Lead Opinion
[¶ 1] Minnie Makedonsky appeals from a district court judgment affirming a North Dakota Department of Human Services’ decision denying her application for
I
[¶ 2] Minnie Makedonsky entered a nursing home in Kidder County in August 2002, and the parties stipulated that at all times relevant to her claim for Medicaid benefits, she was mentally competent and capable of understanding her business affairs, but she had physical deficiencies requiring nursing home care. On August 22, 2002, after entering the nursing home, Minnie Makedonsky executed a durable power of attorney, appointing her daughter, JoAnn Makedonsky, as her attorney-in-fact. Between November 2002 and September 2005 JoAnn Makedonsky, as her mother’s attorney-in-fact, gifted more than $159,000 in assets to Minnie Makedonsky’s four daughters, JoAnn Makedonsky, Carol Schwindt, Rose Mack, and Donita Endrud. On September 8, 2005, Minnie Makedon-sky executed a “statement of intention to gift,” stating she had freely and voluntarily made those gifts to her daughters and she was not influenced by anyone, including JoAnn Makedonsky, in making those gifts.
[¶ 3] In February 2006, Minnie Make-donsky applied for Medicaid benefits with Kidder County Social Services. The county denied her application, concluding she had made disqualifying transfers of assets. Minnie Makedonsky appealed to the Department of Human Services.
[¶ 4] After an administrative hearing, an administrative law judge (“ALJ”) recommended affirming the county’s decision. The ALJ said JoAnn Makedonsky was a trustee for Minnie Makedonsky under N.D.C.C. § 59-01-08. The ALJ further said any transaction by which a trustee obtains any advantage from a beneficiary is presumed to be entered into without sufficient consideration and is a result of undue influence under N.D.C.C. § 59-01-16. The Department adopted the ALJ’s recommendation and found JoAnn Makedonsky had not rebutted the presumption of undue influence because Minnie Makedonsky had not testified at the administrative hearing to substantiate Minnie’s intent to gift her assets or to explain how she intended to pay for her nursing home costs. The Department concluded Minnie Makedon-sky’s testimony would have been the best evidence to rebut the presumption of undue influence and JoAnn Makedonsky’s hearsay testimony about her mother’s intent was not credible. The Department was not convinced by Minnie Makedon-sky’s claim that, before she signed the statement of intention to gift, she had intended to gift her assets to her daughters. The Department recognized an applicant for Medicaid benefits must make a good-faith effort to pursue available legal actions to have assets made available for purposes of Medicaid eligibility. The Department determined Minnie Makedon-sky had a cause of action to have the gifted assets returned to her until she signed the statement of intention to gift on September 8, 2005, because under N.D. Admin. Code § 75-02-02.1-33.1(8), “a transfer is complete when the individual ... making the transfer has no lawful means of undoing the transfer or requiring a restoration of ownership.” It decided Minnie Makedonsky made a disqualifying transfer when she executed the
II
[¶ 5] “ ‘When a decision of an administrative agency is appealed from the district court to this Court, we review the decision of the agency.’ ” Martin v. Stutsman County Soc. Servs.,
“1. The order is not in accordance with the law.
2. The order is in violation of the constitutional rights of the appellant.
3. The provisions of [N.D.C.C. eh. 28-32] have not been complied with in the proceedings before the agency.
4. The rules or procedure of the agency have not afforded the appellant a fair hearing.
5. The findings of fact made by the agency are not supported by a preponderance of the evidence.
6. The conclusions of law and order of the agency are not supported by its findings of fact.
7. The findings of fact made by the agency do not sufficiently address the evidence presented to the agency by the appellant.
8.The conclusions of law and order of the agency do not sufficiently explain the agency’s rationale for not adopting any contrary recommendations by a hearing officer or an administrative law judge.”
N.D.C.C. § 28-32-46.
