McDonald v. Illinois Department of Human Services

NO. 4-10-0290 Filed 12/28/10
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
J. BRIAN McDONALD, as Independent ) Appeal from
Administrator of the Estate of BETTY ) Circuit Court of
J. McDONALD, ) Sangamon County
Plaintiff-Appellee, ) No. 08MR554
v. )
THE ILLINOIS DEPARTMENT OF HUMAN )
SERVICES and MICHELLE R.B. SADDLER, )
Its Secretary; and THE ILLINOIS )
DEPARTMENT OF HEALTHCARE AND FAMILY )
SERVICES and JULIE HAMOS, Its ) Honorable
Director, ) John W. Belz,
Defendants-Appellants. ) Judge Presiding.
_________________________________________________________________
JUSTICE POPE delivered the opinion of the court:
This Medicaid case asks us to resolve a tension between
the need to preserve scarce public medical resources for the
truly needy and the desire of families to preserve their assets
while qualifying for medical assistance through a perceived
legitimate loophole. This tension manifests itself in this case
where an applicant's eligibility for medical assistance was
delayed by the imposition of a penalty period by the transfer of
nearly $125,000 in cash gifts in the year leading up to her
application for benefits.
In June 2007, plaintiff, J. Brian McDonald, acting
pursuant to power of attorney, applied for medical assistance on
behalf of his mother, Betty J. McDonald, to help cover her long-
term-care expenses. Defendant, the Department of Healthcare and
Family Services (Healthcare and Family Services), investigated
Betty's application, and defendant, the Department of Human
Services (Human Services), approved Betty's application but
imposed a penalty period of noncoverage because of certain
nonallowable transfers Brian made on behalf of Betty.
These nonallowable transfers consisted of systematic
monthly gifts from Betty's checking account to Brian and his
siblings. Each month, one of Betty's children would receive two
checks: one for an amount less than twice Betty's monthly long-
term-care expenses and one for the exact amount of Betty's
monthly social-security benefits. When added together, these
gifts totaled more than twice Betty's monthly long-term-care
expenses, resulting in a two-month penalty period for each
month's gifts.
Brian appealed the penalty period, arguing the social-
security gifts, each of which was labeled a "gift of income" in
the check's memorandum line, were not subject to the asset-
transfer policy that resulted in the penalty. Under Brian's
theory, only the gifts of assets should have been used in calcu-
- 2 -
lating the penalty period; since each gift of assets was for less
than twice Betty's monthly long-term-care expenses, each would
result in only one penalty month. Brian claimed the transfers of
income were exempted from the penalty, citing Human Services'
"Cash, SNAP, and Medical Policy Manual" (Medical Policy Manual).
He also relied on a January 2001 letter from the chief of the
bureau of policy of the Department of Public Aid (later succeeded
by Healthcare and Family Services as the agency charged with
executing Illinois's Medicaid laws), which gave an interpretation
of the policy manual's asset-transfer provisions for an unrelated
individual. After a hearing held before an administrative law
judge, Human Services upheld the imposition of the penalty
period, issuing the departments' final administrative decision.
Brian then sought administrative review in the circuit
court, presenting two arguments. First, Brian argued the depart-
ments misapplied their own policies, again citing the Medical
Policy Manual and the January 2001 letter. Second, Brian alter-
natively argued the departments were estopped from changing the
way the policy manual was applied and from departing from the
January 2001 letter's interpretation of their policies. The
court reversed and remanded to Human Services for it to rescind
the portion of the penalty period that resulted from the "gifts
- 3 -
of income."
The departments appeal, arguing federal and state
statutory laws require Human Services to impose a penalty period
for transfers of income, as well as assets, for less than fair
market value and asserting the departments' own rules and poli-
cies are in accord with these statutes. Again, Brian maintains
the departments misinterpreted their rules and policies and
argues, alternatively, the departments are estopped from depart-
ing from the interpretation provided in the January 2001 letter.
