mary-f-henson-and-dena-gaetens-v-texas-health-and-human-services ( 2015 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-13-00621-CV
Mary F. Henson and Dena Gaetens, Appellants
v.
Texas Health and Human Services Commission and Chris Traylor1, M.D.,
Commissioner of the Texas Health and Human Services Commission, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. D-1-GN-10-000077, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING
MEMORANDUM OPINION
Appellant Mary F. Henson, by and through her guardian, Dena Gaetens,2 appeals the
judgment of the district court affirming a final order of the Texas Health and Human Services
Commission. The Commission’s order concluded that Henson became eligible for nursing-facility
Medicaid benefits on April 1, 2009. On appeal, Henson contends that the district court erred in
affirming the order because, according to Henson, the Commission failed to properly account for
certain guardianship orders when it concluded that Henson failed to meet the financial-eligibility
requirements for March 2009. We will affirm the judgment of the district court.
1
This suit was originally brought against Kyle Janek, M.D., the former Commissioner of the
Texas Health and Human Services Commission. We automatically substitute the name of the
successor to this office, Chris Traylor. See Tex. R. App. P. 7.2.
2
Although the administrative proceedings underlying this appeal were initiated by Gaetens
on Henson’s behalf, Gaetens, individually, is not a party to these proceedings.
BACKGROUND
The Texas Health and Human Services Commission is the agency designated to
administer the Texas Medicaid program. See Tex. Hum. Res. Code § 32.021; Tex. Gov’t Code
§ 531.021(a). Chapter 358 of the Texas Administrative Code establishes the Medicaid eligibility
requirements for Medicaid funded programs.3 See 1 Tex. Admin. Code § 358.105 (Tex. Health &
Human Servs. Comm’n, Description of Eligible Clients). To be eligible for Medicaid benefits a
person must demonstrate, among other things, that they meet certain financial-eligibility
requirements. See id. §§ 358.105, .610(d) (Medicaid Coverage).
On April 17, 2009, Henson, through her guardian, applied for nursing-facility
Medicaid benefits. See id. §§ 358.600-.623 (Application for Medicaid). At the time of filing, Henson
was already a resident in a nursing facility and was paying for her care privately, although she had
exhausted almost all of her available assets. Upon reviewing the application, the Commission
notified Henson that she was eligible to receive Medicaid benefits effective April 1, 2009. Henson
disagreed with the effective date for benefits as determined by the Commission, complaining that
the Commission erred in determining that she had failed to meet the financial-eligibility requirements
for the month of March 2009. Consequently, Henson sought an administrative hearing, also known
as a “Fair Hearing,” to contest the decision. See id. § 358.720 (Client Right to Appeal).
3
Chapter 358 of the Texas Administrative Code was amended September 2009. See
34 Tex. Reg. 5497 (2009) (Tex. Health & Human Servs. Comm’n). The Commission applied the
version of Chapter 358 that was in effect when Henson applied for benefits. Unless otherwise
indicated, all references to Chapter 358 in this opinion are to rules promulgated by the Commission
as they existed at that time.
2
The hearing officer assigned to Henson’s case conducted an evidentiary hearing and
issued an order sustaining the Commission’s determination of the April 1 effective date. Henson then
sought an administrative review of the hearing officer’s decision. See Tex. Gov’t Code § 531.019(c)
(requiring administrative review as prerequisite to judicial review of decision related to benefits).
Upon reviewing the administrative record, the reviewing attorney determined that “the hearing
officer developed the record appropriately, and the record reflects that all policies and procedures
were properly applied.” Accordingly, the Commission, through the reviewing attorney, affirmed the
hearing officer’s decision as the Commission’s final order. See id. § 531.019(e).
Henson filed suit in Travis County district court. After admitting the administrative
record, the court concluded that “the Fair Hearing Decision in Case No. 0423309, styled In the
Matter of Mary Frances Henson, should be affirmed, in all respects.” This appeal followed.
