HELENE N. WHITE, Circuit Judge.
Plaintiffs Carole and Harry Hughes (collectively, the Hugheses), a nursing home
Congress established the Medicaid program in 1965 to provide federal and state funding of medical care for individuals who cannot afford to cover their own medical costs. See Social Security Amendments of 1965, Title XIX, Grants to States for Medical Assistance Programs, Pub.L. No. 89-97, 79 Stat. 286, 343-52 (codified as amended at 42 U.S.C. §§ 1396-1396w-5); Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 65 L.Ed.2d 784 (1980). The program is administered by the Secretary of Health and Human Services (HHS or the federal agency), who in turn exercises her authority through the Centers for Medicare and Medicaid Services (CMS).
In 1988, Congress passed the Medicare Catastrophic Coverage Act (MCCA), Pub.L. No. 100-360, 102 Stat. 683, "to protect community spouses from `pauperization' while preventing financially secure couples from obtaining Medicaid assistance. To achieve this aim, Congress installed a set of intricate and interlocking requirements with which States must comply in allocating a couple's income and resources." Blumer, 534 U.S. at 480, 122 S.Ct. 962 (internal citation and parenthetical omitted). In particular, the MCCA allows the community spouse to keep a portion of the couple's assets — the CSRA — without affecting the institutionalized spouse's Medicaid eligibility.
"The CSRA is considered unavailable to the institutionalized spouse in the eligibility determination, but all resources above the CSRA (excluding a small sum set aside as a personal allowance for the institutionalized spouse ...) must be spent before eligibility can be achieved." Blumer, 534 U.S. at 482-83, 122 S.Ct. 962 (citing 42 U.S.C. § 1396r-5(c)(2)). However, a community spouse's income is not considered available to the institutionalized spouse for eligibility purposes, except in limited circumstances. See 42 U.S.C. § 1396r-5(b). Moreover, "after the month in which an institutionalized spouse is determined to be eligible for benefits ..., no resources of the community spouse shall be deemed available to the institutionalized spouse." Id. § 1396r-5(c)(4).
A state plan must "comply with the provisions of [§] 1396p ... with respect to liens, adjustments and recoveries of medical assistance correctly paid,[] transfers of assets, and treatment of certain trusts." 42 U.S.C. § 1396a(18) (internal footnote omitted). Paragraph (1) of § 1396p(c) requires (in relevant part) that a state plan "must provide that if an institutionalized individual or the spouse of such an individual... disposes of assets for less than fair market value on or after the look-back date" (which, as relevant here, is defined as thirty-six months prior to the first date on which the institutionalized spouse applies for Medicaid assistance), "the individual is ineligible for medical assistance for services" (such as coverage for nursing home costs) for the numbers of months that the assets would have covered the average monthly cost of such services. Id. § 1396p(c)(1)(A); see id. § 1396p(c)(1)(B)(i)-(ii), (C)(i)(I), (D)(ii), (E)(i).
In other words, even if the institutionalized spouse is eligible for Medicaid coverage after spending down her assets, § 1396p(c) requires a state to impose a transfer penalty (a period of restricted coverage) if either spouse disposed of assets for less than fair market value during the look-back period. However, the transfer penalties under paragraph (1) do not apply in certain circumstances. As relevant here: "An individual shall not be ineligible for medical assistance by reason of paragraph (1) to the extent that ... (B) the assets [](i) were transferred to the individual's spouse or to another for the sole benefit of the individual's spouse[.]" Id. § 1396p(c)(2)(B)(i). Congress amended § 1396p(c)(2)(B) to its current form in 1993. See Omnibus Budget Reconciliation Act (OBRA) of 1993, Pub.L. No. 103-66, § 13611(a)(2), 107 Stat. 312; MCCA of 1988, Pub.L. No. 100-360, § 303(b), 102 Stat. 683.
Congress later passed the Deficit Reduction Act of 2005 (DRA), Pub.L. No.
