McDonald v. Illinois Department of Human Services
406 Ill. App. 3d 792
| Ill. App. Ct. | 2010Background
- Betty J. McDonald entered a nursing home in June 2006 with monthly long-term-care costs of $4,365.
- Through June 2007 Betty’s son, J. Brian McDonald, via power of attorney, gave monthly gifts totaling nearly $20,000 to his and Betty’s other children.
- Gifts consisted of two checks per month: one for asset gifts and one for income gifts, together exceeding twice Betty’s monthly LTC expense each month.
- Healthcare and Family Services approved Betty’s medical benefits with a 17‑month penalty period for nonallowable transfers, including gifts of income.
- Brian challenged the penalty period, arguing income gifts were exempt from asset-transfer calculations and relying on a cited policy manual and a 2001 agency letter.
- The circuit court reversed, remanding to exclude income gifts from penalty calculations, and later Betty died; the state appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are gifts of income subject to asset-transfer penalties? | McDonald contends income gifts are not assets and thus not subject to transfer policy. | Departments applied asset-transfer law to income gifts; policy manual and statutes require penalties for transfers of income. | Gifts of income are subject to asset-transfer penalties. |
| May the January 2001 letter estop the departments from applying the policy to Betty’s case? | McDonald argues reliance on the 2001 letter bars deviation from that interpretation. | Equitable estoppel does not apply against the state; the letter is irreconcilable with law and policy. | Equitable estoppel does not apply; departments may rely on current law and policy. |
| Is the departments’ interpretation of the Medical Policy Manual correct relative to federal/state law? | McDonald argues misapplication of policy manual provisions and misalignment with statutory law. | Policy manual and code correctly implement asset-transfer penalties for income and assets alike. | Yes; departments properly applied the law and policy. |
Key Cases Cited
- Gillmore v. Illinois Department of Human Services, 218 Ill. 2d 302 (Ill. 2006) (Medicaid asset-transfer penalties mandated by federal/state law)
- Cinkus v. Village of Stickney Municipal Officers Electoral Board, 228 Ill. 2d 200 (Ill. 2008) (de novo review standard in administrative appeals)
- Montalbano v. Department of Children & Family Services, 343 Ill. App. 3d 471 (Ill. App. 2003) (presumption of validity of agency interpretations of own rules)
- Deford-Goff v. Department of Public Aid, 281 Ill. App. 3d 888 (Ill. App. 1996) (equitable estoppel against the State generally not favored)
- Brown's Furniture, Inc. v. Wagner, 171 Ill. 2d 410 (Ill. 1996) (equitable estoppel applicability against public entities)
- Hickey v. Illinois Central R.R. Co., 35 Ill. 2d 427 (Ill. 1966) (public policy considerations in state actions)