STANDARD OF REVIEW
Decisions by the Commission related to Medicaid benefits are subject to judicial
review under section 2001.174. Id. § 531.019(g). Under this standard, a reviewing court must
reverse or remand an agency order if substantial rights of the appellant have been prejudiced because
the administrative findings, inferences, conclusions, or decisions are
(A) in violation of a constitutional or statutory provision;
(B) in excess of the agency’s statutory authority;
(C) made through unlawful procedure;
(D) affected by other error of law;
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(E) not reasonably supported by substantial evidence considering the reliable and
probative evidence in the record as a whole; or
(F) arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion.
Id. § 2001.174(2). However, as a reviewing court, we may not substitute our judgment for that of the
agency on the weight of the evidence on matters committed to agency discretion. Id. § 2001.174(1).
An agency order is presumed to be valid, and it is supported by substantial evidence if the evidence
in its entirety is sufficient to allow reasonable minds to have reached the conclusions that the agency
must have reached to justify the disputed action. Texas State Bd. of Dental Exam’rs v. Sizemore,
759 S.W.2d 114, 116 (Tex. 1988).
To the extent our review turns on the interpretation of the Commission’s rules, we
review these questions de novo. CenterPoint Energy Houston Elec., LLC v. Public Util. Comm’n,
408 S.W.3d 910, 916 (Tex. App.—Austin 2013, pet. denied). In interpreting an administrative
rule, our primary objective is to ascertain and give effect to the agency’s intent. Id. If the rule is
ambiguous or leaves room for policy determinations, we defer to the agency’s interpretation unless
the administrative interpretation is plainly erroneous or inconsistent with the regulation or its
underlying statutes. Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248, 254-55 (Tex. 1999);
CenterPoint, 408 S.W.3d at 916-17.
4
ANALYSIS
In what is, in effect, one issue on appeal, Henson complains that the Commission
erred in determining that she failed to establish her financial eligibility for Medicaid nursing-facility
benefits for the month of March 2009.4
The Commission determines an applicant’s financial eligibility for Medicaid
benefits by assessing the person’s income and resources and applying federal income and resources
eligibility criteria. 1 Tex. Admin. Code § 358.405 (Categories of Resource Limits). An individual
meets resources-eligibility criteria if the value of all countable resources does not exceed $2,000.
See 20 C.F.R. 416.1205 (limitation on resources). A person’s value of countable resources is
determined as of 12:01 a.m. on the first day of the month for which the person seeks benefits,
although eligibility may be re-established no sooner than the first day of the next month. 1 Tex.
Admin. Code § 358.400(a), (b) (General Resources).
At the time the Commission reviewed Henson’s application, the term “resources”
was defined in Chapter 358 as “cash, other liquid assets, or any real or personal property or other
nonliquid assets owned by a client, his spouse, or parent, that could be converted to cash.” See id.
§ 358.100(103) (Definitions). In addition, resources were considered available to a person even
when they were being managed by the person’s legal guardian, so long as the guardianship papers
did not show that the guardian was prohibited from accessing the resources. Id. § 358.415(e), (f)
4
Although Henson also appears to separately argue that her constitutional rights to due
process and equal protection have been violated, she fails to explain how her rights have been
violated or to provide citations to the record in support of this claim. Accordingly, we conclude that
this argument is waived as inadequately briefed. See Tex. R. App. P. 38.1(i) (appellant’s brief must
contain clear and concise argument for contentions made, with appropriate citations to authorities
and to record).
5
(Ownership and Accessibility). A client’s bank account, as of 12:01 a.m. on the first day of the
month for which eligibility is being tested, was considered a countable resource. Id. § 358.435(b)(1)
(Liquid Resources). Under Rule 358.435, an applicant’s countable resources were reduced by the
amount of funds encumbered before 12:01 a.m. on the first day of the month. Id. § 358.435(b)(2).
The Commission reduced a bank account balance as of 12:01 a.m. on the first day of the month by
the amount of any checks written before that time that had not yet been processed by the financial
institution. Id.
