Opinion
No. A06-1139.
Filed May 22, 2007.
Appeal from the District Court, Hennepin County, File No. 27-CV-05-006892.
Jennifer Moore, Moore Family Law, P.A., (for appellant).
Lori Swanson, Attorney General, Patricia A. Sonnenberg, Assistant Attorney General, (for respondent).
Considered and decided by Halbrooks, Presiding Judge; Toussaint, Chief Judge; and Ross, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2006).
UNPUBLISHED OPINION
Ken Wolter, the noncustodial parent of two children receiving state medical-assistance services, challenges the Department of Human Services' determination of the parental fee that he must pay to contribute to the cost of his children's services. Wolter argues that the department erroneously interpreted Minn. Stat. § 252.27, subd. 2a(b), to provide a reduced fee only for custodial parents. Because the plain language of section 252.27 excludes noncustodial parents, and the department's interpretation is consistent with the statute, we affirm.
FACTS
This appeal concerns the calculation of a parental fee for parents of minors receiving state medical-assistance services and the availability of a reduced fee for noncustodial parents when the minor receives care in the custodial home. Ken Wolter has three children. Two of his daughters have Batten's Disease, a terminal neurological disorder that causes severe mental and physical impairment over time. Wolter divorced the children's mother in 1997, and the district court gave the parties joint legal custody. The court afforded his former wife sole physical custody of their daughters and gave Wolter liberal parenting time. Wolter's time with his daughters increased in 2002 when their mother was diagnosed with cancer. Wolter transported his daughters to medical and school appointments and provided some care for them in their mother's home. After their mother's death in 2005, Wolter did not seek physical custody, and his daughters were transferred to separate out-of-home placements.
Because of their medical condition, Wolter's daughters qualify for medical-assistance services from the state. The program they participated in that is relevant to Wolter's appeal allowed them to receive services while minors, regardless of their parents' income. But the program requires parents to contribute to the cost of services through a monthly parental fee.
Wolter challenges the calculation of his parental fee for the 2002, 2003, and 2004 fiscal years, arguing that he is statutorily entitled to a reduced fee because his daughters received in-home care, even though this care was not provided in his home. His older daughter received services only through November 2001, when she turned 18, and his younger daughter received services during all of the challenged years. The Department of Human Services denied Wolter's challenge on the ground that only custodial parents may receive the home-care credit, and the children's mother, not Wolter, was the only custodial parent. Wolter appealed to the Commissioner of Human Services, who affirmed the department's decision. Wolter requested the district court to recalculate his fee, but the court affirmed the agency's decision. He now appeals to this court.
DECISION
Wolter's appeal requires us to construe and apply portions of Minnesota Statutes section 252.27. During the challenged fiscal years, Wolter's daughters received services through a program that does not base a minor's eligibility on her parents' financial circumstances, but requires parents to contribute to the cost of services in the form of a monthly parental fee. See Minn. Stat. § 252.27, subd. 2a(a) (2006) (requiring minor's parents to contribute to services with monthly payment). When a child's parents live separately, each parent is assessed a parental fee. Id., subd. 2a(g) (2006). When a parent has more than one child receiving services, the parent pays a fee only for the child who has the highest cost of services. Id., subd. 2a(h) (2006).
In 2003 the legislature amended the formula for calculating the parental fee. 2003 Minn. Laws 1st Spec. Sess. ch. 14, art. 6, § 39, at 2014-17. The change became effective in July 2003. Id. at 2017. The previous formula governs the first two fiscal years that Wolter challenges while the amended statute controls the fee for the third challenged fiscal year. Before July 2003, the department determined the amount by which a parent's adjusted gross income exceeded 150% of the federal poverty guidelines and then applied a percentage to that amount based on the extent to which the income exceeded the guidelines. Minn. Stat. § 252.27, subd. 2a(b) (2002). As of July 2003, the fee is a percentage of the parent's adjusted gross income based on the percentage by which the income exceeds the federal poverty guidelines. Id. (2006). Both the former and current provisions provide for a lower parental fee when a child receiving services lives at home instead of a state facility. Before 2003, the department would determine the parental fee and then deduct $200 a month. Id. (2002). The new formula deducts $2,400 from the parent's adjusted gross income and then compares the reduced adjusted gross income to the poverty guidelines to determine the parental fee. Id. (2006).
Although the formula for determining the parental fee and the form of the home-care credit have changed, Wolter's legal challenge under each provision is the same. He challenges the agency's denial of the credit to him, arguing that the former $200 monthly deduction and current $2,400 income reduction apply to custodial and noncustodial parents when a child does not live in a state facility. We conclude that the agency correctly applied the statute and denied Wolter the requested credit.
This court may reverse or modify an agency's decision on appeal if it finds that a party's substantial rights have been prejudiced because the agency decision violated a constitutional provision, exceeded the agency's authority, was made through unlawful procedure, was affected by an error of law, was unsupported by substantial evidence, or was arbitrary or capricious. See Hy-Vee Food Stores, Inc. v. Minn. Dep't of Health, 705 N.W.2d 181, 184 (Minn. 2005) (discussing appellate review of agency decision). The court does not defer to the district court's decision. Shagalow v. Dep't of Human Servs., 725 N.W.2d 380, 384 (Minn.App. 2006), review denied (Minn. Feb. 28, 2007).