We reverse the circuit court's judgment and affirm the
administrative decision because we find (1) the departments
correctly applied the law they are charged with enforcing; (2)
the relevant sections of the Medical Policy Manual do not con-
flict with that law; and (3) the departments were not bound by
the January 2001 letter.
I. BACKGROUND
Betty moved into a nursing home in June 2006. There,
she incurred continuing monthly long-term-care expenses of
$4,365. Each month from June 2006 through December 2006, Betty
received $1,542.01 from social security and $573.90 from an
annuity. Beginning January 2007, Betty's monthly income from
social security increased to $1,583.44, and she continued to
- 4 -
receive $573.90 from her annuity. The annuity payments were
never deposited into any of Betty's bank accounts. These annuity
payments were never considered by the departments in setting the
penalty period and are not an issue on appeal. Beginning in June
2006 and continuing through June 2007, through Brian, as power of
attorney, Betty made gifts by check nearly each month to one of
her children. These checks were marked as either gifts of assets
or gifts of income in the memorandum line. Gifts of assets were
in the amount of $7,500 from June 2006 through August 2006 and in
the amount of $7,800 from September 2006 through June 2007.
Gifts of income were in the amount of $1,542.01 from June 2006
through December 2006 and in the amount of $1,583.44 from January
2007 through June 2007.
Brian applied for medical-assistance benefits on
Betty's behalf in June 2007. Healthcare and Family Services
determined the gifts noted above were nonallowable transfers
under the Medical Policy Manual and calculated a penalty period
from March 2007 through July 2008. Healthcare and Family Ser-
vices approved Betty's application for medical assistance subject
to the 17-month penalty period. On Betty's behalf, Brian ap-
pealed the portion of the penalty period attributable to the
"gifts of income," and Human Services upheld the full penalty
- 5 -
period after a hearing by an administrative law judge.
After receiving the unfavorable administrative deci-
sion, Brian initiated this administrative-review action in the
circuit court with Betty as the named plaintiff. On administra-
tive review, the circuit court reversed and remanded with direc-
tions "to exclude from each of the monthly transfer calcula-
tions[] all transfers of income made by [Betty] during that same
calendar month." The court appeared to be persuaded by Brian's
estoppel argument, which consisted of two subarguments, the first
of which can also be understood as a separate argument based on a
straight application of law.
First, Brian argued the plain meaning of a section from
the Medical Policy Manual regarding "income mixed with an asset"
demonstrates a gift of income made in the month when the income
is received does not constitute a nonallowable transfer. The
section provides, in similar language to sections in other
portions of the policy manual, "Money considered as income for a
month is not an asset for the same month. Any income added to a
bank account is income for that month, and not a part of the
account's asset value for the month." Department of Human
Services, Medical Policy Manual, PM 07-02-06-a (eff. March 1,
1997) (hereinafter Medical Policy Manual); see also Medical
- 6 -
Policy Manual, PM 07-04-09-a (eff. October 1, 2010). According
to Brian, this means the funds comprising the gifts Brian made to
himself and his siblings from Betty's social-security benefits
never became an asset. Because the money was not an asset,
according to Brian, it cannot be subject to the departments'
"asset-transfer" or "transfer-of-asset" policy.
Second, Brian argued the departments were estopped from
deviating from the interpretation of policy expressed in a letter
written by the chief of the bureau of policy development of the
Department of Public Aid. The letter was written by then-chief
John Rupcich in January 2001 in response to an inquiry by Joe
Oettel, who appears not to be related in any way to this case or
the parties. Oettel inquired, relying on the above-quoted
language from the policy manual, "Does this mean that income
given away to another person during the same month it is received
is NOT subject to the asset transfer policy and therefore is NOT
used in calculating a penalty period as explained in [the policy
manual section]?" Rupcich responded, without reference to any
discrete facts or circumstances, "Income given away during the
same month it is received is not subject to the transfer of asset
policy." According to Brian, this statement by the chief of the
bureau of policy was a general interpretation of Illinois's
- 7 -
Medicaid/medical-assistance law, made by the agency charged with
implementing it, that bound the departments in future medical-
assistance cases and on which applicants can rely. Thus, accord-
ing to Brian, the departments' departure from this interpretation
in Betty's case was arbitrary and capricious.
