State Court and Administrative Medicaid Litigation - A Case Study
Introduction
This case began, like many cases, innocently enough. Mr. and Mrs. Douvier between the two of them had more than the then approximately $79,000.00 “community spouse resource allowance” that Mrs. Douvier was allowed to keep (in addition to the $2,000.00 “nonexempt resources” (by reason of his being the nursing home spouse). In fact, the two of them had a total of around $105,000.00, mostly consisting of 8 jointly owned CDs of varying amounts and maturity dates, as well as swampland in Mississippi that was owned solely by Mr. Douvier. The choice had been made to ask the Department of Public Aid to consider Mr. Douvier’s application for Medicaid eligibility. This was done with the realization that the excess assets would result in au automatic denial (by Department rules), leading to an inevitable hearing in front of a hearing officer of the Department to determine whether to approve the application under the circumstances.
Initial Denial
In early November of 1996 the of Public Aid issued the expected denial notice. The caseworker gave us the impression that there was nothing left except the issue of whether the excess resources should or should not be transferred to Mrs. Douvier.
Pending (Not Yet Enacted) Illinois Regulation Regarding Spousal Impoverishment
As time was passing, our office became concerned about a proposed change to the state regulation affecting spousal impoverishment cases . This regulation, which was enacted after all of this was over, would require (and in fact now does require) the community spouse to do a calculation based on the purchase of an actuarially sound single premium life insurance annuity. As it turned out, this regulation never was a factor in the history or development of this case.
The Medicaid Fair Hearing (April 24, 1997)
At the appeal hearing, after some initial confusion about the correct application date and asset amount, we and the Department were able to agree upon November 27, 1996 as the application date, and $89,732.40 as the relevant non-exempt asset amount. I explained our contention that Mrs. Douvier’s income was so far below the maximum income allowance that she needed all of her husband’s and her assets combined (and then some) to get her income closer to the community spouse income allowance. The Department offered nothing to refute this, and the hearing then concluded. The Hearing Officer gave every impression that he had all of the information he to render his decision.
Administrative Reorganization of Appeals and Medical Determinations
At the same time, we became aware of a proposed reorganization within the Public Aid Department. As of July 1, 1997, the Illinois Department of Public Aid (IDPA) and Illinois Department of Human Services (IDHS) were to separate from each other. Medical eligibility determinations and administrative appeals would no longer be handled by the same agency. General Counsel assured me that this would eventually be sorted out, but in the beginning there might be some delays and confusion in adjusting to this new administrative hierarchy.
The Mandamus Lawsuit
On February 6, 1998, due to the pressure from the Facility and the pharmacy, and the uncertainty of waiting, Mrs. Douvier decided pursue court action against the State. By then, the Facility’s bill had increased to around $70,000.00, and there was a large pharmacy bill as well.
On February 6, 1998, we prepared the Complaint for Mandamus. We also faxed a copy to General Counsel for the Department. At this point he was suggesting that the State might oppose us based on a Federal consent decree . He hinted that monthly fines for noncompliance with the timeliness requirements were the sole remedy clients could seek, and any other course of action could result in a dismissal. Ultimately, however, he agreed that the State would likely not assert this as a defense in this particular matter.
The Mandamus Lawsuit (filed February 19, 1998 – Judge Jaffe)
The mandamus complaint was filed February 19, 1998. Interestingly, on February 22, 1998, we received a copy of the State’s Final Administrative Decision. This decision sent the case back to the local Medicaid agency. This decision was incomprehensible, since by law only the hearing officer could allow a diversion to the community spouse of assets in excess of the community spouse resources allowance.
Medicaid Administrative Review Case (filed March 19, 1998 – Judge Durkin).
We filed our appeal of the hearing officer’s decision in the form of a Complaint For Administrative Review on March 19, 1998. By now, the State’s attorneys were speaking optimistically about a quick and favorable settlement. Events Leading Up To the Involuntary Transfer Hearing
On April 23, a notice of involuntary transfer (by reason of nonpayment) was issued from the nursing home, through its attorneys. On April 27 we formally appealed that notice to the Illinois Department of Public Health.
By the first week of May, the Department of Public Aid had orally agreed to settle the Medicaid administrative review case, effective back to June 1, 1996. Unfortunately, the nursing home and their counsel continued to press ahead with their involuntary transfer action in spite of this development.
Involuntary Transfer Hearing (May 4, 1998)
The involuntary discharge hearing occurred at ManorCare Rolling Meadows, the resident’s nursing home. We asserted that Federal and State law make it impermissible for the nursing home to involuntarily transfer a resident while Medicaid eligibility has not yet been finally determined, citing Section 3-401.1 of the Illinois Nursing Care Act , as well as the Federal Medicaid statutory provisions saying moreorless the same thing. On June 4, we spoke to Mrs. Douvier. She informed us that Mr. Douvier was now admitted to Hospice, and the attending nurse had discussed with her the possibility of withdrawing his tracheotomy tube.
On June 19 we received a copy of the order of dismissal and stipulation (agreeing to payment back to June 1, 1996) in the Medicaid administrative review case, and faxed it to the nursing home attorney.
On June 22, we received a copy of the Hearing Officer’s written decision permitting the involuntary transfer of Mr. Douvier. This decision stated that only Medicaid recipients (and not Medicaid applicants) are legally protected from involuntary transfers. This decision gave Mr. Douvier ten days to move out. We appealed.
