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Date: 05-22-2022
Case Style:
Texas Health and Human Services Commission v. Estate of Clyde L. Burt, Linda S. Wallace, Executor, and Linda S. Wallace
Case Number: 03-20-00462-CV
Judge:
Darlene Byrne
Before Chief Justice Byrne, Justices Triana and Kelly
Court:
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
On appeal from The 53RD DISTRICT COURT OF TRAVIS COUNTY
Plaintiff's Attorney: Ms. Kara Holsinger
Defendant's Attorney:
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Description:
Austin, Texas - Probate lawyer represented Appellee with a probate issue.
According to Wallace’s initial brief filed in the trial court, her parents, Clyde and
Dorothy Burt, bought a home in 1974. They lived in that home until December 22, 2010, when
they sold it to Wallace and her husband, Robby Wallace, and moved into a rental property owned
by the Wallaces. In early August 2017, the Burts entered a skilled-nursing facility, and on
1 The trial court also dismissed appellees’ request for declaratory judgment for want of
jurisdiction, but appellees do not complain of that dismissal.
2
August 21, 2017, they bought from the Wallaces a one-half interest in the home to “secure home
equity in a home that they could return to if one or both of them should be able to leave the
nursing home.” The same day, they filled out a Commission form designating the home as their
place of residence and indicating an intent to return. After that purchase, the Burts had about
$2,000 remaining in their bank accounts. On September 26, 2017, the Burts sought benefits
through Medicaid2 effective September 1, 2017. That application was denied on March 7, 2018,
due to a finding of “resources in excess of program limits” after the Commission included the
home as a countable resource. Clyde died on November 17, 2017, and Dorothy died on
January 11, 2018, never having left the nursing facility and leaving a debt of $23,479.35 to
the facility.
Wallace appealed the Commission’s decision, and both a hearings officer and a
Commission Legal Services Attorney upheld the denial. She then sought judicial review,
arguing that the home should have been excluded from the Burts’ countable resources. The trial
court agreed, ruling (1) that the Commission’s interpretation of the applicable rule “to require a
Medicaid applicant or recipient to establish prior occupancy of a principal place of residence in
order to exclude the equity value of a home for Medicaid eligibility purposes” was unreasonable
and (2) that the Commission’s findings based on that interpretation were therefore not reasonably
supported by substantial evidence. The court reversed the Commission’s decision and remanded
the case for further proceedings.
2 Although Medicare provides medical insurance coverage for people over sixty-five, it
generally does not cover long-term care in a nursing facility. See What is the difference between
Medicare and Medicaid?, U.S. Dep’t of Health & Hum. Servs.,
https://www.hhs.gov/answers/medicare-and-medicaid/what-is-the-difference-between-medicaremedicaid/index.html (last visited Apr. 1, 2022); How can I pay for nursing home care?,
medicare.gov, https://www.medicare.gov/what-medicare-covers/what-part-a-covers/how-can-ipay-for-nursing-home-care (last visited Apr. 1, 2022).
3
STANDARD OF REVIEW AND LEGAL FRAMEWORK
When reviewing an administrative decision under the substantial-evidence
standard, we presume that the agency’s decision is supported by substantial evidence, and the
party challenging the decision has the burden of proving otherwise. Texas Comm’n on Env’t
Quality v. Maverick County, __ S.W.3d __, No. 19-1108, 2022 WL 413939, at *7 (Tex. Feb. 11,
2022); Texas Health Facilities Comm’n v. Charter Med.-Dall., Inc., 665 S.W.2d 446, 453 (Tex.
1984); Poole v. Karnack Indep. Sch. Dist., 344 S.W.3d 440, 443 (Tex. App.—Austin 2011, no
pet.). An agency’s decision is supported by substantial evidence if reasonable minds could have
reached the same decision, Poole, 344 S.W.3d at 443, meaning that “if there is evidence to
support either affirmative or negative findings on a specific matter, the decision of the agency
must be upheld,” Charter Med., 665 S.W.2d at 453. Although the evidence must amount to
more than a mere scintilla, “the evidence in the record may preponderate against the agency
decision and still amount to substantial evidence.” Poole, 344 S.W.3d at 443.
