Opinion
Civil Action No. 07A-03-006-JOH.
Submitted: August 9, 2007.
Decided: October 11, 2007.
Appeal from the Department of Health and Social Services — AFFIRMED .
Michael J. Goodrick, Esquire, Wilmington, Delaware, attorney for appellant.
Robert W. Willard, Esquire, Deputy Attorney General, Department of Justice, Wilmington, Delaware, attorney for employer-below, appellee.
MEMORANDUM OPINION
Bernard Schmidt appeals a Medicaid Hearing officer's denial of nursing home coverage from April 1 to October 1, 2006, as corporate stock had not been liquidated as required by regulation. Schmidt suffers from "moderate" Alzheimer's disease and is in a nursing home.
His son, Paul Schmidt, his attorney-in-fact, applied for Medicaid benefits in early April, 2006. When he did, he told the Division of Medicaid Assistance his father owned stock in Fortune Brands. But Paul, in April, was unable to locate any of his father's certificates. The Division required him to dispose of the stock and provide verification of the disposition of the proceeds.
Paul Schmidt found the certificates five months later, sold them, received over $11,000.00, and paid off some bills with the proceeds. Even though Medicaid regulations state stock is a liquid asset to be disposed of within twenty days, Paul argues this stock was a non-liquid asset since he could not find it for many months. If so, this would not render his father ineligible for benefits for the finite period at issue.
The issue is whether the certificate's unavailability for five months meant it was or became a non-liquid asset. If it was, coverage was improperly denied, but if liquid, coverage for this finite period was properly denied.
The Court holds the stock in question was a liquid asset. Coverage was, therefore, properly denied. The Hearing officer's decision is affirmed. This decision renders unnecessary Bernard Schmidt's other basis for disputing the Hearing officer's decision.
Factual Background
The facts are not disputed. On April 4, 2006, Paul Schmidt filled out an application for his father to receive Medicaid Nursing Facility Care. The form covers many pages and seeks detailed financial information. The form Paul filled out does not contain information from Paul about the Fortune Brands stock. It appears he mentioned it, however. It is not disputed he must have informed the social worker, who was working with him, about the stock and that he could not locate the certificate or certificates. He listed other assets his father had or recently had. On the day of his application, the social worker listed six matters that needed clarification before Medicaid eligibility could be determined.One of those six involved the Fortune Brands stock: "Provide a cancelled check for Fortuned (sic) Brands stock once it is surrendered and provide verification of where the money is deposited." That same request was repeated in a letter to Paul dated April 19, 2006.
Division hearing Exhibit 2. The balance of the items needing clarification were: Provide three collateral statements stating client is divorce and long. Provide copy of statement showing the Wachovia account #3040000662942 is closed. Provide cancelled check for Metlife #07856335 once it is surrendered and provide verification or where money was deposited. Provide copy of irrevocable burial contract. Provide detailed letter from lawyer explaining the 80/20 split. Medicaid splits the money from the sale of home in two since both names or on Deed.
In that letter, beside the stock, the other items identified for which the Division sought more information were:
Provide three collateral statements stating client is divorce and how long. Provide copy of statement showing the Wachovia account #3040000662942 is closed. Provide cancelled check for Metlife #078356335 once it is surrendered and provide verification of where money was deposited. Provide copy of cancelled check for Fortuned Brand stock once it is surrendered and provide verification of where money was deposited. Provide copy of irrevocable burial contract. Provide detailed letter from lawyer explaining the 80/20 split. Medicaid splits the money from the sale of home in two since both names or on Deed. Provide the following cancelled checks or verification as to what happen to money from account #1010010874202. 10/31 $500 transferred to 10110083163791. 12/27 $554 deposited into account where did money come from. 12/7 $250, $100, $900 what happen to this money. 6/6/05 $6,445.30 deposit where did money come from. 6/1 $600 transferred to 101831163791 $2,000 transferred to 1014204250858 $1,000 transferred to 1014204250858 $1,500 transferred to 1014204250858 6/16 $4,970 counter deposit 2/20 $5,552.80 counter deposit 5/2 $1,000 transferred to 10110083163163791 5/9 $300 transferred to 1014204250858 5/20 $500 transferred to 1014204250858 4/6 $2,000 counter deposit 4/18 $1,096 counter withdrawal 4/18 $1,607.97 counter withdrawal
On June 30, 2006, the Division denied Medicaid benefits for Bernard. There were several reasons given, such as value of assets being over $2,000.00, and others. In addition, Paul had not yet supplied the information on the stock which the Division had requested. The disqualification was extended on that date to "August 1-ongoing." This disqualification prompted Paul to request a "fair hearing" which he did on July 14th.
Division hearing Exhibit 4.
The social worker with whom he had been dealing wrote him on August 29th again asking for the verification information by September 11th on the Fortune Brands stock. Paul indicates that he found the original certificates in early August after he had initiated efforts to get replacement certificates. But despite deadline the social worker had given him, he did not communicate back until a September 13th letter from his lawyer. The letter enclosed a stock quote for Fortune Brands as of close of business on September 6th. Paul himself sent a letter dated September 7 outlining the efforts made to sell the stock.
The documentation supplied to the Division indicates the stock was sold in September and the sales proceeds were deposited on October 13th. Two bills were paid from those proceeds; a $5,000.00 pharmaceutical bill and a pre-paid funeral bill for $8,995.00.
