rep. No. 89–404, at 78 (1965), reprinted in 1965
U.S.C.C.A.N. 1943, 2018. The Court then described how the MCCA
changed this determination after 1989–providing that a spouse’s
income shall not be deemed available to the other. It stated, referring
to subsection (b)(1), “The community spouse’s income is thus
preserved for that spouse and does not affect the determination
whether the institutionalized spouse qualifies for Medicaid. In
general, such income is also disregarded in calculating the amount
Medicaid will pay for the institutionalized spouse’s care after
eligibility is established.” Blumer, 534 U.S. at 480-81, 151 L. Ed. 2d
at 944, 122 S. Ct. at 967. Further, as the United States Supreme Court
observed in Blumer, this “deemed available” language applied to the
couple’s resources as well. Blumer, 534 U.S. at 479-80, 151 L. Ed. 2d
at 944, 122 S. Ct. at 967 (“Similarly, assets held jointly by the couple
were commonly deemed ‘available’ in full to the institutionalized
spouse” (emphasis added)). Accordingly, subsection (b)(1) must be
construed in light of the MCCA mechanisms to avoid spousal
impoverishment and prevent financially secure couples from
receiving benefits. Indeed, our research reveals that prior courts have
only construed this language in terms of its effect on the
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institutionalized spouse’s eligibility. See, e.g., Arkansas Department
of Health & Human Services v. Smith, 370 Ark. 490, ___ S.W.3d ___
(2007); In re Estate of Tomeck, 8 N.Y.3d 724, 872 N.E.2d 236, 840
N.Y.S.2d 550 (2007); King v. Secretary, Louisiana Department of
Health & Hospitals, 956 So. 2d 666 (La. App. 2007).
The next “rule for treatment of income,” subsection (b)(2),
provides guidance for “determining the income of an institutionalized
spouse or community spouse for purposes of the post-eligibility
income determination described in subsection (d).” 42 U.S.C.
§1396r–5(b)(2) (2000). The language of subsection (b)(2) is limited
to attributing income between spouses to provide the income values
needed in subsection (d) and was not directed to state spousal support
laws. In turn, subsection (d) is entitled “Protecting income for
community spouse” and refers to a procedure for raising an
impoverished community spouse’s income. 42 U.S.C. §1396r–5(d)
(2000). Subsections (d)(1)(B), (d)(2), and (d)(3) provide for the
allocation of available income from the institutionalized spouse to the
community spouse to maintain a minimum monthly income, or
MMMNA, when the community spouse’s own income is below that
level. 42 U.S.C. §1396r–5(d)(2) (2000). Subsection (2) defines the
difference between the MMMNA and the community spouse’s
income as the “community spouse monthly income allowance.” 42
U.S.C. §1396r–5(d)(2) (2000). The community spouse monthly
income allowance, along with other allowances defined in subsection
(d), is deducted from the institutionalized spouse’s income before
determining the amount of the institutionalized spouse’s income, as
determined in subsection (b), must be paid toward the costs of
institutional care. Thus, Congress intended subsection (d) to prevent
impoverishment of the community spouse by permitting income to be
allocated to that spouse from the institutionalized spouse when
necessary. This provision is not directed at spousal support laws such
as article X, where the community spouse may be required to
reimburse the state for some of the cost of care provided to the
institutionalized spouse.
Finally, the remainder of the MCCA regarding the CSRA,
MMMNA and the “fair hearing” is peppered with language referring
to the eligibility determination when the agency takes its “snapshot.”
See 42 U.S.C. §§1396r–5(c)(1) (“Computation of spousal share at
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time of institutionalization”), 1396(c)(1)(A) (“There shall be
computed [ ]as of the beginning of the first continuous period of
institutionalization”), 1396r–5(c)(1)(B) (“At the request of an
institutionalized spouse or community spouse, at the beginning of the
first continuous period of institutionalization”), 1396r–5(c)(2)
(“Attribution of resources at time of initial eligibility determination[.]
*** In determining the resources of an institutionalized spouse at the
time of application for benefits under this subchapter”),
1396r–5(d)(1) (“After an institutionalized spouse is determined or
redetermined to be eligible for medical assistance”), 1396r–5(e)(1)(A)
(“a determination of eligibility”), 1396r–5(e)(2)(A) (“If either ***
spouse is dissatisfied with a determination of”), 1396r–5(e)(2)(A)
(“with respect to such determination if an application for benefits
under this subchapter has been made on behalf of the institutionalized
spouse”). These provisions indicate that the MCCA is only concerned
with “diversion” after eligibility has been determined. It makes no
further provisions for the income of a community spouse which may
be above the MMMNA, except to the extent that a community spouse
may request a “fair hearing” to raise the MMMNA or CSRA.
Thus, the community spouse’s income becomes an issue only
when he or she does not receive sufficient income to cover the basic
costs of living. In that case, he or she may seek, through a “fair
hearing,” a portion of the institutionalized spouse’s income to help
defray necessary costs.5 This accords with the purposes of the Act: to
prevent impoverishment of the community spouse and to prevent
financially secure couples from receiving benefits. As the court
illustrated in Blumer,
“Although that hearing is conducted preeligibility, its purpose
is to anticipate the posteligibility financial situation of the
couple. The procedure seeks to project what the community
spouse’s income will be when the institutionalized spouse
becomes eligible. See Tr. of Oral Arg. 14 (officer conducting
5
Plaintiffs do not argue that defendants’ spousal support provisions
threaten to impoverish them in violation of the MCCA. They further do not
argue that they could potentially make use of this fair hearing mechanism
in order to protect any of their income from defendants spousal support
order.
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(e)(2)(c) hearing makes a calculation that ‘concerns the post
eligibility period’; question is will ‘the at-home spouse ...
have sufficient income in the post eligibility period, or does
the resource allowance need to be jacked up in order to
provide that additional income’). The hearing officer must
measure that projected income against the MMMNA, a
standard that, like the CSMIA, is operative only
posteligibility.” (Emphases in original.) Blumer, 534 U.S. at
491, 151 L. Ed. 2d at 951, 122 S. Ct. at 973.
Accordingly, while the MCCA addresses the posteligibility income
of a potentially impoverished spouse, it says nothing about the state’s
ability to seek reimbursement from an otherwise financially secure
community spouse.
The plaintiffs further argue the appellate court improperly limited
the MCCA to the first eligibility determination, pointing out that
eligibility is an ongoing, monthly proposition. But the court did not
do so; it merely stated that the eligibility determination does not
include issues of ongoing spousal support owed to the state. 372 Ill.
App. 3d at 1029. Nevertheless, although an institutionalized spouse’s
Medicaid eligibility may be redetermined each month, this is
irrelevant to the community spouse’s state-law obligation to pay
spousal support when their community-spouse income exceeds the
MMMNA.
We therefore find that the MCCA does not preempt article X of
the Public Aid Code. Accordingly, the appellate court correctly
reversed the trial court’s grant of declaratory, injunctive, and other
relief to the plaintiffs.
CONCLUSION
For the foregoing reasons, we find that plaintiffs were not
required to exhaust administrative remedies and that the MCCA does
not preempt article X of the Public Aid Code. Therefore, we affirm
the judgment of the appellate court which reversed the trial court.
Affirmed.
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