In October 2009, the circuit court, having accepted
Brian's estoppel argument, reversed the administrative decision
and remanded to the departments to rescind Betty's penalty period
insofar as it resulted from their inclusion of Brian's gifts of
Betty's income in the calculation of nonallowable transfers. In
November 2009, the departments filed a motion to reconsider the
court's judgment. Later that month, the court allowed Brian to
substitute himself, as independent administrator of Betty's
estate, for Betty, who had died in September 2009, as plaintiff
in this action. In March 2010, the court denied defendants'
motion to reconsider.
This appeal followed.
II. ANALYSIS
On appeal, defendants maintain the circuit court erred
because both Brian's interpretation of the policy manual and the
interpretation expressed in the January 2001 letter were contrary
to federal and state statutes governing medical-assistance
- 8 -
eligibility and benefits. According to defendants, certain
provisions of the federal medical-assistance laws are binding on
any states participating in the Medicaid program. Among these
provisions are the asset-transfer policy and the corresponding
penalties at issue in this case. Defendants point to state
legislation designed to keep the state in compliance with the
federal asset-transfer policy and penalty provisions and a rule
from the Illinois Administrative Code governing state asset-
transfer policy. Based on these authorities, which defendants
insist control over any internal, unpromulgated department
policies, defendants maintain the policy manual as interpreted by
Brian cannot be given force to disallow Betty's full penalty
period. Alternately, defendants maintain the departments were
required to depart from the interpretation contained in the
January 2001 letter.
In response, Brian argues the federal and state stat-
utes are irrelevant because his argument from the beginning of
the proceedings has been that the departments misapplied their
own rules and policies. According to Brian, the departments are
bound to follow both the policy manual and the letter interpret-
ing it consistently in every case. Because the departments
failed to adhere to these authorities in Betty's case, Brian
- 9 -
maintains, the penalty period attributable to his gifts of
Betty's income should be vacated under either of his two theo-
ries. Those theories are (1) the departments misinterpreted
their rules and policies, and (2) even if legally correct, the
departments were estopped from applying their interpretation
because it marked a departure from their previous interpretation
evidenced by the January 2001 letter.
We agree with defendants.
A. Standard of Review
On appeal in an administrative-review action, we review
the departments' decision, not the circuit court's, in the sense
that we give the circuit court's decision no deference. See
Cinkus v. Village of Stickney Municipal Officers Electoral Board,
228 Ill. 2d 200, 212, 886 N.E.2d 1011, 1019 (2008). The scope of
judicial review of administrative decisions "extend[s] to all
questions of law and fact presented by the entire record before
the court." 735 ILCS 5/3-110 (West 2008). Neither party chal-
lenges the departments' findings of fact; rather, they dispute
the interpretation of the relevant statutes, regulations, and
provisions of the departments' policy manual and the extent to
which the departments are bound by the January 2001 letter and
Brian's alleged reliance on it. These are legal questions, which
- 10 -
we review de novo. Cinkus, 200 Ill. 2d at 211, 886 N.E.2d at
1018. However, the departments' interpretation of their own
rules and regulations " 'enjoys a presumption of validity.' "
Montalbano v. Department of Children & Family Services, 343 Ill.
App. 3d 471, 479, 797 N.E.2d 1078, 1084 (2003), quoting Nolan v.
Hillard, 309 Ill. App. 3d 129, 143, 722 N.E.2d 736, 747 (1999).
B. Gifts of Income and Asset-Transfer Policy
Federal and state statutes, state administrative rules,
and Human Services' departmental Medical Policy Manual all
support defendants' conclusion that gifts of income are subject
to asset-transfer policy and the corresponding penalties at issue
in this case. Consequently, defendants' imposition of a 17-month
penalty period on Betty's eligibility for medical assistance was
proper.
