Evangelical Good Samaritan Soc'y v. N.D. Dep't of Human Servs.

862 N.W.2d 794

The EVANGELICAL GOOD SAMARITAN SOCIETY d/b/a Good Samaritan Society–Mott, Appellee

v.NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, Appellant.

No. 20140297.

Supreme Court of North Dakota.

April 28, 2015.

Charles (Casey) L. Chapman (argued), Bismarck, N.D., and Christina Lollar (on brief), Harrisburg, PA, for appellee.

John H. Tyler (argued), Office of Attorney General, Bismarck, N.D., and Jeanne M. Steiner (on brief), Special Assistant Attorney General, Office of Administrative Hearings, Bismarck, N.D., for appellant.

Opinion

KAPSNER, Justice.

[¶ 1] The Department of Human Services appeals from a judgment reversing the Department's dismissal of Emma Rieger's appeal challenging its denial of her Medicaid application and remanding for a fair hearing on the application. Because the law allows The Evangelical Good Samaritan Society, doing business as the Good Samaritan Society–Mott (“Society”), to act as Rieger's authorized representative for purposes of appealing the Department's denial of her Medicaid application, we affirm the judgment.

I

[¶ 2] On March 21, 2013, Rieger entered the Society's basic care facility in Mott. On May 28, 2013, Rieger executed a general durable power of attorney appointing two women “to be my attorneys-in-fact and co-agents in my name and for my benefit.”

[¶ 3] State Medicaid regulations provided that “[a]ll individuals wishing to make application for medicaid must have the opportunity to do so, without delay,” N.D. Admin. Code § 75–02–02.1–02(1)(a), and defined an “application” as “a written request made by an individual desiring assistance under the medicaid program, or by an individual seeking such assistance on behalf of another individual....” N.D. Admin. Code § 75–02–02.1–02(1)(b). Furthermore, a “prescribed application form must be signed by the applicant or by someone acting responsibly for an incapacitated applicant.” N.D. Admin. Code § 75–02–02.1–02(1)(c). The definition section of the regulations governing the chapter on appeals and hearings provided:

“Authorized representative” means an individual, including an attorney at law, who has been authorized by the claimant to act for and represent the claimant in any and all aspects of a hearing. The claimant need not designate an authorized representative.

N.D. Admin. Code § 75–01–03–01(4).

[¶ 4] On July 15, 2013, the United States Department of Health and Human Services gave notice that a new rule governing “authorized representatives” would become effective January 1, 2014. See 78 Fed. Reg. 42160, 42303 (July 15, 2013). The new regulation, 42 C.F.R. § 435.923, provides in part:

(a)(1) The agency must permit applicants and beneficiaries to designate an individual or organization to act responsibly on their behalf in assisting with the individual's application and renewal of eligibility and other ongoing communications with the agency. Such a designation must be in accordance with paragraph (f) of this section, including the applicant's signature, and must be permitted at the time of application and at other times.

....

(f) For purposes of this section, the agency must accept electronic, including telephonically recorded, signatures and handwritten signatures transmitted by facsimile or other electronic transmission. Designations of authorized representatives must be accepted through all of the modalities described in § 435.907(a).

(Emphasis added). The purpose of the new regulation was explained as follows:

Under current regulations at 42 CFR 435.907, retained in the Medicaid eligibility final rule, states must accept applications from authorized representatives acting on behalf of an applicant. In this rulemaking, we propose to add § 435.923 establishing minimum requirements for the designation of authorized representatives. Proposed § 435.923, which is applied to state CHIP agencies through the addition of a cross reference in proposed § 457.340, is intended to ensure a consistent set of rules and standards for authorized representatives across all insurance affordability programs. We believe the proposed regulation is consistent with current policies and practice in most states today and therefore will not substantially affect state programs.

Specifically, we propose that, consistent with longstanding practice, applicants and beneficiaries may choose to designate an individual or organization to act on the applicant or beneficiary's behalf, or may have such a representative through operation of state law (for example, through a legal guardianship arrangement). The state may not restrict the ability of applicants and beneficiaries to have an authorized representative to only certain groups of applicants and beneficiaries.

78 Fed. Reg. 4606 (Jan. 22, 2013).

[¶ 5] On November 18, 2013, Rieger signed a “Designation of Authorized Representative” authorizing the Society to “(i) initiate an application for Medicaid benefits on my behalf, (ii) participate in all reviews of my eligibility for Medicaid benefits and (iii) take such action as may be necessary to establish my eligibility for Medicaid.” On the same date, Rieger signed a separate document titled, “Assignment of Medicaid Benefits,” which assigned to the Society her right to obtain Medicaid benefits for services provided to her by the Society, and an “Authorization for Release of Health Information.” These documents were provided to the Department.

