A group of legal services and private attorneys in Massachusetts represented clients in a class action challenging the state's 'income first' rule. The plaintiffs alleged that the state's regulation, in effect from June 3, 1994, to July 1, 1995, violated federal Medicaid law in allowing the state to consider the income of the nursing home spouse before determining whether the community spouse may be permitted to keep more assets than the standard allowance to compensate for a shortfall in her income. The plaintiffs also claimed that the state violated the federal statute by failing to provide notice of the right to an increased resource allowance to married Medicaid applicants. In August 1995, a Suffolk County Superior Court judge allowed the plaintiffs' partial motion for summary judgment, ruling that the 1994 rule violated Medicaid law. In January 1996, the judge held that the state had failed to give adequate notice and ordered that it be given.
The question the Supreme Judicial Court set out to resolve is whether sections of the federal law that permit the deeming of income from institutionalized to community spouses in post-eligibility income determinations--42 U.S.C. Sec. 1396r-5(b)(2) and (d)--also permit the institutionalized spouse's income to be deemed part of the community spouse's income as defined in 42 U.S. C. Sec. 1396r-5(e)(2)(C), which deals with readjustments to the community spouse's resource allowance at the time eligibility is determined.
The court rules that although applicable sections of the Medicaid law that deem income from the institutionalized spouse to the community spouse apply after eligibility has been determined, "this does not mean that income can be deemed to the community spouse 'only' after eligibility has been determined," the court writes. "Rather, subsections (b)(2) and (d) can be interpreted as a framework for protecting income for the community spouse by limiting the amount of the institutionalized spouse's income that must be used to pay medical costs after the latter is determined eligible." In addition, the court finds no restrictions on deeming income to the community spouse for eligibility purposes.
In its ruling the court cites the decision in Cleary v. Waldman, 959 F. Supp. 222, 232 (D.N.J. 1997), in which the court similarly held that the community spouse's income as described in (e)(2)© may include income deemed from the institutionalized spouse. As in Cleary, the court notes that the possible impoverishment of the community spouse under the income first rule following the death of the institutionalized spouse can be considered at a fair hearing. Given its ruling, the court declines to reach the notice requirements complaint.
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