Mrs. Hughes entered a nursing home in 2005. For nearly four years, Mr. Hughes paid for his wife's nursing home costs using the couple's resources, which largely consisted of funds from his IRA account. In June 2009, about three months before Mrs. Hughes applied for Medicaid coverage, Mr. Hughes purchased a $175,000 immediate single-premium annuity for himself using funds from his IRA account. The annuity guarantees monthly payments of $1,728.42 to Mr. Hughes from June 2009 to January 2019, totaling nine years and seven months, which is commensurate with Mr. Hughes's undisputed actuarial life expectancy. Combined with other retirement income, the annuity increased Mr. Hughes's monthly income to $3460.64 after the annuity took effect. In the event of Mr. Hughes's death, Mrs. Hughes is the first contingent beneficiary and the Ohio agency is "the remainder beneficiary for the total amount of medical assistance furnished to annuitant['s] spouse, [Mrs.] Hughes."
Mrs. Hughes applied for Medicaid coverage in September 2009. In December 2009, the Stark County division of the Ohio agency issued a notice that she was eligible for Medicaid as of the month of her application. However, the Ohio agency placed her on restricted coverage from September 2009 to June 2010, deeming her ineligible for coverage of nursing home costs for that time period because of Mr. Hughes's annuity purchase.
The Ohio agency determined that Mr. Hughes's annuity purchase was an improper transfer because he used a community resource (the IRA account) in an amount that exceeded his CSRA of $109,560 and because the annuity failed to name Ohio as the first contingent beneficiary. Thus, the Ohio agency placed Mrs. Hughes on restricted coverage for approximately ten months, the number of months that the difference between Mr. Hughes's CSRA and the annuity would have paid for nursing home costs. The Hugheses appealed the decision. The Ohio agency affirmed in a state-hearing and administrative-appeal level decision. State-court proceedings have been stayed pending this case's resolution.
In August 2010, the Hugheses filed this case under 42 U.S.C. § 1983, alleging that the Ohio agency violated the federal Medicaid statutes, including § 1396p(c)(2)(B)(i), when it placed Mrs. Hughes on restricted coverage due to Mr. Hughes's purchase of an annuity with funds from his IRA account.
The district court granted summary judgment in favor of the Ohio agency and denied the Hugheses' request for injunctive relief. See Hughes v. Colbert, 872 F.Supp.2d 612 (N.D.Ohio 2012).
We review de novo the district court's grant of summary judgment, as well as its interpretation of federal statutes. Cnty. of Oakland v. Fed. Hous. Fin. Agency, 716 F.3d 935, 939 (6th Cir.2013). In reviewing questions of statutory interpretation, we employ a three-step framework:
Elgharib v. Napolitano, 600 F.3d 597, 601 (6th Cir.2010) (citations and internal quotation marks omitted).
To the extent that HHS has issued guidance on the federal Medicaid statutes in the form of opinion letters, an agency manual, and an amicus brief that lack the force of law, its statutory interpretations are not afforded deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), but "are `entitled to respect' under ... Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944), ... only to the extent that those interpretations have the `power to persuade[.]'" Christensen v. Harris Cnty., 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000) (internal citation altered); see In re Carter, 553 F.3d 979, 987-88 (6th Cir.2009) (applying Skidmore to the amicus brief filed by a federal agency charged with administering a statutory scheme); Caremark, Inc. v. Goetz, 480 F.3d 779, 787 (6th Cir.2007) (applying Skidmore to interpretations of Medicaid statutes set forth by CMS).
The primary issue on appeal is whether the transfer of a community resource to purchase an annuity for the community spouse's sole benefit, which transfer is done after the institutionalized spouse is
We reject the district court's approach. Section 1396r-5(f)(1) reads:
42 U.S.C. § 1396r-5(f)(1).
The provision begins in permissive, not prohibitive, terms. The Ohio agency acknowledges that "the first sentence tells us that a transfer to the community spouse up to the CSRA is allowed." That same sentence states that such transfer is permitted notwithstanding § 1396p(c)(1), which governs transfer penalties. The next sentence provides that this permitted transfer "shall be made as soon as practicable after the date of the initial determination of eligibility." (emphasis added). It does not say anything about a transfer made before the initial determination of eligibility, let alone that any pre-eligibility transfer that exceeds the CSRA is subject to a transfer penalty.