Medicaid is "a cooperative program in which the federal
government reimburses state governments for a portion of the
costs to provide medical assistance" to, among others, medically
needy persons with low income and low assets who contribute a
mandatory amount of any excess assets to their own healthcare
costs. Gillmore v. Illinois Department of Human Services, 218
Ill. 2d 302, 304-05, 843 N.E.2d 336, 338 (2006). States that opt
into Medicaid "must comply with certain broad requirements
- 11 -
imposed by federal statutes and regulations." Gillmore, 218 Ill.
2d at 305, 843 N.E.2d at 338. Among these requirements is that
the state implement and enforce the asset-transfer policies
defined by the federal Medicaid statute (see 42 U.S.C. §1396p
(2006)). See Gillmore, 218 Ill. 2d at 306, 843 N.E.2d at 339.
In turn, the federal asset-transfer policy mandates a penalty
period of noncoverage for medical-assistance applicants who
divest their property in order to qualify for benefits by trans-
ferring it for less than fair market value. Gillmore, 218 Ill.
2d at 306, 843 N.E.2d at 338-39.
Asset transfers are defined consistently in the federal
and state medical-assistance statutes, state regulations promul-
gated by Human Services, and Human Services' Medical Policy
Manual. The federal statute imposes a penalty when an applicant
or his or her spouse "disposes of assets for less than fair
market value" within a certain period leading up to the appli-
cant's request of benefits. 42 U.S.C. §1396p(c)(1)(A) (2006).
In turn, the statute defines "assets" in terms of income and
resources. "The term 'assets', with respect to an individual,
includes all income and resources of the individual and of the
individual's spouse, including any income or resources which the
individual or such individual's spouse is entitled to but does
- 12 -
not receive because of action." 42 U.S.C. §1396p(h)(1) (2006).
Thus, under the federal statute, a transfer of a medical-assis-
tance applicant's income for less than fair market value would
subject the applicant to penalties. This result is mandated on
all states that participate in the Medicaid program. 42 U.S.C.
§1396p(c) (2006).
State policies on transfers of assets comply with the
federal requirement. The Illinois Public Aid Code (Code) prohib-
its transfers of a medical-assistance applicant's interest in
personal property for less than fair market value. Section 5-
2.1(a) of the Code provides, in pertinent part,
"To the extent required under federal
law, a person shall not make or have made a
*** transfer of any legal or equitable inter-
ests in *** personal property, whether
vested, contingent[,] or inchoate, for less
than fair market value. A person's interest
in *** personal property includes all income
and assets to which the person is entitled or
to which the person would be entitled if the
person had not taken action to avoid
receiving the interest." 305 ILCS 5/5-2.1(a)
- 13 -
(West 2008).
As it includes income in a person's interest in personal
property, the state statute, like the federal statute, would
prohibit the transfer of an applicant's income for less than fair
market value.
The relevant section of the Illinois Administrative
Code (Administrative Code) is consistent with these federal and
state statutes, though less explicit in its operation. Rather,
section 120.387(d) of Title 89 of the Administrative Code merely
defines a transfer of assets in terms of transfers of personal
property. Specifically, in the case of a person in long-term
care, it provides,
"A transfer of assets occurs when an
institutionalized person[] *** buys, sells[,]
or gives away real or personal property or
changes *** the way property is held. *** A
transfer occurs when an action or actions are
taken which would cause an asset or assets
not to be received (for example, waiving the
right to receive an inheritance)." 89 Ill.
Adm. Code §120.387(d), as amended by 23 Ill.
Reg. 11301, 11310 (eff. August 27, 1999).
- 14 -
Sections 120.387(e) and (f) define the circumstances under which
a transfer is allowable or nonallowable. 89 Ill. Adm. Code
§§120.387(e), (f), as amended by 23 Ill. Reg. 11301, 11310-11312
(eff. August 27, 1999). Nonallowable transfers incur penalty
periods of ineligibility. 89 Ill. Adm. Code §120.387(f), as
amended by 23 Ill. Reg. 11301, 11312 (eff. August 27, 1999). By
defining asset transfers in relation to transfers of personal
property rather than assets, the Administrative Code does not
distinguish between transfers of assets and transfers of income.
