Esther HAKANSON, Appellee, v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, Appellant, and Benson County Social Services Board, Respondent.
Civ. No. 910270.
Supreme Court of North Dakota.
Jan. 9, 1992.
479 N.W.2d 809
Duane Houdek, Legal Assistance of North Dakota, Bismarck, for appellee.
ERICKSTAD, Chief Justice.
The North Dakota Department of Human Services appeals from the judgment of the District Court for Benson County, reversing the department‘s decision denying Esther Hakanson medicаl assistance. We reverse the district court judgment and remand to the department.
Sometime in 1983, Esther and Victor Hakanson transferred their interest in farmland to their children, reserving a life estate. On October 9, 1986, the Hakansons first applied for medical assistance from the Benson County Social Service Board. Their application was denied because they had excess available resources in the life estate. The Hakansons did not appeal the denial of this first application. On April 2, 1987, the Hakansons quitclaimed their life interest in the property to their children, for the consideration of one dollar. On March 13, 1990, Esther Hakanson made a second application for medical assistance benefits. On May 17, 1990, this second application was denied because the transfer of their life estate was a disqualifying transfer under
Initially, we note that when this Court reviews an administrative agency‘s decision, we review the decision of the agency and not that of the district court. Midwest Property Recovery, Inc. v. Job Service of North Dakota, 475 N.W.2d 918, 920 (N.D.1991); Skjefte v. Job Service North Dakota, 392 N.W.2d 815 (N.D.1986). We limit our review to the record before the agency and do not consider the findings of the district court. Asbridge v. North Dakota State Highway Commissioner, 291 N.W.2d 739, 743 (N.D.1980). Furthermore, “[t]he final decision of [the Department of Human Services] was made by its Executive Director and it was from his decision that [Esther] appealed to the district court. Consequently, we review the decision of the Executive Director to determine whether [Esther] has raised an appropriate ground for reversal of the agency‘s determination.” Speedway, Inc. v. Job Service North Dakota, 454 N.W.2d 526, 528 (N.D.1990).
As part of her second application for medical assistance, Esther introduced an independent appraisal of the underlying farmland in question. This appraisal was done by Dennis Larson, Esther‘s daughter‘s brother-in-law. Apparently unknown to Esther, Larson, or Barb Arndt, the eligibility specialist in сharge of Esther‘s application, the appraisal turned out to be incomplete.3 After receiving the appraisal, Arndt sent it to Bismarck to be reviewed by counsel for the Department of Human Services. Assistant Attorney General, Blaine Nordwall reviewed the appraisal and concluded it was not credible.4 Because of
At the administrative hearing, Esther introduced Larson‘s updated appraisal as well as an appraisal by Lester Lien. Esther also offered figures showing complete and up-to-date medical expenses that had been incurred. Additionally, Ellen Huffman with the сounty tax office testified that true and full value for tax assessment purposes was not always reflective of market price.
In the hearing officer‘s recommended findings we find the following relevant discussion:
“1. Benson County Social Services’ use of the ‘true and full value’ developed for taxation purposes ... was not inappropriate or erroneous.
Basis for hearing officer‘s finding: ... Given the fact that the only other figure the county staff had to work with was an admittedly incomplete appraisal of $39,300, prepared by a family member, the county‘s decision to rely on the true and full value obtained from the tax office was not unreasonable.
*
“4. Even if the appraisal prepared by Lester Lien, ... might be accepted as fair and reliable, Esther Hakanson has not demonstrated eligibility for Medical Assistance.
Basis for hearing officer‘s finding: Several months after the denial of the application that is the subject of this appeal, the family hired Lester Lien, a certified real estate appraiser, to prepare an appraisal of the farmland. Mr. Lien came in with a figure of $84,800. While this figure is but seventy percent of the ‘full and true value’ of the property for tax assessment purposes, the appraisal appears to have been arrived at by the application of generally accepted appraisal procedures and methods. When the life estate and remainder interest tables used by the Medical Assistance program to determine the value of life estates are applied, a value of $25,539 is obtained [$84,800 x .30117 (the decimal figure used for an 80 year old female)]. The hearing evidence offered with respect to medical expenses for which the assistance unit has become obligated for shows a total of $18,748.38 through May of 1990, when the action under appeal was taken. However, it appears that that total had increased to $30,500.33 through September of 1990. Thus, it would appear that should an application again be made, and the $84,800 appraisal by Lester Lien be found acceptable by the county office, eligibility could possibly be established. How far retroactively such eligibility might be established would also depend upon the value of other non-exempt resources which the county apparently has not previously had reason to look at. [Emphasis added.]”
