Shell v. Ohio Dep't of Job & Fam. Serv.

233 N.E.3d 1207

2024-Ohio-160

Dorothy SHELL, Plaintiff-Appellant,

v.OHIO DEPARTMENT OF JOB AND FAMILY SERVICES, Defendant-Appellee.

No. 112448

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Released and Journalized: January 18, 2024

As amended February 27, 2024

Administrative Appeal from the Cuyahoga County Court of Common Pleas, Case No. CV-22-965289.

Sb2 inc. and Amy C. Baughman, for appellant.

Dave Yost, Ohio Attorney General, and Theresa R. Dirisamer, Senior Assistant Attorney General, Health and Human Services Section, for appellee.

JOURNAL ENTRY AND OPINION

MICHAEL JOHN RYAN, J.:

{¶ 1} This is an administrative appeal brought by plaintiff-appellant, Dorothy Shell, through her Attorney-in-Fact, Shannon Gilberry, concerning the denial of long-term care Medicaid due to what the defendant-appellee, Ohio Department of Job and Family Services ("ODJFS"), determined were excess resources in the form of ownership of life insurance policies with "cash surrender values" ("CSV") in excess of the Medicaid-eligibility resource limit. Although Shell reported that she transferred ownership of those policies to a funeral home, ODJFS found that she did not provide proof of an ownership change and, therefore, the life insurance policies remained countable resources. Shell requested a state hearing, which upheld the denial of her application for long-term care Medicaid based upon excess resources. Shell filed an administrative appeal, which affirmed the state hearing decision. Shell appealed the administrative appeal to the Cuyahoga County Common Pleas Court, which affirmed the administrative appeal decision, finding it was supported by reliable, probative, and substantial evidence. For the reasons that follow, we reverse the decision of the trial court.

Background

{¶ 2} Shell is in her seventies and suffers from heart disease, congestive heart failure, lupus, vascular disease, and has a history of stroke. She is also legally blind. On June 3, 2021, Shell was admitted to Highland Pointe, a long-term care facility, where she receives around-the-clock skilled nursing.

{¶ 3} Shortly after her admission to the facility, Shell designated Highland Pointe as her authorized representative. Highland Pointe filed an application for long-term care Medicaid benefits on Shell’s behalf seeking ongoing benefits beginning June 1, 2021.

{¶ 4} At the time of her admission to Highland Pointe, Shell owned five life insurance policies with a combined CSV of $5,433.77. At issue in this appeal are Shell’s policies with Baltimore Life. The five policies are as follows:

(1) Globe Life $587.25;

(2) Transamerica Life $582.70;

(3) Baltimore Life $1,743.99;

(4) Baltimore Life $1,688.33;

(5) Baltimore Life $846.50.

{¶ 5} Shell entered into a preplanned funeral contract with Calhoun Funeral Home. The contract contained an irrevocable assignment of Shell’s policies with Baltimore Life Insurance. Calhoun Funeral Home subsequently provided a letter to the Cuyahoga Job and Family Services ("county") stating what policies were transferred from Shell to Calhoun. The letter stated that the policies held with Baltimore Life and TransAmerica Life were in progress to be forwarded to Calhoun as beneficiary. According to Shell, the only remaining policy left in her name as of November 12, 2021, was her Globe Life policy in the amount of $587.25.

{¶ 6} On February 3, 2022, the county determined that Shell was over resourced, despite the assignments of her policies, and denied her application for long-term care Medicaid. Shell requested a state hearing. The state hearing decision was issued on April 29, 2022, finding that there was no evidence that Shell was no longer the owner of her life insurance policies. The state hearing decision overruled Shell’s appeal. On May 16, 2022, Shell filed an administrative appeal. On May 25, 2022, a decision was issued finding that a denial of Shell’s application for long-term care Medicaid was warranted on the ground that she was over the resource limits and upholding the state hearing decision.

{¶ 7} Shell appealed to the Cuyahoga County Common Pleas Court. The court upheld the state hearing decision, finding "reliable, substantive evidence to support the position of ODJFS."

Assignments of Error

I. The February 3, 2022 notice of action issued to Ms. Shell denying her application for long-term care Medicaid is defective. It is irrelevant to the case what the attorney knew at the time of the state hearing, after having had the benefit of reviewing the appellee’s appeal summary.

II. The alleged resources, the life insurance policies, were no longer available to Ms. Shell after they were assigned to the funeral home by Ms. Shell’s attorney-in-fact. Because they are not available to Ms. Shell, they are also not countable resources for Medicaid eligibility purposes.