[¶ 6] “Our review of an agency’s decision is limited; we will not make independent findings of fact or substitute our judgment for that of the agency,” and we will not reverse an agency’s decision unless its findings are not supported by a preponderance of the evidence. J.P. v. Stark County Soc. Servs. Bd.,
Ill
[¶ 7] Minnie Makedonsky argues the Department erred in counting assets she gifted to her four daughters through her attorney-in-fact before the applicable look-back period. She asserts the gifts were effective on the date the transfers occurred and not in September 2005, when she signed the statement of intention to ratify the gifts because the ratification related back to the actual date of the transfers. She contends JoAnn Makedonsky was authorized to gift the assets under N.D.C.C. § 30.1-30-06, which allows an attorney-in-fact to make gifts if the attorney-in-fact has authority to perform any
[11S] The Department counters that a Medicaid applicant must take affirmative steps showing an asset cannot be made available and that the date Minnie Make-donsky signed the statement of intention to gift, September 8, 2005, was the date she relinquished her legal right to sue for the return of assets gifted by her attorney-in-fact. The Department argues that evidence supports its findings that Minnie Makedonsky made a disqualifying transfer when she signed the statement of intention to gift and that she did not rebut the presumption of undue influence that arose when her attorney-in-fact gained an advantage from her. The Department contends the assets were available to Minnie Make-donsky for purposes of her Medicaid eligibility.
[¶ 9] In Estate of Pladson v. Traill County Soc. Servs.,
“Generally, a person without sufficient assets to meet the cost of necessary medical care and services is eligible for Medicaid benefits. Schmidt v. Ward County Soc. Servs. Bd.,2001 ND 169 , ¶ 9,634 N.W.2d 506 . The Medicaid program is intended to be a payor of last resort, and available resources must be exhausted before Medicaid will pay for an individual’s care. Wahl v. Morton County Soc. Servs.,1998 ND 48 , ¶ 18,574 N.W.2d 859 . An applicant for Medicaid benefits must prove eligibility. Roberts [v. North Dakota Dep’t of Human Servs.],2005 ND 50 , ¶ 7,692 N.W.2d 922 . Under the Department’s rules for determining Medicaid eligibility, a one-person unit is eligible for Medicaid benefits if the total value of that person’s assets does not exceed $3,000. N.D. Admin. Code § 75-02-02.1-26(l)(a); Linser v. Office of Attorney General,2003 ND 195 , ¶ 7,672 N.W.2d 643 . An ‘asset’ is defined as ‘any kind of property or property interest, whether real, personal, or mixed, whether liquid or illiquid, and whether or not presently vested with possessory rights.’ N.D. Admin. Code § 75-02-02.1-01(2). Although certain assets are exempt or excluded from consideration, see N.D. Admin. Code §§ 75-02-02.1-27 and 75-02-02.1-28, other assets that are ‘actually available’ must be considered in determining the applicant’s eligibility for Medicaid. N.D. Admin. Code § 75-02-02.1-25(1); Estate of Gross v. North Dakota Dep’t of Human Servs.,2004 ND 190 , ¶ 8,687 N.W.2d 460 . Assets are ‘actually available’ under N.D. Admin. Code § 75-02-02.1-25(1) when the assets are at the disposal of the applicant, recipient, or responsible relative who has a legal interest in a liquidated sum and that person has the legal ability to make the sum available for support, maintenance, or medical care.” Estate of Gross, at ¶ 8.
“Determining whether an asset is ‘actually available’ for purposes of Medicaid eligibility is largely a fact-specific inquiry depending on the circumstances of each case. Linser,2003 ND 195 , ¶ 11,672 N.W.2d 643 . The ‘actually available’ requirement must be interpreted reasonably, and the focus is on the applicant’s actual and practical ability to*190 make an asset available as a matter of fact, not legal fiction. Opp v. Ward County Soc. Servs. Bd.,2002 ND 45 , ¶ 11,640 N.W.2d 704 .”