With the various financial issues satisfied and the record then showing an asset balance now below $2,000.00, Bernard Schmidt became eligible for Medicaid as of October 1st. He, of course, wants it retroactive to April 1st.
Administrative Decision
The fair hearing Paul requested was held on December 18, 2006. At the outset of the hearing, counsel for the parties agreed that while there had been other financial eligibility issues, only one remained: whether the stock involved in this case should be (and should have been) treated as a liquid asset or a non-liquid asset.
The Hearing officer relying upon federal regulations, ruled Bernard's Fortune Brands stock was a liquid asset. Stock is listed by regulation as a liquid asset. The Hearing officer, despite the narrow issued framed by the parties at the beginning of the hearing, went on to discuss and hold Bernard was ineligible for other reasons. Those involved the issues identified in the April 4, April 19, and June 30 correspondence from the Division to Paul. His discussion and holding on these issues also formed a basis for denial of coverage up to October 1, 2006.
Standard of Review
On an appeal from a Medicaid fair hearing decision, the function of this Court is to determine whether that decision is supported by substantial evidence and free of legal error. Issues of law are reviewed de novo.
31 Del. C. § 520; Urban v. Meconi, 2007 WL 2285864 (Del.).
Discussion
The parties do not dispute the factual issues or the facts as the Hearing officer found them. They both address the discrete issue of law involving the stock, but Meconi defends those portions of the Hearing officer's decision which went beyond the issue of the stock.
In this matter, federal regulations and Delaware policies are the same. The Delaware policies are contained in Division of Medicaid and Medical Assistance Policy Manual ("DSSM"). To be eligible for the Medicaid nursing facility assistance sought here, the asset limit is $2,000.00. The initial application Paul Schmidt filled out in April 2006 showed there were potential financial eligibility impediments.
DSSM § 20300.
When eligibility issues arise, the Division is within its power to request and receive verification in order to reach its eligibility determination. It did that twice in April. On each of those two occasions it set deadlines for compliance; a requirement it must follow. The applicant, in this case Paul Schmidt, is responsible for supplying the requested documentation. The disqualification decision dated June 30th did not give a deadline, nor does it appear it was required to.
DSSM § 20103.12.
Id.
DSSM § 20103.2.
But when the Division social worker wrote Paul on August 29th, she noted the Fortune Brands' verification still had not been supplied. She gave a new deadline of September 11, 2006. That verification was not provided until November.
By regulation, stock is listed as a liquid asset:
Funds or other property that can be converted to cash within 20 working days. The following items are examples of liquid resources: bank accounts, stocks, bonds, CDs, money market funds, promissory notes and mortgages.
DSSM § 20300.1.
The regulations also address stocks in this manner:
Shares of stocks represent ownership in a business corporation. Their value shifts with demands and may fluctuate widely . . . Obtain a copy of the stock certificate or most recent statement of account from the firm that issued or is holding the stock.
The value of a stock as a resource is its current market value. The current market value of a stock is its closing price on any given day . . .
The stock of some corporations is held within close groups and traded very infrequently. The sale of such stock is often handled privately and is subject to restrictions. The evidence for this kind of stock can be a written statement from the firm's accountant giving their best estimate of the stock's value and the basis for the estimate, such as most recent sale, most recent offer from outsiders, current market value of assets less any debts on them, etc.
DSSM § 20330.5.
The above language has import. The record in this case does not reflect that Fortune Brands stock is, in fact, traded in the New York Stock Exchange (FO). While the Court could take judicial notice of that, it need not do so here. But the reason for noting it is that even stock in non-publicly traded corporations by regulation is still considered to be a liquid asset.
The regulations also define non-liquid assets. But not included in the definition are stock certificates which cannot be found or where there is a delay in selling.
DSSM § 20300.2 states: Assets that require more than 20 working days to convert to cash are considered non-liquid. The following types of resources are non-liquid, including but not limited to: annuities and their streams of income, household goods and personal effects, automobiles, trucks, tractors, and other vehicles, machinery and livestock, buildings and land, non-cash business property.
Paul Schmidt's inability to find the stock for a number of months does not mean it became "non-liquid." He seeks to carve out an exception to "liquid asset" which is fraught with danger. It is the proverbial slippery slope. For good reason the eligibility requirements are necessary, deadlines need to be established and followed.
Of course, these rules can create some hardship. The Court is not saying there was or was not hardship here or that it had or should have a role in a case like this. Under other regulations, the ones Schmidt argues the Hearing officer should not have considered, there is some discretion in the Division when sorting out eligibility issues.
The essential and only point in this case remains. Stock is a liquid asset. The regulations do not provide whether it becomes non-liquid if it cannot be found. For this Court to rule that the circumstances of this case convert Fortune Brands stock to a non-liquid asset would, for once, create a real ad horrendum situation. All sorts of potential excuses or circumstances could be argued to circumvent clear regulations designed to insure the truly needy get help, and tax dollars are not wasted.
The hearing officer correctly applied the law — the DSSM regulations — to the uncontroverted facts presented to her. On that basis her decision is affirmed.
With that resolution, it is unnecessary to review her other grounds for ruling non-eligibility for April to October 1, 2006.
Conclusion
For the reasons indicated herein the decision of the Division hearing officer is AFFIRMED.IT IS SO ORDERED.