The construction of a statute, on the other hand, “is a question of law we review
de novo,” and we generally will uphold an agency’s interpretation of a statute it is charged with
enforcing, provided that “the construction is reasonable and does not conflict with the statute’s
language.” Sirius XM Radio, Inc. v. Hegar, __ S.W.3d __, No. 20-0462, 2022 WL 879704, at *4
(Tex. Mar. 25, 2022) (quoting Railroad Comm’n of Tex. v. Texas Citizens for a Safe Future &
Clean Water, 336 S.W.3d 619, 625 (Tex. 2011)). However, “a court must always endeavor to
decide for itself what the statutory text means so that it can determine whether the agency's
construction contradicts the statute’s plain language.” Id. (citing Maverick County, 2022 WL
413939, at *4). Moreover, deference to an agency’s construction “is appropriate only when the
statutory language is ambiguous.” Southwest Royalties, Inc. v. Hegar, 500 S.W.3d 400, 404–05
4
(Tex. 2016); see Texas Citizens, 336 S.W.3d at 625 (judicial deference to agency’s construction
of statute is tempered by several considerations, including that statutory language “must be
ambiguous”). As the supreme court has explained:
It is true that courts give some deference to an agency regulation containing a
reasonable interpretation of an ambiguous statute. But there are several qualifiers
in that statement. First, it applies to formal opinions adopted after formal
proceedings, not isolated comments during a hearing or opinions [in a court brief].
Second, the language at issue must be ambiguous; an agency’s opinion cannot
change plain language. Third, the agency’s construction must be reasonable;
alternative unreasonable constructions do not make a policy ambiguous.
Fiess v. State Farm Lloyds, 202 S.W.3d 744, 747-48 (Tex. 2006).
In determining the resources of an individual applying for Medicaid services,3 the
Commission excludes the applicant’s home, 42 U.S.C. § 1382b(a)(1), which is defined as “any
property in which an individual (and spouse, if any) has an ownership interest and which serves
as the individual’s principal place of residence,” including “the shelter in which an individual
resides, the land on which the shelter is located and related outbuildings,” 20 C.F.R.
§ 416.1212(a) (2022) (Exclusion of the home);
4 1 Tex. Admin. Code § 358.103(38), (69) (2022)
(Tex. Health & Hum. Servs. Comm’n, Exclusion of a Home) (“home” is “structure in which a
person lives” and “all adjacent land . . . in which the person has an ownership interest and that
3 The methodology used in Medicaid calculations must be no more restrictive than that
used in Social Security calculations, 42 U.S.C. § 1396a(r), and a “methodology is considered to
be ‘no more restrictive’ if, using the methodology, additional individuals may be eligible for
medical assistance and no individuals who are otherwise eligible are made ineligible for such
assistance,” id. § 1396a(r)(2)(B).
4 The Commission “follows 20 CFR § 416.1212 regarding the treatment of a home” and
excludes from an applicant’s resources the value of “a home that is the principal place of
residence of an applicant” or the applicant’s spouse if the applicant “occupies or intends to return
to the home.” 1 Tex. Admin. Code § 358.348(a)(1) (2022) (Tex. Health & Hum. Servs.
Comm’n, Exclusion of a Home).
5
serves as his or her principal place of residence,” which is “[t]he home where a person resides,
occupies, and lives”).
DISCUSSION
In Wallace’s suit for judicial review, she argued that the home should have been
excluded from the Burts’ countable resources because the Burts had an ownership interest and
considered the home to be their principal place of residence. 42 U.S.C. § 1382b(a)(1). The trial
court agreed, determining that the Commission’s interpretation of its applicable rule, 1 Tex.
Admin. Code § 358.348, “to require a Medicaid applicant or recipient to establish prior
occupancy of a principal place of residence in order to exclude the equity value of a home for
Medicaid eligibility purposes” was unreasonable. The Commission complains of that ruling,
arguing that the Burts’ half-interest in the home was properly included as a resource because
they bought that half-interest after they entered the nursing facility and thus cannot be viewed as
intending to “return” there.