Notwithstanding its disagreement with the district court‘s judgment, the department agrees thаt this case must be remanded so that the new figure of $30,500.33 may be considered without requiring a reapplication for medical assistance benefits. See Falcon v. Williams County Social Service Board, 430 N.W.2d 569; Luithle v. Burleigh County Social Services, 474 N.W.2d 497 (N.D.1991). However, the department argues that the hearing officer‘s findings and implicit findings should be upheld regarding its use of the tax assessed value, the use of the remainder interest tables, and its interpretation of
The department first argues that its decision to use the “true and full value” in assigning a value to the Hakanson farmland should be upheld. Under
We agree that it is not unreasonable to use the “true and full value” used for tax аssessment purposes as evidence in assigning a value.5 It should not be the exclusive requirement.6 In this case, it does not appear from the hearing officer‘s recommended findings that a specific value was assigned to the Hakanson farmland. Accordingly, on remand to the department, all evidence should be considered and weighed and a decision rendered on this issue.
Next the department argues that it properly valued the life еstate interest. More specifically, the department argues that its use of the remainder interest tables was not inappropriate.7 Esther argues that use of the remainder interest tables was inappropriate in that they were not properly promulgated as an administrative rule pursuant to the Administrative Agencies Practice Act. We have on a number of occasions discussed when an agency procedure must be promulgated as an administrative rule. See e.g., Illies v. Illies, 462 N.W.2d 878 (N.D.1990); Mullins v. North Dakota Department of Human Services, 454 N.W.2d 732 (N.D.1990); Johnson v. North Dakota Workers Compensation Bureau, 428 N.W.2d 514 (N.D.1988); see also Kroeplin v. North Dakota Workmen‘s Compensation Bureau, 415 N.W.2d 807, (N.D.1987) (VandeWalle, J., concurring in result).7, 8 In this case, Esther did not
Lastly, the department argues that before a person can overcome a disqualifying transfer and become eligible for benefits, he or she must incur out-of-pocket medical expenses after insurance equal to the disqualifying transfer. Relevant is
“An assignment or transfer of a nonexempt property, for less than adequate consideration, whenever made with the intent to render the assignor or transferor, or a family member, eligible for medical assistance benefits, produces ineligibility. An amount equal to the fair market value of the property transferred will be treated as though the assignor or transferor had retained the property. An individual found ineligible as a result of a disqualifying assignment or transfer will remain ineligible until he becomes obligated for medical expensеs equal to the difference between the fair market value of the property and the amount of compensation actually received. [Emphasis added.]”
The department asserts that its interpretation of the phrase “obligated for medical expenses” is reasonable. We note that an administrative agency‘s interpretation of its own rules is entitled to some deference. See Matter of Stone Creek Channel Improvements, 424 N.W.2d 894, 900 (N.D.1988) (“an agency ... has a reasonable range of informed discretion in the interpretation and application of its own rules.“). A contrary interpretation in this case would not treat the transferor as if he had retained the asset. Presumably, when a disqualifying transfer has not been made, the property in question would be an available asset rendering the owner ineligible for medical assistance until actual out-of-pocket medical expenses consume the asset or at least up to the point where the balance of the asset is exempt from consideration by the department. We thus conclude that the department‘s interpretation of
For the аforementioned reasons, the judgment of the district court is reversed and this case is remanded to the department for appropriate action consistent with this opinion.
PEDERSON, Surrogate Judge, sitting with the Court due to the resignation of the Honorable H.F. GIERKE III, as of November 20, 1991.
MESCHKE, Justice, concurring.
I join in the opinion by Chief Justice Erickstad. I write separately only to call attention to related statutеs that reinforce the holding on the third point about interpreting
VANDE WALLE and LEVINE, JJ., concur.