The Commission found that Henson’s banking records established that on March 1,
2009, at 12:01 a.m., the balance available to Henson was $2,239.77. Because this balance exceeded
the $2,000 eligibility threshold and because there was no evidence of any unprocessed checks at that
time, the Commission concluded that Henson failed to demonstrate her financial eligibility for the
month of March 2009. The Commission, however, did find that Henson became eligible for benefits
effective April 1, 2009.
On appeal, Henson acknowledges that $2,000 is the applicable financial-eligibility
limit. In addition, Henson does not dispute that her bank balance was $2,239.77 on March 1 at 12:01
a.m., that there were no outstanding checks that had not yet been processed, and that her guardian
was entitled to use the funds in her bank account for her support and maintenance. Instead, Henson
argues that the Commission erred in failing to deduct certain guardianship orders as “encumbrances”
from this bank balance which, according to Henson, would demonstrate that her countable resources
were, in fact, below the $2,000 eligibility threshold.
In support of her argument, Henson asserts that court orders requiring a guardianship
to pay a claim are effective the day they are signed and that, under a prior policy decision issued by
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the Commission, these types of guardianship orders are considered legal encumbrances against the
applicant’s estate.5 Henson contends that, in this case, her guardian was required by the Texas
Probate Code to file an application with the probate court requesting a monthly allowance and that
the probate court granted that request by issuing its “order setting monthly allowance” in the amount
of $2,074.60 per month. See Tex. Prob. Code §§ 767-782. Henson also points out that the probate
court separately ordered that Henson’s guardian pay up to $1,100 for certain expenses, including a
wheelchair. Henson reasons that the probate court orders setting the monthly allowance for Henson’s
needs and authorizing the payment of certain expenses were effective the day they were signed and,
thus, operated as encumbrances on her bank account on that same day, regardless of when the money
was actually spent.
In response, the Commission emphasizes that Rule 358.345 expressly defines an
encumbrance on a bank account to be “the amount of any checks written before that time that have
not yet been processed by the financial institution.” Further, the Commission argues that, to the
extent court orders may, under certain circumstances, operate as encumbrances with respect to
calculating an applicant’s countable resources, those circumstances are not present in this case.
The Commission made several findings relevant to the guardianship orders that
form the basis of Henson’s complaint. Specifically, the Commission found:
(7.) Prior to the Medicaid Application, it was necessary for part of [Henson’s]
monthly expenses to be met using [Henson’s] asset reserves. [Henson’s]
5
Henson cites to a document entitled Excerpt of Memorandum issued by the Commission
and dated May 29, 1996. In the document, the Commission staff concluded, in another case, that
a court order to pay a debt was considered a “legal encumbrance at the point in time the court makes
the order.”
7
income was $2,052.91 per month. A court order allotting a monthly allowance
for expenditures in the amount of $2,074.40 per month from [Henson’s]
assets was established on November 19, 2008.
(8.) [Henson’s] guardian was limited by the order to spending [Henson’s] assets
as court appointed guardian to the amount of $2,074.40 monthly. The order
required that funds spent be for the care, custody, and maintenance of
[Henson].
(9.) The order allotment was based on approximate monthly expenses of
maintaining [Henson] that were presented in a request to the court on behalf
of the Guardian. These were anticipated expenses and based on Guardian’s
own estimates for [Henson’s] needs as presented to the court for: nursing
home, personal needs, medicare premium, diapers, medical doctors,
prescription.
(10.) The court order does not place specific limits/prohibitions on Guardian for
spending allotted funds, nor does it specify spending limits by item. While
the monthly allotment was clearly directed based on Guardian’s own
submission of anticipated need, the only specific restrictions to Guardian’s
access to [Henson’s] assets is that the monthly use may not exceed $2,074.40.
(11.) The court order allows for expenditure “up to and including the amount of
$2,074.40 per month.” The court order does not prohibit accumulation of
monies in [Henson’s] account when the full $2,074.40 is not used in any
given month.
