Hill v. Div. of Soc. Serv.

897 S.E.2d 137

Jean HILL and James Hill, Petitioners,

v.The DIVISION OF SOCIAL SERVICES and the Division of Health Benefits of the North Carolina Department of Health and Human Services, Respondents.

No. COA23-197

Court of Appeals of North Carolina.

Filed January 16, 2024

West Codenotes

Prior Version Recognized as Repealed by Implication

10A N.C. Admin. Code 23A.0102(19)

Appeal by petitioners from order entered 7 October 2022 by Judge J. Thomas Davis in Rutherford County Superior Court. Heard in the Court of Appeals 3 October 2023. Rutherford County, No. 22 CVS 38

Ott Cone & Redpath, P.A., Greensboro, by Stephen J. White, for petitioners-appellants.

Attorney General Joshua H. Stein, by Assistant Attorney General Chris D. Agosto Carreiro and Assistant Attorney General Adrian W. Dellinger, for the State.

ZACHARY, Judge.

This case concerns a single issue of law: whether great-aunts and great-uncles were included within the definition of "caretaker relatives" under the North Carolina State Medicaid Plan prior to 1 May 2022, Petitioners Jean and James Hill ("the Hills") appeal from the superior court’s order affirming the ruling by Respondent North Carolina Department of Health and Human Services ("DHHS"), which approved the Hills for Family Planning Medicaid benefits rather than retroactive and ongoing full Medicaid benefits covering the medical expenses that they incurred during their period of caring for their great-niece. After careful review, we affirm.

I. Background

At the outset, the Hills acknowledge that "[t]his appeal does not raise any substantive disputes concerning the material facts." We therefore need only recite the legal and procedural facts pertinent to our analysis.

A. Medicaid

"The Medicaid program was established by Congress in 1965 to provide federal assistance to states which chose to pay for some of the medical costs for the needy." Correll v. Div. of Soc. Servs., 332 N.C. 141, 143, 418 S.E.2d 232, 234 (1992). "Whether a state participates in the program is entirely optional. However, once an election is made to participate, the state must comply with the requirements of federal law." Id. (cleaned up). In essence, "Medicaid offers the States a bargain: Congress provides federal funds in exchange for the States’ agreement to spend them in accordance with congressionally imposed conditions." Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320, 323, 135 S.Ct. 1378, 1382, 191 L. Ed. 2d 471, 476 (2015).

"The federal and state governments share the cost of Medicaid, but each state government administers its: own Medicaid plan. State Medicaid plans must, however, comply with applicable federal law and regulations." N.C. Dep’t of Health & Hum. Serve. v. Parker Home Care, LLC, 246 N.C. App. 551, 556, 784 S.E.2d 552, 556, disc. review denied, 369 N.C. 183, 793 S.E.2d 690 (2016) (citation omitted); see also 42 U.S.C. § 1396c. "Within broad Federal rules, each State decides eligible groups, types and range of services, payment levels for services, and administrative and operating procedures." 42 C.F.R. § 430.0 (2022). A "State plan" is "a comprehensive written commitment by a Medicaid agency, submitted under [42 U.S.C. § 1396a], to administer or supervise the administration of a Medicaid program in accordance with Federal requirements." Id. § 400.203.

"North Carolina’s Medicaid plan describes the nature and scope of its Medicaid program and gives assurance that it will be administered in conformity with specific federal statutory requirements and other applicable official issuances of the federal Department of Health and Human Services." Martin v. N.C. Dep’t of Health & Hum. Serve., 194 N.C. App. 716, 720, 670 S.E.2d 629, 633 (2009). State Medicaid Plans and State Plan Amendments approved by the Centers for Medicare and Medicaid Services ("CMS") "have the force and effect of rules adopted pursuant to Article 2A of Chapter 150B of the General Statutes." N.C. Gen. Stat. § 108A-54.1B(d) (2021).

B. "Caretaker Relative" Status

CMS has promulgated a regulation defining "caretaker relative," a category of individuals who may be eligible for full Medicaid benefits, which includes an optional expansion of the category that a state may choose:

Caretaker relative means a relative of a dependent child by blood, adoption, or marriage with whom the child is living, who assumes primary responsibility for the child’s care (as may, but is not required to, be indicated by claiming the child as a tax dependent for Federal income tax purposes), and who is one of the following—

(1) The child’s father, mother, grandfather, grandmother, brother, sister, stepfather, stepmother, stepbrother, stepsister, uncle, aunt, first cousin, nephew, or niece.

(2) The spouse of such parent or relative, even after the marriage is terminated, by death or divorce.