Law and Analysis

Standard of Review

[1, 2] {¶ 8} R.C. 5101.35(E) authorizes individuals who disagree with an administrative appeal to appeal to the court of common pleas in the county in which they reside. Pursuant to R.C. 119.12, the common pleas court must examine the entire record, conduct a hearing, and affirm an agency’s decision only if it is supported by "reliable, probative, and substantial evidence in accordance with law." The common pleas court’s "review of the administrative record is neither a trial de novo or an appeal of questions of law only, but a hybrid review in which the court ‘must appraise all the evidence as to the credibility of the witnesses, the probative character of the evidence, and the weight thereof.’ " Lies v. Ohio Veterinary Med. Bd., 2 Ohio App.3d 204, 207, 441 N.E.2d 584 (1st Dist.1981), quoting Andrews v. Bd. of Liquor Control, 164 Ohio St. 275, 280, 131 N.E.2d 390 (1955). With respect to purely legal questions, however, the common pleas court reviews de novo. See Ohio Historical Soc. v. State Emp. Relations Bd., 66 Ohio St.3d 466, 471, 613 N.E.2d 591 (1993) ("courts exercise independent judgment on matters of law").

[3] {¶ 9} An "appellate court’s review is even more limited than that of the trial court." Pons v. Ohio State Med. Bd., 66 Ohio St.3d 619, 621, 614 N.E.2d 748 (1993). Unlike the court of common pleas, we do not determine the weight of the evidence. Id.; Univ. Hosp., Univ. of Cincinnati College of Medicine v. State Emp. Relations Bd., 63 Ohio St.3d 339, 587 N.E.2d 835 (1992).

[4] {¶ 10} Traditionally, in Ohio, a reviewing court has been called upon to give "due deference" to agency statutory interpretation. See Leon v. Ohio Bd. of Psychology, 63 Ohio St.3d 683, 687, 590 N.E.2d 1223 (1992) (holding that courts reviewing administrative decisions are to abide by a due deference standard); see also Ohio Historical Soc. at id. More recently, the Ohio Supreme Court has revisited the deference standard reviewing courts are to give to administrative decisions and clarified that the judiciary is never required to defer to an administrative interpretation of the law. TWISM Ents., L.L.C, v. State Bd. of Registration for Professional Engineers & Surveyors, 172 Ohio St.3d 225, 2022-Ohio-4677, 223 N.E.3d 371, ¶ 3. "An agency interpretation is simply one consideration a court may sometimes take into account in rendering the court’s own independent judgment as to what the law is." Id.

Life Insurance Policy as a Countable Resource

{¶ 11} At the time Shell applied for Medicaid benefits, if an applicant’s countable resources exceeded the $2,000 "resource limit," the applicant was ineligible for coverage. See former Ohio Adm.Code 5160:1-3-05.1(B)(8)(a), effective Aug. 1, 2016. " ‘Resource limit’ meant the maximum combined value of all resources an individual can have an ownership interest in and still qualify for medical assistance." Former Ohio Adm.Code 5160:1-3-05.1(B)(8), effective Aug. 1, 2016. "Resources" were defined as

cash, funds held within a financial institution, investments, personal property, and real property an individual and/or the individual’s spouse has an ownership interest in, has the legal ability to access in order to convert to cash, and is not legally prohibited from using for support and maintenance.

Former Ohio Adm.Code 5160:1-1-01(B)(72), effective Sept. 1, 2017; see also former Ohio Adm.Code 5160:1-3-05.1(B)(7), effective Sept. 1, 2017.¹

{¶ 12} Former Ohio Adm.Code 5160:1-3-05.1(C), effective Sept. 1, 2017, provided that an individual is ineligible for Ohio Medicaid if he or she has an ownership interest in resources with an aggregate or total countable value that exceeds the set resource limit. "Countable resources" are the resources remaining "after all exclusions have been applied." Former Ohio Adm.Code 5160:1-3-05.1(B)(1), effective Sept. 1, 2017. The resource limit for an individual is $2,000. Former Ohio Adm. Code 5160:1-3-05.1(B)(8)(a), effective Sept. 1, 2017.

{¶ 13} A life insurance policy is a countable resource to the policy owner if it generates a CSV. Ohio Adm.Code 5160:1-3-05.12(C). A CSV is a form of equity value that the policy accrues over time and that the owner can obtain by canceling the policy before it matures or the insured dies. Ohio Adm.Code 5160:1-3-05.12(B)(3). "The total CSV of all life insurance policies for an individual is excluded if the total face value of the policies is equal to or less than [$1,500] for any one individual." Ohio Adm.Code 5160:1-3-05.12(0(1). But "[i]f the total face value of all life insurance policies for any one individual is more than [$1,500], then the total CSV of all the policies for that individual is counted toward the applicable resource limit." Id.

{¶ 14} If a life insurance policy has a CSV, the administrative agency must distinguish between the owner of the policy and the insured. Ohio Adm.Code 5160:1-3-05.12(E)(1). Because the owner of the policy is the only one who can receive the proceeds of the policy, a life insurance policy with a CSV is only a countable resource if the individual is the owner of the policy, regardless of whether or not the...