[¶ 6] In late November 2013, an online application requesting Medicaid and basic care benefits was electronically signed by Rieger and submitted to the Department. On December 4, 2013, an eligibility worker for the Department denied the application because Rieger's countable assets of $135,264.58 exceeded the $3,000 Medicaid limit. The “Medicaid Denial” notice explained “assets taken from Emma in a confidential relationship by her power of attorney are a countable asset and are over the Medicaid limit allowed for a household of one.” The notice informed Rieger of her right to request a fair hearing. On January 3, 2014, the Society timely appealed the denial notice and requested a fair hearing.

[¶ 7] The Administrative Law Judge (“ALJ”) agreed with the Department's objections to the Society's standing and dismissed the appeal for lack of subject matter jurisdiction. The ALJ concluded N.D. Admin. Code § 75–01–03–01(4) precludes a nursing facility from being an “authorized representative” by limiting a representative to an “individual”; the new federal regulation was inapplicable because Rieger signed the documents before the regulation became effective; Medicaid benefits are not assignable; and it was “questionable” whether Rieger, who was 90 years old with a history of dementia, was competent to sign the documents. The Society appealed, and the district court reversed. The court concluded state regulations which conflicted with 42 C.F.R. § 435.923 were preempted, the Society's notice of appeal was timely, and the Society had standing to appeal on behalf of Rieger. The court remanded for a fair hearing on Rieger's application for Medicaid benefits.

II

[¶ 8] The Department wages a multifaceted attack on the district court's conclusion that the Society had standing to appeal on behalf of Rieger.

[¶ 9] Under N.D.C.C. §§ 28–32–46(1) and 28–32–49, this Court may reverse an administrative decision if it is not in accordance with the law. To have standing, a litigant must have an interest, either in an individual or representative capacity, in the cause of action or the subject matter of the controversy. See, e.g., Whitecalfe v. North Dakota Dep't of Transp., 2007 ND 32, ¶ 15, 727 N.W.2d 779; Nodak Mut. Ins. Co. v. Ward Cnty. Farm Bureau, 2004 ND 60, ¶ 11, 676 N.W.2d 752. Whether a party has standing to litigate an issue is a question of law which we review de novo on appeal. See, e.g., Finstad v. Gord, 2014 ND 72, ¶ 23, 844 N.W.2d 913; Whitecalfe, at ¶ 15.

A

[¶ 10] The Department does not quarrel with the proposition that rules and regulations of federal agencies have the force and effect of law and, under the supremacy clause, preempt conflicting state law. See, e.g., Northwestern Fed. Sav. and Loan Ass'n v. Ternes,

315 N.W.2d 296, 299 (N.D.1982). Rather, the Department argues 42 C.F.R. § 435.923 does not control in this case because Rieger signed the “Designation of Authorized Representative” and the other documents on November 18, 2013, about one and one-half months before the federal regulation became effective on January 1, 2014. The Department's position demonstrates a fundamental misunderstanding of the law.

[¶ 11] It is well-established that governments have “a present power to enact laws intended to carry out constitutional provisions for the future when the time comes for them to take effect.” Druggan v. Anderson, 269 U.S. 36, 39, 46 S.Ct. 14, 70 L.Ed. 151 (1925). “It is the general rule in this country that a legislature has power to enact a statute not authorized by the existing constitution of that State when the statute is passed in anticipation of an amendment to its constitution authorizing it or which provides that it shall take effect upon the adoption of an amendment to its constitution specifically authorizing and validating such statute.” Henson v. Georgia Indus. Realty Co., 220 Ga. 857, 142 S.E.2d 219, 223–24 (1965) ; see also Alabam's Freight Co. v. Hunt, 29 Ariz. 419, 242 P. 658, 659 (1926) ; Stop Slots MD 2008 v. State Bd. of Elections, 424 Md. 163, 34 A.3d 1164, 1177 (2012). The obvious purpose of this rule “is ‘to allow the government time to establish machinery’ for enforcement of the act,” Blumenthal v. Clerk of Circuit Court, 278 Md. 398, 365 A.2d 279, 286 (Ct.App.1976) (internal citation omitted), and to avoid the “folly” of requiring another session of the legislature after the amendment's effective date to enact the regulatory and enabling provisions. In re Opinions of the Justices, 227 Ala. 291, 149 So. 776, 780 (1933).

[¶ 12] The same principle applies to people who might be affected by a change in the law. “The...