Notes
Much of
“75-02-02.1-32. Valuation of assets. It is not always possible to determine the value of assets with absolute certainty, but it is necessary to determine a value in order to determine eligibility. The valuation must be based on reasonably reliable information. It is the responsibility of thе applicant or recipient, or the persons acting on behalf of the applicant or recipient, to furnish reasonably reliable information. However, some verification of value must be obtained. Useful sources of verification include, but are not limited to:
*
3. Real property.
a. With respect to surface interests: market value or ‘true and full’ value from tax records, whichever represents an approximation of fair market value; real estate agents; appraisers; loan officers in local banking institutions. If a valuation from a source offered by the applicant or recipient is greatly different from fair market value established by tax records, an explanation for the difference must be made....
*
4. Divided or partial interests....
*
c. Life estates and remainder interests.
*
(4) Life estate and remainder interest tables. These tables must be used to determine the value of a life estate or remainder interest....
75-02-02.1-33. Disqualifying transfers.
*
2. a. An individual found ineligible as a result of a disqualifying assignment or transfer will remain ineligible until the individual becomes legally obligated to pay for medical expenses, not paid for by any other third party.... [Emphasis added.]”
Thus, many of the issues raised by Esther Hakanson in this case will be addressed by the newly promulgated rules in future cases.
In his letter to Arndt, Nordwall stated in relevant part:
“Included with the materials furnished by Mrs. Arndt was an appraisal report. That report concludes the value of the property, less two lots which are not described in the appraisal, as $39,300. The appraised value is slightly less than one third of the true and full value. It does not appear that the appraisal was secured in contemplation of a sale of the land or in contemplation of borrowing, even though the appraisal report is produced on a Form FmHA 422-1, usually used as part of a loan application. I make that observation because the applicant‘s name is given as Victor & Esther Haakenson, and they had not owned any interest in the property for nearly two years prior to the date of appraisal. Accordingly, I conclude that the appraisal was secured by the applicants solely for the purpose of attempting to demоnstrate eligibility for benefits. Inasmuch as the appraised value is so far removed from the true and full value, I conclude that the appraisal is not credible.”
In Kroeplin v. North Dakota Workmen‘s Compensation Bureau, the majority of this Court considered the authority of the Bureau to adopt the American Medical Association‘s Guides to the Evaluation of Permanent Impairment. Justice VandeWalle, concurring in the result reached by the majority noted the following:
“Section 65-02-08 authоrizes the Bureau to ‘make, promulgate, and enforce such rules, not inconsistent with the provisions of this title, as may be necessary to carry out the provisions of this title.’ However, those rules must be made and promulgated, if they are to be effective, pursuant to Chapter 28-32, N.D.C.C., the Administrative Agencies Practice Act. As the majority opinion notes at footnote 1 thereof, these guidelines were not adopted pursuant to Chapter 28-32, nor do they appear exempt from that procedure by virtue of Section 28-32-01(6). It appears to me that the adoption of such a significant and substantive standard for a claimant to meet must be accomplished by more than the mere issuance of an informal ‘directive,’ i.e., it must be adopted in accordance with the formal rule-making power given the Bureаu pursuant to Section 65-02-08 and Chapter 28-32, N.D.C.C.” 415 N.W.2d at 810, 811.
We note that
“6. ‘Rule’ means the whole or a part of an agency statement of general applicability that implements, interprets, or prescribes law or policy, or the organization, procedure, or practice requirements оf the agency. The term includes the amendment, repeal, or suspension of an existing rule. The term does not include:
a. A rule concerning only the internal management of an agency which does not directly or substantially affect the substantive or procedural rights or duties of any segment of the public.
*
k. Interpretive statements, general statements of policy, or statements of agency organization, procedure, or practice.
l. Guidelines, manuals, brochures, pamphlets, and similar statements of policy intended to advise or guide the agency or the public concerning activities of the agency which are otherwise prescribed by rule or statute.
m. Statements of policy intended to implement federal statutes, rules, or requirements with which compliance by the agency is revenues, оr to avoid the loss of otherwise available federal revenues.
n. A contract. Any material, including a guideline, interpretive statement, statement of general policy, manual, brochure, or pamphlet, that is merely explanatory and not intended to have the force and effect of law.” S.L.1991, ch. 343, § 1.