ELAINE L. KOENIG, Plaintiff, and ELANIE L. KOENIG, ADMINISTRATOR OF THE ESTATE OF PAUL F. KOENIG, Plaintiff-Appellee, vs. CYNTHIA C. DUNGEY, DIRECTOR OF OHIO DEPARTMENT OF JOB AND FAMILY SERVICES, and OHIO DEPARTMENT OF JOB AND FAMILY SERVICES, Defendants-Appellants.
APPEAL NO. C-140111
TRIAL NO. A-1203492
IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO
October 22, 2014
2014-Ohio-4646
FISCHER, Judge.
Civil Appeal From: Hamilton County Court of Common Pleas; Judgment Appealed From Is: Affirmed
Beckman Weil Shepardson, LLC, Janet E. Pecquet and Ashley Shannon Burke, for Plaintiff-Appellee,
Michael DeWine, Ohio Attorney General, and Rebecca L. Thomas, Assistant Attorney General, for Defendants-Appellants.
Please note: this case has been removed from the accelerated calendar.
{¶1} Defendants-appellants the Ohio Department of Job and Family Services and Cynthia Dungey, in her official capacity as director of the Ohio Department of Job and Family Services, are charged with administering the federal Medicaid program in Ohio. Plaintiff-appellee Elaine Koenig, as the administrator of her late-husband‘s estate, sued defendants after the Ohio Department of Job and Family Services upheld an agency determination imposing a period of restricted coverage on her husband‘s Medicaid benefits on the basis that Mrs. Koenig had improperly transferred resources to purchase an annuity.
{¶2} Following Hughes v. McCarthy, 734 F.3d 473 (6th Cir.2013), we determine that Mrs. Koenig‘s annuity purchase with funds in excess of her community spouse resource allowance, after her husband‘s institutionalization, but before his Medicaid eligibility determination, was not an improper transfer for purposes of qualifying for Medicaid. We also determine that because the issue of whether Mrs. Koenig‘s annuity was an improper transfer for failing to meet the requirements of
Federal Medicaid Statutes and Ohio‘s Regulations
{¶3} Medicaid is a federally-established program developed by Congress to provide state and federal funding to those individuals who cannot afford their medical care. See Title XIX of the Social Security Act, 79 Stat. 286 (1965). The state of Ohio, as a participant in the Medicaid program, develops its own rules for implementing the program, which must be consistent with the federal Medicaid
{¶4} Congress has sought to protect married individuals living in the community (“community spouses“) from financial hardship caused by their spouses’ institutionalization in a nursing-care facility (“institutionalized spouses“) by allowing community spouses to maintain some assets—the Community Spouse Resource Allowance—while still permitting institutionalized spouses to receive Medicaid. See
{¶5} The CSRA cannot be counted as an available resource in determining an institutionalized spouse‘s Medicaid eligibility. See
{¶6} Even if a state agency deems an institutionalized spouse Medicaid-eligible, the agency can impose a period of restricted coverage on the institutionalized spouse, meaning that the agency will withhold Medicaid payments to the nursing-care facility, if the agency determines that an “improper transfer” of the couple‘s resources occurred. See
{¶7} The treatment of resource transfers for Medicaid purposes is governed by
{¶8} Even if an individual or spouse transfers a resource for less than fair market value,
{¶9} Additionally, other provisions govern transfers of resources between spouses.
{¶10} Effective in 2006 with Congress‘s passage of the Deficit Reduction Act of 2005, Pub.L.No. 109-171, 120 Stat. 4, 62-64, the purchase of an annuity is considered an improper transfer, unless certain criteria are met. See
Mrs. Koenig‘s Annuity Purchase
{¶11} Paul Koenig entered a nursing-care facility on March 15, 2011. He later applied for Medicaid benefits with Hamilton County Job and Family Services (“HCJFS“) on October 18, 2011. At the time of Mr. Koenig‘s institutionalization, Mr. and Mrs. Koenig had countable Medicaid resources of approximately $349,806. The agency determined that the CSRA for Mrs. Koenig was $109,560.
