The Tenth Circuit Court of Appeals published its opinion in Morris v. Oklahoma Dep’t of Human Services on Monday, July 9, 2012.
The Tenth Circuit reversed and remanded the district court’s decision. Petitioners brought suit to challenge the Oklahoma Department of Human Services’ denial of their application for Medicaid benefits as inconsistent with federal law. “After calculating the couple’s resources and the [Community Spouse Resource Allowance], Respondents determined that [Petitioners] were ineligible for benefits. In an effort to ‘spend down’ their excess resources, [Petitioners] purchased an actuarially sound annuity payable to [the husband]. Despite this purchase,[Respondent] determined that [the wife] remained ineligible. It reasoned that [the wife] could not spend her share of the couple’s resources on an annuity payable to [her husband], or in the alternative, that [the wife] was subject to a transfer penalty for transferring to [her husband] a sum in addition to the CSRA. The district court granted summary judgment in favor of Respondents, upholding the agency’s application of the Medicaid statutes.”
The Tenth Circuit disagreed with the district court’s analysis. “As the federal agency charged with administering Medicaid has noted, a couple may convert joint resources—which may affect Medicaid eligibility—into income for the community spouse—which does not impact eligibility—by purchasing certain types of annuities. This result is not dependent on the CSRA provisions, which provide an independent basis for sheltering certain resources. In other words, a couple may purchase a qualifying annuity payable to the community spouse in addition to the community spouse’s retention of the CSRA.” Additionally, the Court held that the “limit on spousal transfers applies only after a state agency has declared the institutionalized spouse eligible for Medicaid benefits.” Although the Court noted the district court’s concerns regarding the exploitation of what can only be described as a loophole in the Medicaid statutes, it concluded that the problem can only be addressed by Congress.