[¶ 10] An asset need not be in hand to be “actually available,” and an applicant may be required to initiate appropriate legal action to make the asset available. Linser v. Office of Attorney Gen.,
[¶ 11] Minnie Makedonsky’s claim involves whether the transfers by her attorney-in-faet to her daughters were gifts. A valid gift requires an intention by the donor to then and there give the property to the donee, coupled with an actual or constructive delivery of the property to the donee and acceptance of the property by the donee. Bellon v. Bellon,
[¶ 12] JoAnn Makedonsky, as Minnie Makedonsky’s attorney-in-fact, had a relation of personal confidence with Minnie Makedonsky, and JoAnn Makedonsky is deemed a trustee under N.D.C.C. § 59-01-08, the statute in effect when these transactions occurred. See 2007 N.D. Sess. Laws ch. 549, § 27 (repealing N.D.C.C. ch. 59-01 and adopting Uniform Trust Code). Although JoAnn Makedon-sky had authority to gift Minnie Makedon-sky’s property under N.D.C.C. § 30.1-30-06, that authority must be construed together with other statutes regarding obligations of an attorney-in-fact and trustee. See In re Estate of Elken,
[¶ 13] Minnie Makedonsky had the burden of rebutting the presumption that the gifts were made without sufficient consideration and under undue influence. See Estate of Zins,
[¶ 14] This record contains credible evidence supporting the Department’s findings that Minnie Makedonsky did not intend to gift her assets to her daughters when those transfers were made, including the Department’s reliance on Minnie Mak-edonsky’s failure to testify at the administrative hearing, which the Department found raised questions about JoAnn Make-donsky’s credibility, and the testimony about the daughters’ “plan” to divide the assets equally after Minnie’s death. In assessing credibility, the Department was entitled to draw an adverse inference from Minnie Makedonsky’s failure to testify at the administrative hearing. See Seco, Inc. v. Carney Rig & Trucking Co.,
[¶ 15] We also reject Minnie Makedon-sky’s claim that her ratification of the gifts in September 2005 was retroactive to the actual date of the transfers under Matter of Mehus’ Estate,
[¶ 16] “Recognizing the constitutional doctrine of separation of powers, our standard of review in cases such as this does not allow us to make independent findings of fact or to substitute our judgment for that of the agency fact finder.” Linser,
IV
[¶ 17] We affirm the judgment affirming the Department’s decision.
Dissenting Opinion
dissenting.
[¶ 19] I respectfully dissent. I would reverse the district court judgment and remand this matter to the North Dakota Department of Human Services for a rede-termination of Minnie Makedonsky’s (“Makedonsky”) eligibility for Medicaid benefits. Because Makedonsky made completed gifts without undue influence, she has no legal ability to make the gifted property available under N.D. Admin.Code § 75-02-02.1-25. The Statement of Intention to Gift signed by Makedonsky acknowledged that she made those gifts and, even if treated as a mere ratification, it related back to the date of the transfers Makedonsky made to her daughters. I would further hold that the amounts transferred before the thirty-six month look-back period and acknowledged or ratified by the Statement of Intention to Gift were not available to her for purposes of determining her Medicaid eligibility.
[¶ 20] The majority opinion makes the same error of law the ALJ made. The majority misinterprets N.D. Admin. Code §§ 75-02-02.1-25 and 75-02-02.1-33.1(8) and ignores agency law.
