Carole Hughes v. John McCarthy
2013 U.S. App. LEXIS 21701
| 6th Cir. | 2013Background
- The Hugheses challenge a district court ruling favoring the Ohio agency's decision penalizing Mrs. Hughes due to Mr. Hughes's annuity purchase with funds from his IRA.
- Mr. Hughes bought a $175,000 immediate single-premium annuity for himself about three months before Mrs. Hughes applied for Medicaid.
- The annuity pays $1,728.42 monthly for 9 years 7 months; Mrs. Hughes is the first contingent beneficiary and the Ohio agency is the remainder beneficiary for medical assistance paid.
- Ohio deemed the transfer improper because it exceeded the community spouse resource allowance (CSRA) and because the annuity did not name Ohio as the first contingent beneficiary, resulting in about ten months of restricted nursing-home-coverage eligibility for Mrs. Hughes.
- District court held that § 1396r-5(f)(1) precluded such pre-eligibility transfers when over CSRA and that § 1396r-5 superseded § 1396p(c)(2)(B)(i) to the extent of the pre-eligibility transfer.
- The issue on appeal is whether § 1396r-5(f)(1) can override the unlimited pre-eligibility transfers permitted by § 1396p(c)(2)(B)(i); the court reverses and remands.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can pre-eligibility transfers exceed CSRA under § 1396p(c)(2)(B)(i)? | Hugheses: § 1396p(c)(2)(B)(i) allows unlimited transfers to the spouse for the spouse’s sole benefit before eligibility determination. | ODJFS: § 1396r-5(f)(1) precludes transfers that exceed CSRA and supersedes § 1396p(c)(2)(B)(i). | No; § 1396r-5(f)(1) does not supersede pre-eligibility transfers under § 1396p(c)(2)(B)(i). |
| Does the sole-benefit rule in § 1396p(c)(2)(B)(i) permit contingent-beneficiary annuities for the spouse during life? | Hugheses: a transfer to an annuity for the spouse’s sole benefit during life is permissible if actuarially sound. | ODJFS: the annuity must strictly be for the spouse’s sole benefit with no future benefit to others | Yes; a transfer can be for the spouse’s sole benefit even with contingent beneficiaries or post-death remainder. |
| Must § 1396p(c)(1)(F) annuity rules apply to transfers that satisfy § 1396p(c)(2)(B)(i)? | Hugheses: § 1396p(c)(2)(B)(i) is an exception to paragraph (1); § 1396p(c)(1)(F) does not control pre-eligibility transfers. | ODJFS: annuity rules under § 1396p(c)(1)(F) should apply to any transfer | No; § 1396p(c)(1)(F) applies within paragraph (1) transfer penalties and does not override the sole-benefit exception. |
Key Cases Cited
- Blumer, 534 U.S. 473 (2002) (CSRA and transfer mechanics in MCCA context)
- Morris v. Okla. Dep’t of Human Servs., 685 F.3d 925 (10th Cir. 2012) (unlimited pre-eligibility transfers vs CSRA cap; aligns with the Hugheses)
- Flores v. Rios, 36 F.3d 507 (6th Cir. 1994) (contextual statutory reading; statutory text must control)
- Davis v. Mich. Dep’t of Treasury, 489 U.S. 803 (1989) (textual interpretation and context in statutory construction)
- INS v. Cardoza-Fonseca, 480 U.S. 421 (1987) (statutory interpretation and congressional intent can guide construction)