Administrative Review Action (filed June 25, 1998 – Judge Hett)
On June 25, 1998, we filed Mr. Douvier’s complaint, and on that same day, we scheduled an emergency motion for a restraining order for a June 29 hearing.
On June 29 we argued that motion. The attorney for Public Aid informed the court that a an official settlement could be expected within 30 days.
The nursing home attorney appeared and confirmed that the facility was going ahead with its request for involuntary discharge. We argued that the Court should apply the balancing test frequently used in cases where injunctive relief is being sought. We argued that the harm to the resident in allowing an involuntary transfer would be life threatening, permanent, and irreparable. By comparison, the nursing home would suffer relatively little harm in waiting awhile for payment to be made in this matter, and favorable action had been virtually assured. The Court, fortunately for us, found our argument persuasive, and granted a temporary restraining order in our favor.
On June 30, we prepared a Motion To Clarify Agreed Order And Stipulation Of Settlement against Public Aid. The nursing home administrator signed the affidavit supporting this motion. On July 9, we appeared before Judge Durkin this motion. The State tried to argue that it should not be held in contempt since it had essentially complied already with the court’s June 15 agreed order. The court was not persuaded by this, and ruled that Public Aid was to take steps to comply with the court’s order by July 17. Mr. Dourer was ordered to submit any and all group-care credit information to Public Aid by July 24, and Public Aid was to mail payment to the nursing home no later than July 31.
On July 15, the attorney for Public Aid informed us a prepayment report should be issued for the August fiscal month, but a check could not be issued before July 31.
Hearing To Extend Restraining Order (July 16, 1998)
On July 16, we extended our initial restraining order until July 29, 1998.
Hearing To Extend Restraining Order (July 29, 1998)
On July 29, we appeared seeking another extension on the restraining order. The attorney for Public Aid informed the court that the remaining issue appears to be the prepayment report. Again the court allowed an extension anyway, this time until September 5, 1998.
Contempt Action against Medicaid Agency
On July 16, we scheduled a Motion For Rule To Show Cause against Public Aid. On August 3 the hearing on the contempt action against the State was extended until August 27. The attorney for Public Aid provided us with the Prepayment Report. For some unexplained reason, it appeared to omit June 1, 1996 through November 12, 1996.
Final Flurry Of Effort To Get Information To Medicaid Agency
On August 27, we spoke to the attorney representing Public Health. When we told her about the payment voucher information we had just received, she told us that Public Health would cite the nursing home if they continued to pursue involuntary transfer once payment had been made.
Resident’s Death
We spoke with Mrs. Douvier on August 8. She informed us that the feeding tube had been pulled out on Mr. Douvier’s body on August 4. On August 27, 1998, he died.
Our Unsuccessful Effort To Continue Despite the Resident’s Death.
On September 3, we presented a Motion for Instructions. We argued that a significant number of individuals were potentially at risk with the recent onslaught of involuntary transfers of residents awaiting word from Medicaid. Thus, the court could invoke the public interest exception to the mootness doctrine and appoint a special administrator to do oral argument and otherwise conclude this matter on its merits, and the court could make its ruling notwithstanding the resident’s recent death. The court declined to go that direction, however, and dismissed our action.
Money Damages Lawsuit in Unrelated State Court Case
The Facility pushed ahead on its money damages lawsuit in the Third Municipal District. While this case was still pending, we were able to convince Public Aid to pay the nursing home retroactively to June 1, 1996. It turns out that somebody at the nursing home had erroneously Public Aid that Medicare (and not Medicaid) covered that time period when it fact it did not. Once this had occurred, we were able to tell the court that the nursing home had or would be paid in full. The nursing home’s suit was dismissed shortly after that.
Early 1999 Decision In a Different Case Involving Same Nursing Home.
Chicago attorney, Janna S. Dutton, was able to succeed at the hearing level where we had not been successful less than a year before. She reported that her client applied for Medicaid in October of 1998. The application was denied, not for substantive reasons, but because an uncooperative daughter would not release financial information she had in her exclusive possession as power of attorney for her mother. The Hearing Officer (the same one as in our case) concluded this time that as long as the Medicaid application had been filed prior to the discharge notice, and as long as the application, once approved, would cover all arrearages, then the nursing home’s action would be dismissed Illinois statute . In fact this dismissal motion was brought, and this time the Hearing Officer ruled in favor of the resident and dismissed the nursing home’s dismissal action.
Furthermore, the nursing home had committed other technical notice errors under the administrative regulations. These included their failure to give the requisite 30-day notice before giving the 21-day notice. Furthermore, they had not discussed their proposed action with any of the family members, and had indicated on the notice that the nursing home was going to discharge the resident to the home of the daughter, although she had never consented to this proposed action.
Conclusion
If it appears that this case was enormously expensive to the client, and time consuming to everyone concerned, then you are right. It was. I would like to think that the client’s death did not totally nullify all of our effort and expense. The favorable outcome in the recent involuntary discharge case seems to signify a renewed willingness on Public Health’s part to throw out a nursing home’s attempt to involuntarily discharge a Medicaid-pending resident based on nonpayment of the resident’s bill there.
89 Illinois Administrative Code §120.379 Provision For the Prevention of Spousal Impoverishment, effective June 9, 1997.
Jeffries v. Swank, 337 F.Supp 1062 (1971).
210 ILCS 45/3-401.1.
210 ILCS 45/3-401.1 and 210 ILCS 45/3-406.