(12.) The court order is for an allowance of expenditure to meet general needs and
is not a specific encumbrance to pay specified amounts to limited parties for
exact services.
...
(16.) The special one-time court order for January 12, 2009 of $1,100 for a
recliner, dresser, wheelchair, and night stand for [Henson] are based on a
petition to meet some of [Henson’s] special needs made by the Guardian.
(17.) The special one-time order of January 12, 2009 notes the date of January
2009 on the request and allows the purchases to be made, however, it does
not specifically limit the purchase of the items to that month, require the
exact amounts noted to be spent, or make an absolute requirement that the
items be purchased.
8
The Commission argues that these findings support the Commission’s conclusions that the
November 19 order and January 12 order “did not prohibit the guardian access to any funds” and
that neither order operated as an “encumbrance against the funds in [Henson’s] bank account.”
We agree.
Rule 358.345, regarding encumbrances on bank accounts, by its plain language,
permits a reduction of an applicant’s account balance with respect to the “amount of any checks
written before that time that have not yet been processed by the financial institution.” 1 Tex. Admin.
Code § 358.435(b)(2). Here, Henson does not contend, nor do the Commission’s findings suggest,
that Henson’s guardian had acted on the probate orders by writing checks that had not yet been
processed as of March 1, 2009. In addition, to the extent we may reasonably construe Rule 358.435
as requiring the Commission to treat a court order as an “encumbrance” against a bank account
when the order requires the payment of legal debt—as Henson contends we should—there is no
evidence that would support the conclusion that the probate orders in this case operated as such
encumbrances. That is, the Commission’s findings of fact, describing and characterizing the orders
at issue, are supported by substantial evidence in the administrative record—namely, the express
language of the orders themselves. These findings establish that the November 19 and January 12
probate orders do not operate to restrict Henson’s guardian’s ability to access any funds and that they
are not orders requiring the payment of any specific legal debt.6 Therefore, assuming without
6
To the extent Henson suggests that the funds in her bank account are not “resources” at all
because the funds are not generally available to her guardian absent permission from the probate
court, we disagree. Pursuant to Rule 358.415(e), an applicant’s resources in guardianship are
generally considered available despite the fact that the guardian may need to routinely “petition the
court for permission to dispose of a client’s resources.” 1 Tex. Admin. Code § 358.410. This is
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deciding that Henson’s interpretation of the applicable Medicaid rules regarding encumbrances on
bank accounts is reasonable and correct, we cannot conclude that the November 19 and January 12
probate orders operate as deductible encumbrances under the Commission’s rules. As a result,
Henson has failed to demonstrate any error in the Commission’s order. Henson’s sole issue on
appeal is overruled.
CONCLUSION
Having considered Henson’s arguments on appeal, we affirm the judgment of the
district court.
__________________________________________
Scott K. Field, Justice
Before Justices Puryear, Goodwin, and Field
Affirmed
Filed: November 5, 2015
consistent with guidance provided in the Social Security Administration’s Program Operations
Manual System (POMS). Frerks v. Shalala, 848 F. Supp. 340, 350 (E.D.N.Y. 1994) (noting that
POMS is considered persuasive authority, even though it is not published in the Federal Register and
does not have “the force of law”). POMS provides that if, under State law, conservatorship funds
are available for the care and maintenance of an individual, the funds are considered that individual’s
resources “despite the fact that the individual or his/her agent is required to petition the court to
withdraw funds for the individual’s care.” See id. (citing POMS at SI 01120.010). Thus, under this
authority, the funds in Henson’s bank account are countable resources, despite the fact that her
guardian must petition the court to gain access to the funds. Moreover, there can be no dispute that
pursuant to the court’s order of November 19, 2008, Henson’s guardian had access to at least
$2,074.40 per month from Henson’s account for the care, custody, and maintenance of Henson.
This amount, standing alone, exceeds the $2,000 financial-eligibility threshold.
10