(3) At State option, another relative of the child based on blood (including those of half-blood), adoption, or marriage; the domestic partner of the parent or other caretaker relative; or an adult with whom the child is living and who assumes primary responsibility for the dependent child’s care.

42 C.F.R. § 435.4 (second emphasis added).

Prior to the enactment of the Patient Protection and Affordable Care Act ("the Affordable Care Act"),¹ North Carolina recognized a more expanded definition of "caretaker relative." The North Carolina Administrative Code contained a regulation ("the Rule")² that reflected this expanded definition:

"Caretaker Relative" means a parent or a person in one of the following groups with whom a child lives:

(a) any blood relative, including those of half-blood, and including first cousins, nephews, or nieces, and persons of preceding generations as denoted by prefixes of grand, great, or great-great;

(b) stepfather, stepmother, stepbrother, and stepsister;

(c) persons who legally adopt a child, their parents as well as the natural and other legally adopted children of such persons, and other relatives of the adoptive parents in accordance with state law;

(d) spouses of any persons named in the groups in Sub-item (19)(a)–(c) of this Rule even after the marriage is terminated by death of divorce.

10A N.C. Admin. Code 23A.0102(19) (2020) (emphasis added).

In response to the enactment of the Affordable. Care Act, which included revisions to the Medicaid eligibility groups, North Carolina submitted State Plan amendments to CMS on 26 September 2013. On 10 December 2013, CMS approved the North Carolina State Plan Amendment NC-13-00014-MM1 ("the SPA") with an effective date of 1 January 2014. The SPA includes several pages to be incorporated into North Carolina’s State Plan. On page S25-1 of the SPA, the State "attests that it operates [the ‘caretaker relatives’] group[,]" which includes "parents or other caretaker relatives (defined at 42 CFR 433.4), including pregnant women, of dependent children (defined at 42 CFR 435.4) under age 18. Spouses of parents and other caretaker relatives are also included." Page S25-1 also contains a series of checkboxes related to the various options in defining the category that the State may elect. The box labeled "Options relating to the definition of a caretaker relative (select any that apply)"—which must be checked in order to select an expanded definition of "caretaker relative"—is unchecked. Meanwhile, on page S51-1 of the SPA, the State attests that it declines "to cover individuals qualifying as parents or other caretaker relatives who are not mandatorily eligible and who have income at or below a standard established by the State and in accordance with provisions described at 42 CFR 435.220."

C. Procedural History

The Hills live with and care for their great-niece, a minor child. On 24 June 2021, the Hills submitted an application for retroactive and ongoing Medicaid Assistance for Families & Children; however, they were only approved for Family Planning Medicaid benefits, rather than full Medicaid benefits. On 22 July 2021, the Rutherford County Department of Social Services ("DSS"), notified the Hills via mail that their application was approved "only for limited services related to Family Planning and COVID 19 testing." The Hills appealed DSS’s decision.

On 25 August 2021, after a local appeal hearing, the Hearing Officer affirmed DSS’s decision. The Hearing Officer agreed with DSS that the Hills "did not qualify for full coverage" because the "minor in the home [wa]s a ‘great’ niece, making the applicants ineligible for caretaker benefits." The Hear- ing Officer stated that "[t]he regulation[ ] on which this decision [wa]s based is found in" Section 3235 of the North Carolina Family and Children’s Medicaid Manual ("the MAF Manual").

The Hills requested a state appeal, which was heard on 13 October 2021. On 15 October 2021, the State Hearing Officer issued a pair of decisions affirming DSS’s prior rulings. The State Hearing Officer relied, in significant part, on the federal definition of "caretaker relative" found in 42 C.F.R., § 435.4, the SPA, and Section 3235 of the MAF Manual. The Hills appealed again, and on 17 December 2021, the Assistant Chief Hearing Officer issued a pair of Final Decisions, once again affirming the earlier rulings.

On 13 January 2022, the Hills filed a petition for judicial review with the Rutherford County Superior Court pursuant to N.C. Gen. Stat. § 108A-79(k). The matter came on for hearing on 30 June 2022. On 7 October 2022, the superior court entered an order affirming the Final Decisions. The superior court concluded:

[N.C. Gen. Stat. § 108A-54.1B(d)] provides that the [SPA] shall have the force and effect of the Rules. As a result, [the SPA] and the supporting [MAF] Manual are in direct conflict with [the Rule]. The later adopted [SPA] and the [MAF M]anual, however, have the force and effect of a repeal of [the Rule] since they cannot coexist together. Therefore, great[-]aunts and great[-]uncles are not included within the definition of relative caretaker and the rulings by [DHHS]

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