That is, if a transfer of income is made under circumstances that
would render any other transfer nonallowable, the transfer of
income is itself nonallowable. This result is consistent with
the federal and state statutes on asset-transfer policy and the
corresponding penalties.
These provisions and federal and state law are
extrapolated in Human Services's Medical Policy Manual. The
Medical Policy Manual is comprised of a policy manual, which
describes the Medicaid laws and provides general guidance on
Medicaid issues, and a Worker's Action Guide, which gives more
specific guidance to agency caseworkers in determining
eligibility and notifies them of common difficulties. The entire
Medical Policy Manual is available to the public online, although
- 15 -
it appears to be primarily an internal manual to guide employees
of the departments in navigating Medicaid issues.
The Medical Policy Manual is consistent with the
federal and state statutory and administrative laws on transfers
of assets and related penalties. Like the Administrative Code,
the manual defines "transfer of assets" in terms of personal
property without distinguishing between income and assets.
Section PM 07-02-20 of the Medical Policy Manual states, in
pertinent part,
"An asset transfer occurs when a client or
their spouse *** buys, sells, [or] gives away
real or personal property or changes the way
property is held. *** A transfer *** occurs
when an action is taken that causes an asset
not to be received (for example, waiving the
right to receive an inheritance)." Medical
Policy Manual, PM 07-02-20 (eff. April 17,
1998).
Compare Medical Policy Manual, PM 07-02-20 (1998), with 89 Ill.
Adm. Code §120.387(d), as amended by 23 Ill. Reg. 11301, 11310
(eff. August 27, 1999) (quoted above). In turn, section PM 07-
02-06 of the policy manual defines "personal property" as
- 16 -
"anything owned by a person that is not land or permanently
affixed to land," including checking-account funds. Medical
Policy Manual, PM 07-02-06 (eff. March 1, 1997). The policy
manual goes on to define allowable and nonallowable transfers but
both relate back to the definition of "asset transfer" that would
include transfers of income as well as transfers of assets. See
Medical Policy Manual, PM 07-02-20-b, 07-02-20-c, 07-02-20-d
(1998) (eff. April 17, 1998, March 1, 1997, and April 17, 1998,
respectively).
These authorities support defendants' determination
that the gifts of Betty's income were nonallowable transfers of
assets for less than fair market value that must be penalized.
The federal statute mandates penalties for nonallowable transfers
of a medical-assistance applicant's assets, where assets include
that person's income. The Code prohibits nonallowable transfers
of an applicant's interest in personal property, where that
person's interest in property includes his or her income. The
Administrative Code and the Medical Policy Manual penalize
nonallowable transfers of personal property without excluding
income from personal property. As they were made for less than
fair market value in the months leading up to her application for
medical assistance, Brian's gifts of Betty's social-security
- 17 -
benefits would result in a penalty period under any of these
federal and state authorities.
Notwithstanding the plain meaning of section PM 07-02-
20 of the policy manual, let alone the controlling statutes and
regulations, Brian has maintained the departments overlooked a
critical distinction in the Medical Policy Manual between income
and assets. Brian cites section PM 07-02-06-a of the policy
manual, which guides agency employees in calculating a person's
assets. It states, in pertinent part, as follows:
"Money considered as income for a month
is not an asset for the same month. Any
income added to a bank account is income for
that month, and not a part of the account's
asset value for the month. To figure the
asset value of the account, subtract the
income from the bank balance. For the
following month(s) any remaining income in
the account is an asset." Medical Policy
Manual, PM 07-02-06-a (eff. March 1, 1997).
Brian asserts this section requires the departments to exclude
transferred amounts of income in calculating nonallowable
transfers because, essentially, he maintains "asset transfer"
- 18 -
policy can apply only to transfers of assets.