Tellingly, § 1396r-5(f)(1) is a CSRA provision. It does not appear within § 1396p(c)(1)'s framework, which imposes restricted coverage for the disposal of assets for less than fair market value during the look-back period. Even assuming that § 1396r-5(f)(1) provides authority for a state to impose a period of ineligibility for a transfer that exceeds the CSRA,
In response to Morris's holding, the Ohio agency asks us to follow an unpublished district court opinion, Burkholder v. Lumpkin, No. 3:09-cv-1878, 2010 WL 522843 (N.D.Ohio Feb. 9, 2010). But Burkholder does not support its position because, in that case, the district court held that "§ 1396r-5(f) supersedes § 1396p(c)(2) where ... the transfer of assets from the institutionalized spouse to the community spouse occurs after the initial eligibility determination." Id. at *7. By contrast, the Ohio agency seeks to impose a penalty for a transfer that occurred before it found Mrs. Hughes eligible for coverage.
Further, the two primary state-court cases the Ohio agency cites in support — Feldman v. Department of Children & Families, 919 So.2d 512 (Fla.Dist.Ct. App.2005), and McNamara v. Ohio Department of Human Services, 139 Ohio App.3d 551, 744 N.E.2d 1216 (2000) — are unpersuasive.
Our reading of the statute is supported by HHS's guidance. In its amicus brief, HHS explains that § 1396r-5(f)(1) "has nothing to say about the inter-spousal transfers that are permissible before a determination of eligibility." The federal agency's State Medicaid Manual confirms that § 1396r-5(f)(1) applies to post-eligibility reallocation of resources and that § 1396p(c)(2)(B)(i) permits transfers to a third party for the sole benefit of the individual's spouse. See State Medicaid Manual §§ 3258.11, 3262.4. HHS has taken the same position in a series of opinion letters issued to state plan administrators and to the public, reasoning that § 1396r-5(f)(1) does not conflict with, and thus does not supersede, § 1396p(c)(2)(B), as the two provisions apply to different situations, before and after eligibility is established; and that permitting inter-spousal transfers under § 1396p(c)(2)(B) does not render § 1396r-5(f)(1) a nullity, as the latter provision still has meaning with respect to resource allocation after eligibility is established. We agree with amici curiae, the National Academy of Elder Law Attorneys and the Ohio State Bar Association (who
The Ohio agency argues that Congress intended a different result, one that would subordinate § 1396p(c)(2)(B)(i) to § 1396r-5(f)(1)'s CSRA transfer cap. But the statutory text does not provide any indication of such an intent for the reasons described. Moreover, the legislative history does not support the Ohio agency's contention. A Senate amendment to H.R. 2264 (the bill that ultimately became OBRA, which enacted § 1396p(c)(2)(B)(i)) would have subjected the unlimited-transfer provision to § 1396r5(f)(1)'s CSRA transfer cap. See 139 Cong. Rec. 7913-01, 7986 (1993) (bill passes the Senate with amendment); id. at 8013 (amending § 1396p(c)(2)(B)(i) to provide that "(B) the resources-(i) were transferred to the individual's spouse or to another for the sole benefit of the individual's spouse and did not exceed the amount permitted under section 1924(f)(1)" (emphasis added)). In a conference report, the House of Representatives receded from its disagreement with the Senate amendment, but nevertheless offered substitute language that dropped the reference to § 1396r-5(f)(1), and provided the current language of § 1396p(c)(2)(B)(i), which was adopted. H.R. Rep. 103-213, at 1, 324 (1993) (Conf.Rep.), reprinted in 1993 U.S.C.C.A.N. 1088. That Congress declined to adopt language supporting the very construction of § 1396p(c)(2)(B)(i) that the Ohio agency now advances is a "compelling" indication of its intent not to subordinate § 1396p(c)(2)(B)(i) to § 1396r-5(f)(1). INS v. Cardoza-Fonseca, 480 U.S. 421, 442-43, 107 S.Ct. 1207, 94 L.Ed.2d 434 (1987) ("Few principles of statutory construction are more compelling than the proposition that Congress does not intend sub silentio to enact statutory language that it has earlier discarded in favor of other language." (internal quotation marks omitted)).