[¶ 21] Assets that are “actually available” must be considered in determining eligibility for Medicaid. N.D. Admin. Code § 75-02-02.1-25(1). Assets are “actually available” when “the assets are at the disposal of the applicant, recipient, or responsible relative who has a legal interest in a liquidated sum and that person has the legal ability to make the sum available for support, maintenance, or medical care.” Estate of Pladson v. Traill Co. Social Services,
[¶ 22] Makedonsky made gifts to her daughters, including the daughter who executed some of the gift documents as Mak-edonsky’s agent. A gift is a transfer of personal property made voluntarily and without consideration. N.D.C.C. § 47-11-06. The requirements for a valid inter vivos gift are: (1) an intent to give; (2) delivery of the gift, either actual or constructive; and (3) an acceptance of the gift by the donee. Kolouch v. Bond,
[¶ 23] Some of the documents to complete the gifts were executed by daughter JoAnn Makedonsky, Makedonsky’s agent under a Durable Power of Attorney, and not merely under the statute as the majority asserts in ¶ 12. “Every act which legally may be done by or to any person may be done by or to the agent of such person.” N.D.C.C. § 3-02-01. The mere fact the gifts were completed through an agent does not negate the effectiveness of the act. The exception to this is when an agent violates the agent’s duty in circumstances giving rise to a presumption of undue influence. The Department wants Makedonsky to bring a lawsuit attacking the transfer on the basis of a statutory rebuttable presumption that the gifts to JoAnn Makedonsky, as trustee, were without sufficient consideration and made under undue influence.
[¶24] Under N.D.C.C. § 59-01-16 (2006), a transaction whereby a trustee gains an advantage from the beneficiary is “presumed to be entered into by the latter without sufficient consideration and under undue influence.” See 2007 N.D. Sess. Laws ch. 549, § 27 (repealing N.D.C.C. ch. 59-01 and enacting the N.D. Uniform Trust Code, § 59-09-01 et. seq.). When an agent gains such an advantage, the burden is on the agent to rebut the presumption. Mehus v. Mehus,
[¶ 25] The majority treats the Statement of Intention to Gift as a mere ratification although its content indicates it was not intended merely to ratify the prior acts of Makedonsky’s agent, but rather to show that the acts previously done through her agent were, in fact, Makedonsky’s own acts at the time they were made. The Statement provides, in part:
*194 I, Minnie Makedonsky, state and memorialize that, as a reflection of my love and affection, I made previous gifts of cash, life insurance, and a remainder interest in my home totaling $148,703.77 to my children, including my daughter and attorney-in-fact, JoAnn Makedon-sky. I was not influenced by anyone, including JoAnn, in any way to make these gifts and I did it freely and voluntarily. Likewise, I intend to continue making future gifts of my assets to my children, including JoAnn, or any other child that may serve as my attorney-in-fact, and my intention to make future gifts to my children or any trusts in which my children are beneficiaries has not been influenced by any of my children in any way.
(Emphasis added.)
[¶ 26] Makedonsky, therefore, established that any legal action brought within the thirty-six month look-back period would have been unsuccessful. The transfers were made by Makedonsky, as a matter of fact, on their original dates.
[¶ 27] The Department has stipulated that Makedonsky was a competent individual and accepts this Statement as Make-donsky’s valid act. For purposes of eligibility, the Department cannot have it both ways. It cannot treat the Statement of Intention to Gift as a valid act, a document of legal significance executed by a competent person, but ignore its contents. The Statement is clear that Makedonsky herself made those gifts, that it was her intention to do so, and she was not under undue influence.
[¶ 28] Even if the Statement of Intention to Gift is treated merely as a ratification, the law applicable to ratifications indicates that the ratification would relate back to the date of transfer, thus treating those gifts made outside the look-back period as not available for purposes of determining eligibility.
Elf 29] The majority ignores the legal effect of a ratification. The Statement made in September 2005, if a ratification of the gifts, related back to the actual date of the transfers. Ratification is “[t]he affir-mance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.” Askew v. Joachim Mem’l Home,
The concept of ratification is not a legal fiction, but denotes the legal consequences which result from a series of events beginning with a transaction inoperative as to the principal, and ending in an act of validation. The statement that there is a relation back to the time of the original act is fictitious in form, but in effect, it is a statement of liabilities. The concept is unique .... it operates as if the transaction were complete at the time and place of the first event, rather than the last ....
Restatement (Second) of Agency § 82 cmt. c. (1958) (emphasis added).
