Cleary v. Waldman

Thomas Cleary, who suffers from Parkinson's disease and dementia, entered a long-term care facility on November 21, 1995. When Mr. Cleary's wife, Carolyne, applied for Medicaid benefits on his behalf, the Passaic County Board of Social Services assessed the couple's resources as totaling $180,000. At the time of the assessment, Mrs. Cleary's monthly income was $828.25--less than New Jersey's Minimum Monthly Maintenance Needs Allowance (MMMNA) of $1,524.50. New Jersey follows an "income-first" approach to making up the shortfall in the community spouse's MMMNA, meaning that before it will consider allocating a larger portion of a couple's joint resources to the community spouse in order to generate more income for her (a "resource-first" approach), it considers a contribution of the institutionalized spouse's income to the community spouse. Determining that Mrs. Cleary's shortfall could be remedied with a shift of income from Mr. Cleary to her, the court rejected the application for benefits because of excess resources.

The Clearys, representing themselves and a class of similarly situated persons, filed suit seeking injunctive relief from the income-first rule, arguing that the approach violates both the letter and spirit of the Medicare Catastrophic Coverage Act (MCCA). Contending that the MCCA follows the "name on the check" rule, the Clearys asserted that the institutionalized spouses' income cannot be considered the income of the community spouse, and that New Jersey therefore has no alternative but to revise the community spouse resource allowance (CSRA) in cases where her income falls short of the MMMNA. The Clearys also argued that the MCCA was designed to provide relief for people like themselves who will exhaust their retirement savings by paying for long-term care expenses. The district court denied their motion, and the Clearys appealed. (Cleary, et al. v. Waldman, et al., U.S. Dist. Ct. N.J. Civ. Action No. 96-cv-04774), Feb. 25, 1997.

The Third Circuit rejects the Clearys' arguments and upholds the district court's ruling. The court rules that the income provisions of § 1396r-5(b)(2), where the "name of the check" rule appears, do not apply to a revision of resources under § 1396r-5(e)(2)(C). The statutory language, the court writes "makes it clear that a certain portion of the community spouses' income may come from the income of the institutionalized spouse." The court rejects the Clearys' contention that according to the plain language of MCCA, if the CSRA is inadequate to generate sufficient income for the community spouse, "there shall be substituted, for the [CSRA] under subsection (f)(2) of this section, an amount adequate to provide such a minimum monthly maintenance needs allowance." § 1396r-5(e)(2). The court finds that because the "fair hearing" subsection at (e)(2) begins with a recitation of the five components that make up the community spouse's income, the revision of any one of those components must be made with consideration of the other four, which includes the community spouse's monthly income allowance from the institutionalized spouse. Finally, the court reviews the legislative history and finds that the final MCCA version adopted by the Conference Committee gave no indication of an intent to follow a "resource-first" approach.