The Ohio agency raises two alternate grounds for affirmance. To the extent it did not raise the issues before the district court, we address them to promote finality in this litigation, as the issues require no further factual development and have been sufficiently presented for our review. See In re Morris, 260 F.3d 654, 664 (6th Cir. 2001).
The Ohio agency argues that the transfer of a community resource to purchase an annuity by or on behalf of the community spouse cannot be "for the sole benefit of the individual's spouse" under § 1396p(c)(2)(B)(i) if — as here — the annuity designates the institutionalized spouse as the first contingent beneficiary and the Ohio agency as the second contingent beneficiary to receive payments in the event of the community spouse's early death, even if the annuity is actuarially sound and payments are made only to the spouse during his life. We disagree.
The statute does not define the term "sole benefit." Nor is the term defined by federal regulation. The Ohio agency's position on this issue rests primarily on the plain meaning of the word "sole," citing dictionaries and other authorities for the proposition that the word means "`only,' `solitary,' `single' or `exclusive.'" But what a dictionary does not tell us is whether a transfer of assets "to another for the sole benefit of the individual's spouse" means (as HHS contends in its amicus brief and the Hugheses contend in their second supplemental brief) that the transfer may benefit
The Ohio agency argues that HHS's position on this issue is inconsistent. The State Medicaid Manual, § 3258.11, explains:
In turn, § 3257 of the manual states:
Id. § 3257.
Although the phrase "at any time in the future" might be interpreted to mean that contingent beneficiaries cannot be named in the financial instrument, this is not the federal agency's position. As HHS has reasoned in its amicus brief and in a prior opinion letter, the designation of contingent beneficiaries to receive funds remaining in an annuity in the event of the spouse's early death would not necessarily violate the sole-benefit rule, so long as the annuity is actuarially sound and provides for payments only to the spouse during his life. Accord Mertz v. Houstoun, 155 F.Supp.2d 415, 426 n. 14 (E.D.Pa.2001) ("If an annuitant receives the amount invested [plus interest] during his lifetime, the annuity is actuarially sound and for his sole benefit.").
HHS's position is mirrored by Ohio's implementing regulation:
Ohio Admin. Code § 5101:1-39-07(F)(1).
The Ohio agency asserts that HHS's position and its state's regulation are
Were we to adopt the Ohio agency's definition, no transfer "to another for the sole benefit of the individual's spouse" under most standard financial arrangements could satisfy § 1396p(c)(2)(B)(i). We reject this "acontextual approach to statutory interpretation." Flores v. Rios, 36 F.3d 507, 513 (6th Cir.1994); see Davis v. Mich. Dep't of Treasury, 489 U.S. 803, 809, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989) ("It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.").
We cannot presume that Congress operated in a vacuum when it enacted § 1396p(c)(2)(B)(i). By providing that a couple may transfer assets "to another for the sole benefit of the individual's spouse," the term "another" is not limiting. It naturally encompasses standard financial arrangements (such as an annuity) crafted for the spouse's sole benefit during his life. Our reading is supported by HHS, which takes the position that the term "another" includes an entity that issues the annuity. In this context, HHS's construction of the sole-benefit rule gives the statute meaning. The actuarial-soundness requirement reasonably assures that the assets were transferred to a third party for the individual spouse's sole benefit. Any contingent interest becomes relevant only if the spouse dies early. To extend the sole-benefit requirement past a spouse's death is nonsensical. The federal agency's construction is reasonable, supported by the statutory structure, and, thus, due respect under Skidmore.