Brian misunderstands the significance of this
distinction between income and assets in determining medical-
assistance eligibility. The distinction is necessary to
determine whether and to what extent an applicant must "spend
down" his or her excess assets or income in order to be eligible
for medical assistance. See 305 ILCS 5/5-2.07 (West 2008).
Though equally essential to the operation of the medical-
assistance program, the spend-down provisions are wholly separate
from those defining eligibility penalties for nonallowable
transfers. We find the manual's provisions regarding "income
mixed with an asset," such as section PM 07-02-06-a, are
irrelevant to the calculation of nonallowable transfers of
personal property. Transfers of personal property for purposes
of determining any penalty period include transfers of income and
assets. When determining eligibility in the first instance,
income which is consumed in a month on legitimate living expenses
would not be counted as an asset. Accordingly, the departments
did not err in their application of the law they are charged with
implementing and enforcing or the Medical Policy Manual in
Betty's case.
In addition, the State Medicaid Manual, a federal
- 19 -
manual that provides guidance to state employees in making
penalty determinations, provides as follows:
"Treatment Of Income As Asset.--Under OBRA
1993, income, in addition to resources, is
considered to be an asset for transfer (and
trust) purposes. Thus, when an individual's
income is given or assigned in some manner to
another person, such a gift or assignment can
be considered a transfer of assets for less
than fair market value.
* * *
When you find that income or the right
to income has been transferred, a penalty for
that transfer must be imposed for
institutionalized individuals (if no
exceptions apply)." (Emphasis in original.)
State Medicaid Manual, Health Care Financing
Administration Publication No. 45-3,
Transmittal 64, §3258.6 (November 1994).
Even if a medical-assistance applicant's income were
distinct from his or her assets for purposes of calculating
nonallowable transfers for a month, we note we would reach the
- 20 -
same conclusion in Betty's case because a transfer of income
would be a transfer of a future asset. Under the provision of
the policy manual Brian relies on, income becomes an asset by
remaining in the account where it is deposited until the
following calendar month. Federal and state asset-transfer
policy extends to transfers of a person's future interest in an
asset, including actions that "would cause an asset or assets not
to be received (for example, waiving the right to receive an
inheritance)." 89 Ill. Adm. Code §120.387(d), as amended by 23
Ill. Reg. 11301, 11310 (eff. August 27, 1999). The social-
security benefits deposited in Betty's account would have become
an asset if Brian had not given them away in the month they were
received. Under his interpretation of section PM 07-02-06-a of
the policy manual, Brian's transfer of Betty's social-security
benefits caused an asset not to be received the following month.
Thus, even if we considered section PM 07-02-06-a and similar
provisions to be relevant to the calculation of nonallowable
transfers, the transfers of income involved in this case would
still be subject to the departments' scrutiny. Accordingly, we
reject Brian's argument that Betty's ineligibility period
resulted from the departments' misapplication of their own
policies regarding asset transfers, and we further find the
- 21 -
departments' imposition of a penalty period for Brian's
nonallowable transfers of Betty's social-security income complied
with the Medicaid laws that the departments are charged with
implementing.
C. Equitable Estoppel
Defendants argue, next, the circuit court erred in
reversing on the basis of Brian's argument that his and Betty's
reliance on the January 2001 letter estopped the departments from
subjecting transfers of income to asset-transfer policy. We
agree with defendants equitable estoppel is inapplicable to this
case.
"Generally, the doctrine of equitable estoppel may be
invoked when a party reasonably and detrimentally relies on the
words or conduct of another." Brown's Furniture, Inc. v. Wagner,
171 Ill. 2d 410, 431, 665 N.E.2d 795, 806 (1996). However,
public policy disfavors application of equitable estoppel to bar
state action. Deford-Goff v. Department of Public Aid, 281 Ill.