The Commission “follows 20 C.F.R. § 416.1212 regarding the treatment of a
home” and its exclusion from an applicant’s assets, 1 Tex. Admin. Code § 358.348(a)(1) (2022)
(Tex. Health & Hum. Servs. Comm’n, Exclusion of a Home), and uses its Medicaid for Elderly
and Persons with Disability Handbook (MEPD Handbook) to calculate assets, see Medicaid for
the Elderly & People with Disabilities Handbook, Texas Health & Hum. Servs. Comm’n,
www.hhs.texas.gov/handbooks/medicaid-elderly-people-disabilities-handbook (last visited Apr.
1, 2022). The Handbook provides that a home can be excluded if the applicant or the applicant’s
spouse has “ownership interest in the property” and “reside[s] in the property while having
ownership interest,” id. at F-3000, www.hhs.texas.gov/book/export/html/4501 (last visited
6
Apr. 1, 2022), and that a home can be excluded if the applicant or spouse “has ownership interest
in the property and the property currently is the principal place of residence of either the person
or the spouse,” id. at F-3100. The Commission asserts that the definitions and requirements set
out in the Handbook “come directly from Section 416.1212,” specifying that subsection (a)
imposes “concurrent ownership and ‘principal place of residence’ requirements.”
Subsection (a) defines “home” as a property in which the applicant “has an
ownership interest and which serves as the individual’s principal place of residence” but does not
define “place of residence.” 20 C.F.R. § 416.1212(a). For that definition, the Commission
references the federal Program Operations Manual System (POMS), which is “a primary source
of information used by Social Security employees to process claims for Social Security benefits.”
POMS Home, Social Security, secure.ssa.gov/apps10/ (last visited Apr. 1, 2022).5 POMS
defines “place of residence” as “the dwelling the individual considers his or her established or
principal home and to which, if absent, he or she intends to return.” POMS SI 01130.100.A.2,
secure.ssa.gov/apps10/poms.nsf/lnx/0501130100 (last visited Apr. 1, 2022). The POMS sections
that discuss “[h]ow to develop absences from the home” note that the “‘Intent to return’
development applies only to the continued exclusion of property which met the definition of the
individual’s home prior to the time the individual left the property,” id. SI 01130.100.C.7.c, and
the Commission relies on that language to conclude that because “the Burts did not own a home
5 “Although the POMS is not published in the Federal Register, and does not have the
force of law, it is entitled to persuasive authority.” Frerks v. Shalala, 848 F. Supp. 340, 350
(E.D.N.Y. 1994); see Contreras v. Barnhart, No. CV H-05-3141, 2006 WL 8450447, at *2 (S.D.
Tex. Aug. 21, 2006), report and recommendation adopted, No. CV H-05-3141, 2006 WL
8450448 (S.D. Tex. Sept. 11, 2006, order) (citing POMS); Henson v. Texas Health & Hum.
Servs. Comm’n, No. 03-13-00621-CV, 2015 WL 6830677, at *4 n.6 (Tex. App.—Austin Nov. 5,
2015, no pet.) (mem. op.) (considering guidance provided in POMS).
7
when they entered the nursing facility, they had no excludable home to which they could ‘intend
to return.’”
In our analysis, however, we cannot ignore that the “principal place of residence”
references rely on the applicant’s subjective intent. For instance, POMS states that an
individual’s principal place of residence is the place that individual “considers his or her
established or principal home,” id. SI 01130.100.A.2 (emphasis added), and the decision-making
agency may not consider factors such as the applicant’s age or physical condition or the
likelihood of the applicant’s actual return, id. SI 01130.100.E.3. Section 416.1212(c) provides
that a home continues to be excluded even if an applicant leaves it “to live in an institution,” as
long as he intends to return to that home after being discharged. 20 C.F.R. § 416.1212(c). And
courts considering an applicant’s eligibility for public benefits have held that “the proper
standard to be applied is a subjective ‘intent’ standard, and not an objective ‘expectations’
standard.” Anna W. v. Bane, 863 F. Supp. 125, 130 (W.D.N.Y. 1993); see Staar v. Colvin, No.