{¶12} On October 26, 2011, Mrs. Koenig purchased a single-premium annuity for $121,783.56. The annuity provided immediate, monthly payments to Mrs. Koenig for five years—within her actuarial life expectancy at the time of nine and one-half years. The annuity contract was irrevocable, nonassignable, and did not contain a balloon payment or deferral. The annuity contract named the state of
{¶13} The initial HCJFS caseworker responsible for Mr. Koenig‘s Medicaid application approved his application, but instituted a period of restricted coverage from December 2011 through July 2013. The caseworker determined that the annuity purchase constituted an improper transfer of resources to Mrs. Koenig under former Ohio Adm.Code 5101:1-39-07(C), renumbered as
{¶14} Mr. Koenig requested a state hearing with the Ohio Department of Job and Family Services (“ODJFS“) under
{¶15} Mrs. Koenig, on behalf of herself and as the administrator of her late-husband‘s estate, filed an administrative appeal of ODJFS‘s decision under
{¶16} In its trial-court brief seeking to uphold the hearing officers’ decisions, ODJFS argued that Mrs. Koenig‘s annuity purchase was an improper transfer.
{¶17} The trial court found that ODJFS waived its argument that Mrs. Koenig‘s annuity failed to comply with
Standard of Review
{¶18}
Preeligibility Purchase of an Annuity is not an Improper Transfer
{¶19} In its first assignment of error, ODJFS argues that the trial court erred in reversing its determination that the annuity purchase by Mrs. Koenig was an improper transfer. ODJFS argues that Mrs. Koenig could not use funds in excess of her CSRA to purchase the annuity without seeking agency approval in a hearing. See
{¶20} ODJFS‘s arguments have been considered and rejected by Hughes, 734 F.3d 473. In Hughes, the United States Court of Appeals for the Sixth Circuit considered whether a community spouse‘s transfer of resources to purchase an annuity after institutionalization, but preeligibility, constituted an improper transfer of resources. In that case, Mr. Hughes purchased an annuity four years after his wife had entered a nursing home, and the annuity provided income to Mr. Hughes for nine years and seven months, his actuarial life expectancy. The annuity named Mrs. Hughes as the first remainder beneficiary, and the state of Ohio as the second remainder beneficiary “for the total amount of medical assistance furnished to Mrs. Hughes.” Id. at 477. Three months after Mr. Hughes had purchased his annuity, Mrs. Hughes applied for Medicaid.
{¶21} The Ohio agency determined that Mrs. Hughes was eligible for Medicaid, but imposed a period of restricted coverage because of Mr. Hughes‘s annuity purchase. In temporarily withholding Medicaid funds, the Ohio agency relied on
{¶22} The Sixth Circuit harmonized the unlimited-transfer provision of
{¶23} The Sixth Circuit further determined that Mr. Hughes‘s annuity purchase was for his “sole benefit” under
{¶24} Just as the community spouse in Hughes had transferred community resources to purchase an annuity after his spouse‘s institutionalization, but preeligibility, Mrs. Koenig purchased the annuity after her husband‘s institutionalization, but before Medicaid eligibility had been determined. Thus, ODJFS‘s reliance on the CSRA-hearing requirement in
{¶25} Therefore, we determine that Mrs. Koenig‘s annuity purchase with funds in excess of the CSRA was not an improper transfer when the transfer occurred after institutionalization, but preeligibility.
{¶26} We note that the trial court and Mrs. Koenig rely heavily on a decision from this court, Rorick v. Ohio Dept. of Job and Family Servs., 1st Dist. Hamilton No. C-090627, 2010-Ohio-5571. Rorick, which predated the Sixth Circuit‘s decision in Hughes, determined that a community spouse‘s purchase of an annuity, which complied with former Ohio Adm.Code 5101:1-39-22.8 (renumbered as
{¶27} We overrule ODJFS‘s first assignment of error.
The Annuity Requirements in Ohio Adm.Code 5160:1-3-22.8
{¶28} In its second assignment of error, ODJFS contends that the trial court erred in determining that it had waived the issue of whether Mrs. Koenig‘s annuity was an improper transfer for failing to meet the requirements of
{¶29} ODJFS failed to raise Mrs. Koenig‘s technical noncompliance with the annuity requirements as a basis for its decisions at the administrative level. Without the benefit of a developed administrative record, this court cannot conduct a meaningful review of ODJFS‘s argument in this appeal. We determine that it would be unfair to reinstate ODJFS‘s period of restricted coverage on the basis of
Conclusion
{¶30} In conclusion, because we determine that the trial court properly found that ODJFS erred when it treated the purchase of Mrs. Koenig‘s annuity as an improper transfer for Medicaid purposes, and that ODJFS erred when it imposed a period of restricted coverage on Mr. Koenig‘s Medicaid payments, we affirm the judgment of the trial court.
Judgment affirmed.
DINKELACKER, P.J., and DEWINE, J., concur.
Please note:
The court has recorded its own entry on the date of the release of this opinion.