The Ohio agency argues the transfer of a community resource to purchase an annuity by or on behalf of the community spouse that satisfies § 1396p(c)(2)(B)(i)'s sole-benefit rule must also satisfy the annuity rules under § 1396p(c)(1)(F), and that because Mr. Hughes's annuity does not name Ohio as "the remainder beneficiary in the first position," it fails to satisfy
As the Hugheses correctly contend in their second supplemental brief, an annuity that satisfies § 1396p(c)(2)(B)(i) need not satisfy § 1396p(c)(1)(F). The annuity rules under § 1396p(c)(1)(F) fall within § 1396p(c)(1)'s (paragraph (1)) overall transfer-penalty regime:
42 U.S.C. § 1396p(c)(1)(F) (emphasis added). On the other hand, § 1396p(c)(2)(B)(i) is an exception to transfer penalties under paragraph (1):
Id. § 1396p(c)(2)(B)(i) (emphasis added).
In its amicus brief, HHS takes the position that an annuity that satisfies § 1396p(c)(2)(B)(i)'s sole-benefit rule must also satisfy § 1396p(c)(1)(F). It does so without any reference to the statutory text, meaningful analysis, or reference to authority. The only proffered support for HHS's position is a 2006 CMS letter enclosure concerning the treatment of annuities under the DRA. In that letter, the federal agency reasoned:
CMS, Changes in Medicaid Annuity Rules under the DRA of 2005 § II.B (July 27, 2006).
As the Ohio agency acknowledges, HHS applies § 1396p(c)(1)(F) to an annuity that otherwise satisfies § 1396p(c)(2)(B)(i) without acknowledging or addressing the structure of § 1396p(c), which places § 1396p(c)(1)(F) within paragraph (1)'s transfer-penalty framework and specifically sets forth § 1396p(c)(2)(B)(i)'s sole-benefit rule as an exception to paragraph (1). HHS's rationale lacks reasoning and contravenes the plain language of § 1396p(c)(2)(B)(i) and § 1396p(c)(1)(F). Thus, we decline to afford its interpretation respect under Skidmore. See Flores v. USCIS, 718 F.3d 548, 554-55 (6th Cir. 2013).
Rather than adopt HHS's rationale, the Ohio agency asks us to hold that Congress could not have enacted § 1396p(c)(1)(F) without intending it to supplement the earlier and more general provision of § 1396p(c)(2)(B)(i).
We disagree with the Ohio agency's characterization of the two provisions. Although "it is axiomatic that a general provision yields to a specific provision when there is a conflict," Reg'l Airport Auth. of Louisville v. LFG, LLC, 460 F.3d 697, 716 (6th Cir.2006), there is no inherent conflict between the two provisions, and each provision is specific in its own way. Section 1396p(c)(1)(F) purports to govern all annuities through the imposition of a transfer penalty under paragraph (1) if the annuity does not satisfy certain rules. On the other hand, § 1396p(c)(2)(B)(i) carves out an exception to paragraph (1)'s transfer penalties. The language of § 1396p(c)(1)(F) limits its annuity rules "[f]or purposes of this paragraph." The language of § 1396p(c)(2)(B)(i) provides that "[a]n individual shall not be ineligible for medical assistance by reason of paragraph (1)" if a transfer satisfies, in relevant part, the sole-benefit rule. The two provisions complement rather than contradict one another.
Because the provisions are not in conflict, that Congress enacted
Last, the Ohio agency's reference to floor statements by members of Congress — indicating in general terms that the DRA was enacted to close loopholes related to the purchase of annuities — is unavailing given that the statutory language unambiguously limits § 1396p(c)(1)(F) to paragraph (1) and § 1396p(c)(2)(B)(i) is an exception to paragraph (1)'s transfer penalties and was unamended by the DRA.
For the foregoing reasons, we REVERSE the district court's judgment and remand for further proceedings consistent with this opinion.
42 U.S.C. § 1396r-5(f)(1).
42 U.S.C. § 1396p(c)(1)(G) (internal paragraph formatting altered). We need not address the Hugheses' argument that the annuity is saved by § 1396p(c)(1)(G) given our disposition of this appeal on other grounds.