2:14-CV-00033-REB, 2017 WL 760732, at *4-5 (D. Idaho Feb. 25, 2017) (mem. dec. & order)
(remanding for consideration of applicant’s “understood intent to sell the Arizona Residence for
the purposes of purchasing a new residence in Idaho” and whether intent affected claim for
benefits); Inglese v. Nirav Shah, 121 A.D.3d 688, 691 (N.Y. App. Div. 2014) (“While it may
very well be that the petitioner’s home was listed for sale prior to the execution of the contract of
sale, no evidence was adduced at the fair hearing as to the precise date on which the home was
listed for sale and, thus, the petitioner’s intent to return was determinative of that issue, at least
until the contract of sale was executed.”); see also Ball v. Colvin, No. CV-2012-01574-PHX-BS,
2013 WL 5886604, at *6 (D. Ariz. Oct. 31, 2013, order) (although applicant testified that he
considered one of two properties located in Illinois to be his “residence,” he was living in
8
another state and had lived there for several years, both properties were occupied by renters at
time of administrative hearing, and applicant “did not express an ‘intent to return’ to either of the
Illinois properties during the administrative hearing”; thus, determination that neither of two
Illinois properties was applicant’s principal place of residence was supported by substantial
evidence); Doyle v. Barnhart, No. 00-C-643-C, 2002 WL 32349787, at *4 (W.D. Wis. Dec. 13,
2002) (op. & order) (discussing applicant’s intent to return home and noting evidence indicating
his subjective intent to trade properties with mother).
6
Since there are no relevant Texas appellate decisions regarding “intent to return,”
we will consider the decisions of Travis County district courts (as they have sole trial court
jurisdiction for these cases in Texas) and commentators in our analysis. In a 2008 letter written
in a similar case, District Judge Stephen Yelenosky noted that the “intent to return” language,
including the POMS caution that the “‘Intent to return’ development applies only to the
continued exclusion of property which met the definition of the individual’s home prior to the
time the individual left the property,” SI 01130.100C.7.c, “appears in the federal rules only with
respect to one’s state of mind upon changing or leaving a principal place of residence.” Estate of
Seffer v. Texas Health & Hum. Servs. Comm’n, No. D-1-GN-08-000790, 419th District Court of
Travis County, Texas (Dec. 16, 2008 letter ruling). In the letter explaining his ruling, Judge
Yelenosky explained that because Seffer had been living in an apartment when he moved into
6 Further, in the context of determining “the meaning of the term ‘residence’” as used in
the election code, our sister court has observed (1) that “[w]hether a person is a resident depends
on the ‘circumstances surrounding the person involved and largely depends upon the present
intention of the individual,’” and (2) that the determination of residence “centers on both the
person’s expression of intent to remain at, or return to, the alleged residence, as well as the
circumstances that led to their presence or absence and those tending to show that the person is
likely to remain at or return to the alleged residence.” Woods v. Legg, 363 S.W.3d 710, 714
(Tex. App.—Houston [1st Dist.] 2011, no pet.) (quoting Mills v. Bartlett, 377 S.W.2d 636, 637
(Tex. 1964)).
9
the nursing home, he had no “home” at that time as defined by Medicaid rules. Judge Yelenosky
observed that although the rules explain how a homeowner applicant can sell his home and use
that money to buy another home without losing the home exclusion, they do not address the
situation in which an applicant who is renting or otherwise lacks an excludable “home” buys a
home after entering a nursing facility. Judge Yelenosky reasoned that an individual who rents
before entering a facility will be at least as “needy” as if he was a homeowner upon entry and
that such an individual will be in the same need of a home upon his discharge from the
institution. He stated that “[i]f Congress had intended to require prior occupancy, it would have
been simple to state it” and noted that imposing a “prior actual residence” requirement would
allow an applicant to obtain the home exemption if he lived for only one day in the home before
entering a nursing facility but not if he was unable to move in before needing care. Thus, Judge
Yelenosky concluded, the Commission’s interpretation is incorrect and the purposes of Medicaid
are better served by allowing an applicant to claim the home exemption for a home he buys
while in a nursing facility, as long as he intends to move into that home upon discharge.