App. 3d 888, 893, 667 N.E.2d 701, 705 (1996). Thus, equitable
estoppel will not apply unless (1) doing so would be necessary to
prevent fraud and injustice and (2) the state itself induced a
private actor's reliance. "When equitable estoppel is invoked
against the State, it will be applied only to prevent fraud and
- 22 -
injustice." Deford-Goff, 281 Ill. App. 3d at 893, 667 N.E.2d at
705. Otherwise, estoppel would "impair the functioning of the
[s]tate in the discharge of its government functions" because
"valuable public interests may be jeopardized or lost by the
negligence, mistakes[,] or inattention of public officials."
Hickey v. Illinois Central R.R. Co., 35 Ill. 2d 427, 447-48, 220
N.E.2d 415, 426 (1966). This is particularly true when, as here,
public revenues are concerned. Deford-Goff, 281 Ill. App. 3d at
893, 667 N.E.2d at 705. Further, when estoppel is sought to bar
state action, the acts inducing detrimental reliance "generally
must be the acts of the [s]tate itself, such as legislation,
rather than the unauthorized acts of a ministerial officer."
Deford-Goff, 281 Ill. App. 3d at 893, 667 N.E.2d at 705.
The January 2001 letter, in which the chief of the
bureau of policy of the predecessor to Healthcare and Family
Services wrote, "Income given away during the same month it is
received is not subject to the transfer[-]of[-]asset policy,"
cannot estop the departments from relying on contrary legal
authority in imposing a penalty period of ineligibility on
Brian's gifts of Betty's social-security benefits to himself and
his siblings. Estoppel cannot apply against the defendants in
this case because no fraud or injustice resulted from the penalty
- 23 -
period. Penalties for nonallowable transfers help ensure those
applicants who can afford to contribute to their own medical
needs do so. Betty, who made gifts of income totaling nearly
$20,000 in the year preceding her application for medical
assistance, could clearly have contributed to her own long-term-
care expenses. It was neither fraudulent nor unjust for the
departments to impose penalties for these gifts when the purpose
of the penalties was solely to account for money that should have
been available to offset the government's contributions to
Betty's long-term care.
Further, Brian's reliance on the letter does not
support application of equitable estoppel because the letter does
not constitute an act by the state itself. The chief of the
bureau of policy of the predecessor agency of Healthcare and
Family Services is a ministerial officer whose erroneous acts
should not bind the state through equitable estoppel. See
Deford-Goff, 281 Ill. App. 3d at 893, 667 N.E.2d at 705. The
policy expressed in the letter is irreconcilable with federal and
state laws, and it would be absurd for us to require the
departments to adhere to erroneous interpretations of the
statutes and rules they enforce, made by officers of a
predecessor agency some years earlier for the benefit of an
- 24 -
unrelated third party. Accordingly, we reverse the circuit
court's determination that Brian's reliance on the January 2001
letter estopped the departments from applying relevant law that
contradicted the letter's statement of policy.
Even if we were to look past the compelling precedent
that warns against application of equitable estoppel in these
circumstances, we are troubled by several questions regarding the
merits of Brian's claim that were not satisfactorily addressed by
either the departments or the circuit court and on which we are
not convinced Brian carried his burden of proof at either level
of proceedings below. These questions include whether Brian
actually relied on the January 2001 letter; whether such
reliance, if actual, was also reasonable; and whether such
reliance, if actual and reasonable, was also detrimental.
However, we find it unnecessary to reach these questions as we
conclude equitable estoppel should not be applied in the first
place.
Lastly, we note the State of Illinois departments
involved in this litigation owe it to the citizens of this state
to adopt clear, understandable rules which assist applicants in
navigating the complicated eligibility and transfer of assets
requirements of the Medicaid laws. If the participants can know
- 25 -
and understand the rules, they can avoid the minefield that
erupted in this case.
III. CONCLUSION
For the reasons stated, we reverse the circuit court's
judgment and affirm the administrative decision imposing the full
17-month penalty period as a condition of Betty's medical-
assistance eligibility.
Reversed.
MYERSCOUGH and APPLETON, JJ., concur.
- 26 -