Kaspari v. N.D. Department of Human Services
2011 ND 124
| N.D. | 2011Background
- In 1996, Kasparis conveyed about 561 acres of farmland to their son and daughter-in-law, retaining a life estate and leasing the land to a tenant.
- Kasparis’ life estate included irrigation rights funded by mortgages; new loans were combined with an existing mortgage on the land.
- Irrigation equipment increased land rentals, producing about $44,000 annually, with a $5,000 per year management fee payable to their son and daughter-in-law while the mortgage remained unpaid.
- In April 2009, the Kasparis entered a nursing home and applied for Medicaid; initial determinations deemed them eligible but did not allow deductions for mortgage interest, real estate taxes, or the management fee.
- Cass County Social Services’ decision calculated recipient liabilities using rental income and social security, excluding mortgage interest and real estate taxes as deductions.
- The district court reversed, holding the Kasparis were entitled to deductions for mortgage interest and real estate taxes; the court construed the regulations broadly to include ordinary expenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 'all appropriate deductions' includes mortgage interest and real estate taxes. | Kaspari contends ordinary expenses from life-estate rental income reduce net income. | Olson contends only enumerated deductions in § 75-02-02.1-38.1(3) apply; mortgage interest and real estate taxes are not listed. | No; Department correctly limited deductions to enumerated items; life-estate expenses are not authorized deductions. |
| Whether post-eligibility treatment of income supports deductions beyond enumerated items. | Kaspari argues ordinary and necessary expenses should be considered to determine recipient liability. | Olson relies on federal and state rules limiting deductions to those specifically enumerated. | No; the regulations require deductions only as enumerated, and there is no basis to expand beyond them. |
| Whether the court should harmonize ND Admin. Code §§ 75-02-02.1-41.1 and -38.1 to determine recipient liability. | Kaspari claims backward calculation from net income yields deductions for mortgage interest and real estate taxes. | Olson argues regulations taken together do not authorize those deductions and align with federal treatment. | Yes; the Department’s interpretation is correct and consistent with the regulations and federal framework. |
Key Cases Cited
- Wahl v. Morton County Soc. Servs., 574 N.W.2d 859 (ND 1998) (post-eligibility income treatment; use of gross income aligns with Medicaid payor of last resort)
- Krueger v. Richland County Soc. Servs., 526 N.W.2d 458 (ND 1994) (second, post-eligibility phase; determining application of income to cost of care)
- Reinholdt v. North Dakota Dep’t of Human Servs., 760 N.W.2d 101 (ND 2009) (standard of review for agency decisions; statutory framework)
- Oyloe v. North Dakota Dep’t of Human Servs., 747 N.W.2d 106 (ND 2008) (two-phase eligibility process; financial eligibility and extent of assistance)
- Rennich v. North Dakota Dep’t of Human Servs., 756 N.W.2d 182 (ND 2008) (weight of evidence standard; findings supported by preponderance)
- Gofor Oil, Inc. v. State, 427 N.W.2d 104 (ND 1988) (statutory construction; interpretation of agency actions)