[¶ 30] When these ratification principles are applied to Makedonsky, the ratification by Makedonsky of any gifts made before the look-back period would relate
[¶ 31] To support its rejection of Make-donsky’s claim that her ratification of the gifts in September 2005 was retroactive to the actual date of the transfers, the majority cites Mehus v. Mehus,
[¶ 32] In Mehus, we affirmed a district court decision affirming an order of a county probate court that a son who served as coattorney-in-fact for his mother was not entitled to savings certificates he purchased with his mother’s assets and held with his mother as a joint tenant with right of survivorship.
[¶ 33] In Askew, the board of directors of an association that operated a retirement home did not expressly ratify an agreement entered into by the association’s president with another party.
[¶ 34] Here, the ALJ did not question the validity of Makedonsky’s Statement of Intention to Gift executed subsequent to the transfers to her daughters and impliedly found Makedonsky made an express ratification of the gifts. The recommended findings of the ALJ adopted by the Department and affirmed by the district court stated,
Minnie had the right to have the assets returned to her until she signed the Statement of Intention to Gift on September 8, 2005.... The gifts were revocable until Minnie executed the Statement of Intention to Gift, at which time she ratified the gifts and her statement became in effect, her release of her chose in action.
The ALJ then concluded that “the transfer became complete when Minnie signed the Statement of Intention to Gift on September 8, 2005.” The ALJ wrote,
In this case, the disqualifying transfer occurred when Minnie executed the*196 Statement of Intention to Gift on September 8, 2005, and no longer had any lawful means of undoing the transfers or requiring a restoration of ownership of her assets. It was on that date that she gave up the right to revoke the gifts and have her assets returned to her. That date falls within the thirty-six month look-back date. Therefore, the assets transferred by her attorney-in-fact are considered disqualifying transfers under Medicaid rules in N.D. Admin. Code § 75-02-02.1-33.1.
(emphasis added).
[¶ 35] When the ALJ considered whether Makedonsky overcame the presumption of undue influence, the ALJ failed to consider the effect of an express ratification of the transfers. A principal can consent to conduct by an agent that would otherwise constitute a breach of the agent’s duty. Restatement (Third) of Agency § 8.06 (2006). The Restatement provides that a principal’s consent will be valid, provided,
(a) in obtaining the principal’s consent, the agent
(i) acts in good faith,
(ii) discloses all material facts that the agent knows, has reason to know, or should know would reasonably affect the principal’s judgment unless the principal has manifested that such facts are already known by the principal or that the principal does not wish to know them, and
(iii) otherwise deals fairly with the principal; and
(b) the principal’s consent concerns either a specific act or transaction, or acts or transactions of a specified type that could reasonably be expected to occur in the ordinary course of the agency relationship.
Id. When “a principal consents after-the-fact to action taken by an agent that would otherwise breach the agent’s fiduciary duty to the principal, the principal has the opportunity to assess what the agent has done with a degree of specificity not available before the agent takes action.” Id. at cmt. b.
[¶ 36] Here, if Makedonsky’s Statement is treated as a ratification, the validity of which the ALJ acknowledges in the recommended findings and conclusions, the Statement rebutted the presumption of undue influence, related back to the original date of the transfers to Makedonsky’s daughters and supplied original authority to execute the transfers. Makedonsky had the opportunity to assess the earlier transfers to her daughters. The Statement of Intention to Gift reveals that Makedonsky “freely and voluntarily” consented to the transfers, and “freely and voluntarily” executed the Statement of Intention to Gift. Her “ratification” of the transfers related back to the original date on which the transfers occurred. Makedonsky established there was no viable legal action to compel the return of the property. Thus, any of the transfers at issue in this case made before the thirty-six month look-back period were not relevant to Makedon-sky’s Medicaid eligibility determination.
[¶ 37] For these reasons, I would reverse the district court judgment and the decision of the North Dakota Department of Human Services and would remand for a redetermination of Minnie Makedonsky’s eligibility for Medicaid benefits. The property transferred before the thirty-six month look-back period was not available to her for purposes of determining her Medicaid eligibility.