7
Further, commentators have noted that prior to 2008 changes to the MEPD
Handbook, “it was common for a Medicaid applicant to inherit a home or even buy one and for it
to be exempt, based on the individual’s intent to live there if and when able to leave the nursing
home.” Molly Dear Abshire, H. Clyde Farrell, Patricia Flores Sitchler & Wesley E. Wright, 51
7 District Judge Lora Livingston ruled similarly in Bettes v. Texas Health & Human
Services Commission, D-1-GN-08-002967 (July 2, 2010), another ruling that the Commission
opted not to appeal but has refused to apply. In that case, Bettes developed dementia while in a
nursing facility, requiring her son to act for her. Her son bought a home for her and even
arranged for Bettes to leave the nursing facility and live in the home for three days, but the
Commission refused to exempt Bettes’s home. Judge Livingston ruled that the Commission’s
refusal to exempt the home was “based on an erroneous interpretation of the applicable statutes
and regulations.”
10
Tex. Prac., Texas Elder Law § 8:96, Excluded resources—Home, Author’s Comment (2021 ed.);
see H. Clyde Farrell & Bills Burdett Pak, Planning for Beneficiaries Who May Need Long-Term
Care, at 9 & n.30 (Nov. 15, 2016, www.epcct.org/assets/Councils/CentralTexas-TX/library/
Planning%20for%20Beneficiaries%20Who%20May%20Need%20Long-Term%20Care.pdf, last
visited Apr. 3, 2022). The authors of the Texas Practice Series on Texas Elder Law explain that
the Commission’s January 1, 2008 changes “added the requirement of having an ownership
interest while residing there, thus putting at risk even childhood homesteads inherited by nursing
home residents,” and characterize that change as “a substantive manual change without
rulemaking, possibly subject to challenge by judicial review,” noting Judge Yelenosky’s ruling
in Seffer, which the Commission opted not to appeal but since has refused to apply. 51 Tex.
Prac., Texas Elder Law § 8:96, Author’s Comment & n.5.
The Commission cites Groce v. Director, Arkansas Department of Human
Services, in which the state court of appeals held that federal and state regulations require “a
house to be an individual’s principal place of residence before allowing it to be excluded as a
homestead exemption.” 117 S.W.3d 618, 622 (Ark. Ct. App. 2003). In that case, the applicant,
while living in a care facility, bought a life estate in her daughter’s home and periodically stayed
there for “short periods of time as a guest.” Id. at 620. When she sought to exclude the life
estate from her resources for Medicaid calculations, the Arkansas Department of Human
Services denied her request, id., and the court of appeals agreed, holding that “[t]he fact that
appellant signed an ‘intent to return’ form does not negate this requirement—the house was
never her principal place of residence to which she could ‘return,’” id. at 622. We agree with the
Commission that Groce presents similar facts to this case. However, we are unpersuaded by the
Groce court’s holding. See SpawGlass Constr. Corp. v. City of Houston, 974 S.W.2d 876, 881
11
(Tex. App.—Houston [14th Dist.] 1998, pet. denied) (“Decisions from other states are not
binding on this court, and their value as a precedent is persuasive only.” (citing Williams
v. Cimarron Ins. Co., 406 S.W.2d 173, 175 (Tex. 1966))).
Under the Commission’s argument, an applicant can exempt his home if he lives
there for one day before entering a nursing facility, but an applicant living in an apartment and in
the process of buying a home who, the day before closing, suffers a fall requiring nursing care
cannot. Such a distinction is not supported by the language found in the various federal statutes
and rules, makes no practical sense, and in no way advances the purposes behind the assistance
programs in question.8 The Burts bought a half-interest in their daughter’s home—the same
home in which they lived for decades before selling it to the Wallaces—and informed the
Commission that they viewed it as their principal place of residence, stating an intention to move
there if they were released from the nursing facility. Under the language provided by Congress
and the purposes of the various assistance programs that inform our application of the language,
we agree with the trial court that the Commission’s requirement that an applicant must establish
“prior occupancy” of a home is incorrect. We overrule the Commission’s issue on appeal
Outcome: Having overruled the Commission’s issue on appeal, we affirm the trial
court’s judgment.
Plaintiff's Experts:
Defendant's Experts:
Comments: