Opinion
Docket No. 98550.
Decided December 7, 1987.
Richard B. Adams, for plaintiff.
Frank J. Kelley, Attorney General, Louis J. Caruso, Solicitor General, and Donald S. McGehee, Assistant Attorney General, for defendant.
Defendant appeals as of right from the February 2, 1987, order of the Ontonagon Circuit Court which reversed defendant's decision to deny plaintiff retroactive medical assistance (Medicaid) benefits. We reverse the lower court's order and reinstate the denial of Medicaid benefits to plaintiff.
In the late spring of 1985 plaintiff had open heart surgery, for which he incurred substantial medical expenses. Following surgery, he submitted a claim to Medicare, his primary medical insurance carrier, which took several months to process. In November, 1985, Medicare informed him that approximately $3,250 of his expenses was not covered under the government program. Thereafter, he filed a claim with his private supplemental medical insurer for that unpaid balance. He was subsequently informed that the supplemental policy did not fully cover the balance owing. On December 5, 1985, he applied for Medicaid benefits through the Ontonagon Department of Social Services. That application was denied on the ground that his medical expenses had been incurred outside the three-month retroactive coverage period prescribed by federal law, 42 U.S.C. § 1396a(a)(34) and 42 C.F.R. § 435.914(a), and defendant's departmental policy.
Plaintiff filed a timely request with defendant for review of that denial. He argued that the medical expenses were "incurred," within the meaning of defendant's policy, when he was notified that neither Medicare nor the supplemental policy covered his entire expenses and he was billed personally for the unpaid balance. Defendant disagreed with that argument, holding that the medical expenses were incurred on the date the medical services were rendered. Since plaintiff did not apply for Medicaid benefits within three months of that date, the denial of his application for retroactive coverage was upheld.
Thereafter, plaintiff filed a petition for review with the Ontonagon Circuit Court. On February 2, 1987, an order was issued, reversing defendant's decision and holding that plaintiff's medical expenses were incurred when he received the bills for such in November, 1985, which was within the three-month retroactive coverage period. It is from that order that defendant brings its appeal of right.
Judicial review of a decision by an administrative agency is delineated by statute. MCL 24.301 et seq.; MSA 3.560(201) et seq. Where an agency rules on a question of law which is within its jurisdiction to decide, its decision cannot be set aside unless substantial rights of a party were prejudiced as a result of a substantial and material error of law. MCL 24.306(1)(f); MSA 3.560(206)(1)(f). An administrative agency's long-standing interpretation of a statute falling within its powers to administer is entitled to great weight and should not be overruled by a court without the most cogent of reasons. Bd of Ed of Oakland Schools v Superintendent of Public Instruction, 401 Mich. 37, 41; 257 N.W.2d 73 (1977); Kent Co v Dep't of Social Services, 149 Mich. App. 749, 753; 386 N.W.2d 663 (1986). However, an administrative interpretation of a statute is not conclusive and cannot overcome a logical reading of the statute. People v Dunn, 104 Mich. App. 419, 425; 304 N.W.2d 856 (1981).
Although this Court has not had prior occasion to interpret the federal statute and regulation in question, there can be no legitimate dispute that under the federal scheme the state provider (here defendant) must provide retroactive coverage only back through the third month prior to the month of initial application. See Martin v Dep't of Public Welfare, 99 Pa. Commw. 345, 359-360; 514 A.2d 204 (1986); Berry v Dep't of Public Welfare, 42 Pa. Commw. 640; 401 A.2d 602 (1979). Indeed, plaintiff concedes this. However, he asserts that such an interpretation is based on the express language of 42 U.S.C. § 1396a(a)(34) and 42 C.F.R. § 435.914(a), which differs from the language of defendant's departmental policy. He further argues that the federal law prescribes a minimum, not a maximum, term of eligibility and that defendant's policy language extends the period of coverage. Without deciding whether the federal law establishes only a minimum period of coverage, we do not believe that this state has extended the eligibility period even if such was permitted.
Pursuant to the Michigan Social Welfare Act, defendant is the state agency responsible for administering and disbursing Medicaid benefits. MCL 400.10; MSA 16.410. Defendant has done this in accordance with the policy directives found in its program administration manual (PAM) and the glossary of its program reference manual (PRM). The PAM states that benefits are available back to the first day of the third calendar month prior to the most recent application for benefits if, among other things, there was an "incurred medical expense" during that time period. Furthermore, the PRM glossary defines a "retroactive benefit month" as the first, second, or third calendar month prior to the most recent application for benefits. Hence, defendant's policy provides that medical assistance may be obtained for a period three months prior to the most recent application date if the medical expenses were "incurred" during that time. The critical question now before us is whether plaintiff's medical expenses were incurred at the time he was billed for the unpaid balance or at the time the services were rendered.
Unfortunately, neither the PAM nor the PRM define the term "incurred." It is a well-established rule of statutory construction, though, that a term not defined by statute is to be given its ordinary meaning. Statutes must be construed according to the common and approved usage of the language. Resort to dictionary definitions is an appropriate method of achieving this result. In re Condemnation of Lands, 133 Mich. App. 207, 211; 349 N.W.2d 261 (1984), lv den 421 Mich. 856 (1985). We believe those rules apply equally in construing the policies of administrative agencies.
The term "incur" has been defined as "to become liable or subject to." Webster's New Collegiate Dictionary (1973). In the context of other areas of law, several decisions of this Court have adopted that definition. Harris v Mid-Century Ins Co, 115 Mich. App. 591, 596; 322 N.W.2d 718 (1982) (no-fault insurance); Hoehner v Western Casualty Surety Co, 8 Mich. App. 708, 717; 155 N.W.2d 231 (1967), lv den 380 Mich. 758 (1968) (medical insurance contract). It is hornbook law that one generally becomes liable to pay for goods or services at the time they are received or rendered, unless the parties have agreed otherwise. Billing for the goods or services is not usually a prerequisite for legal liability. See Simpson, Contracts (2d ed), §§ 5, 8, pp 5, 7.
Applying the common definition of "incurred," plaintiff's medical expenses were incurred at the time the medical services were rendered — in May and June of 1985. Since he did not apply for Medicaid benefits within three months of those dates, his application was not timely.
To adopt the position urged by plaintiff would produce ludicrous results and render the three-month time reference without effect. If the three-month retroactive period was a minimum, not a maximum, time limit, a person could apply for Medicaid benefits many years after the expenses were incurred. This would encourage stale claims. The purpose of the three-month retroactive period is to protect persons who are eligible for Medicaid but do not apply for assistance until after receiving care either because they did not know about the eligibility requirements or because the sudden nature of their illnesses prevented their applying. Martin, supra, p 360 (citing 8 HR Rep No 231, 92d Cong, 2d Sess, reprinted in 1972 US Code Cong Ad News 4989, 5099). Here, plaintiff's delay in applying for benefits was not caused by ignorance of the eligibility requirements or sudden illness. In any case, the three-month period has been deemed a sufficient time in which to apply for benefits after incurring the expenses. Because defendant is charged with the responsibility of administering the Medicaid program, which it has done consistent with federal law, we are loath to interpret its policy differently than it has done.
Plaintiff also argues that, even if defendant's policy mandates only a three-month retroactive period, the equities of this case require that his tardiness in applying for benefits be excused. Although equity is "not bound by the strict rules of the common law," Spoon-Shacket Co, Inc v Oakland Co, 356 Mich. 151, 163; 97 N.W.2d 25 (1959), it is not without its limitations. Equitable principles cannot be applied in derogation of an unambiguous legislative requirement. Lansing v Lansing Twp, 356 Mich. 641, 650; 97 N.W.2d 804 (1959). We believe that rule applies equally to agency policies. Plaintiff has presented no proof that he could not have discovered his personal liability, either because of extended illness or because the terms of his Medicare and supplemental policies misled him, prior to the expiration of the three-month retroactive period. He alleges only that his Medicaid application was tardy because he waited for Medicare to process his claim. Even assuming that the delay in being informed of his liability was unavoidable, any relief from the existing three-month retroactive period must come from Congress or our Legislature, not this Court. Lansing, supra, p 650. While we certainly sympathize with plaintiff's plight, the federal law and defendant's policy — being clear on their face — cannot be disregarded in the interests of doing "justice." Martin, supra, pp 360-361. The circuit court lacked authority to disregard a clearly applicable law and policy out of sympathy for a particular litigant. Baldwin Co Welcome Center v Brown, 466 U.S. 147, 152; 104 S Ct 1723; 80 L Ed 2d 196 (1984). "Hard cases should not shipwreck the law." Brogdon v American Automobile Ins Co, 290 Mich. 130, 137; 287 N.W. 406 (1939).
The order of the circuit court is reversed and the decision of defendant denying plaintiff retroactive Medicaid benefits is reinstated.
Reversed.