When reviewing whether an agency has properly applied a statute, we focus first on the statute's words to ascertain and effectuate the legislature's intent. Minn. Stat. § 645.16 (2006); In re Claim for Benefits by Meuleners, 725 N.W.2d 121, 123 (Minn.App. 2006). When the statutory language is clear and unambiguous, we apply its plain meaning. Meuleners, 725 N.W.2d at 123. This court need not defer to an agency's interpretation of a statute if it contravenes the statute's plain language or if compelling evidence indicates that the agency's interpretation is wrong. Id. at 124.
The department's interpretation of section 252.27 follows the statute's plain language, which provides a reduced fee only for custodial parents. When parents of a child receiving services do not live together, each parent's fee is calculated using the same formula as parents residing together, but the fees are calculated separately without regard to the other parent's income. Paragraph (b) of subdivision 2a sets out the formula for determining the percentage of the parent's adjusted gross income that will constitute the parental fee. Minn. Stat. § 252.27, subd. 2a(b). The 2004 statute, which incorporated the 2003 amendment and applied to Wolter for the 2004 fiscal year, states, "If the child lives with the parent, the annual adjusted gross income is reduced by $2,400 prior to calculating the parental contribution." Id. The statute applicable to the 2002 and 2003 fiscal years stated, "If the child lives with the parent, the parental contribution is reduced by $200." Id. (2002). Because each parent's contribution is calculated separately when determining the fees of parents not living together, the statute's use of a definite article in "the parent" indicates that the statute refers to the specific parent for whom the fee is being calculated. See id. § 645.08(1) (2006) (stating that non-technical words and phrases in statutes should be construed according to rules of grammar). Of course, the child does not "live with" a noncustodial parent. Wolter has acknowledged on appeal that he does not claim that he was a de facto custodial parent by virtue of the assistance he contributed to the children's care while they resided in his former wife's home.
Wolter points to the agency's rule interpreting section 252.27 to support his argument that " the parent" means either parent. In setting out the formula for calculating the monthly parental fee, the rule directs the department to "subtract $200 if the child receiving services lives with the parents." Minn. R. 9550.6220, subp. 6.E.(6) (2005). He argues that the use and plain meaning of the plural term "parents" demonstrates that the credit applies to both custodial and noncustodial parents. But the use of the definite article again signals that the rule refers to the parent or parents for whom the fee is being calculated. And to the extent that the rule conflicts with the statute, the statute controls. See id. 1400.2100.D. (2005) (requiring judge to disapprove rule if it conflicts with enabling statute or other applicable law); J.C. Penney Co. v. Comm'r of Econ. Sec., 353 N.W.2d 243, 247 (Minn.App. 1984) ("[A]n administrative agency may not adopt a rule that conflicts with a statute.").
The agency has not amended its rules to reflect the 2003 statutory change to the annual $2,400 adjusted-gross-income deduction.
As the commissioner aptly noted, Wolter's argument that the court should read "parents" to mean either parent would suggest reading surrounding provisions the same way. For example, when calculating the parental fee, the agency's formula in subpart 6.E of rule 9550.6220 also provides for an increase "if health insurance was available to the parents . . . but was not taken." Minn. R. 9550.6220, subp. 6.E.(4) (2005); see also Minn. Stat. § 252.27, subd. 2a(h) (2006) (providing for increased fee if parent declined available health insurance). Applying Wolter's reading of subpart 6.E.(6) to this provision, both separated parents would be penalized for only one parent's failure to provide available health insurance. This interpretation is not only implausible for that reason; it would also conflict with the statutory requirement to calculate separate fees when parents do not live together. Because the agency correctly applied the plain meaning of section 252.27, subdivision 2a, we affirm its decision to deny Wolter a reduced parental fee.
Wolter suggests that the department's current position conflicts with its prior practice and therefore represents an unpromulgated rule. But a department representative testified that the department has always interpreted the statute to apply the home-care credit only to the custodial parent, and this interpretation is consistent with the plain meaning of the statute. See Mapleton Cmty. Home, Inc. v. Minn. Dep't of Human Servs., 391 N.W.2d 798, 801 (Minn. 1986) (stating that agency's interpretation that corresponds with plain meaning of provision it construes is not an unpromulgated rule). Wolter's argument of inconsistency has no support in the record.
Similarly, Wolter argues that the agency's decision is arbitrary and capricious because no reasonable basis supports distinguishing between custodial and noncustodial parents. This argument is problematic because the agency is following the policy set forth by the legislature. The legislature's reason for distinguishing between custodial and noncustodial parents is unknown, but the department has made reasonable inferences from the statute regarding its purpose. The department's representative testified that the department believes that the intent is to provide a deduction to the parent who contributes most to providing the child's support because noncustodial parents do not incur the same day-to-day expenses as custodial parents. This position is congruent with other provisions of the statute. Before the parental fee is calculated, a noncustodial parent may deduct from his adjusted gross income any court-ordered child support paid on behalf of the child receiving services. Minn. Stat. § 252.27, subd. 2a(b), (g). A custodial parent, in contrast, does not get a similar deduction for expenses incurred in the course of supporting the child during the preceding tax year because the expenses are not paid in the form of court-ordered child support. The department has not implemented an unpromulgated rule or acted arbitrarily or capriciously toward Wolter.