Bradford, J.
Case Summary
In 2019, Cheryl Adducci was appointed guardian of her institutionalized husband Anthony, applied for Medicaid coverage on his behalf, and (before Anthony’s Medicaid application had been approved) petitioned to divert some of his income for her support (“the Petition”), which petition the trial court granted (in “the Support Order”). The Indiana Family and Social Services Administration (“FSSA”) provisionally granted Anthony’s Medicaid application and eventually moved to intervene in the case and for relief from judgment, also arguing that the Support Order, which had the effect of increasing the amount FSSA must pay for Anthony’s care, was unlawful. The trial court denied FSSA’s motions to intervene and for relief from judgment and reiterated that the Support Order was lawful.
FSSA argues that it had a right to intervene in the action because the Support Order diverted money to Cheryl that would have otherwise gone to pay Anthony’s medical bills and it had no other way to challenge it. FSSA also argues that it was entitled to relief from judgment because it was a necessary party to the action who had not been served, rendering the Support Order void. Finally, FSSA argues that the Support Order is without legal basis. Because we agree with all of FSSA’s contentions, we reverse the trial court’s denials of FSSA’s motions to intervene and for relief from judgment and remand with instructions.
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It was eventually realized that this exhaustion requirement, at times, left the community spouse1 with insufficient resources, which prompted Congress to pass the Medicare Catastrophic Coverage Act of 1988 (“the MCCA”). 42 U.S.C. § 1396r-5. The stated purpose of the MCCA was to “end th[e] pauperization of the community spouse by assuring that the community spouse has a sufficient—but not excessive—amount of income and resources available[.]” Blumer, 534 U.S. at 480. In some cases, an institutionalized spouse is permitted to transfer a “community spouse monthly income allowance” without that amount being counted against him for eligibility-determination purposes. 42 U.S.C. § 1396r-5(d)(3). The exact amount of the monthly income allowance is determined by subtracting a community spouse’s actual monthly earnings from a “minimum monthly maintenance needs allowance” (“the Allowance”), which is set by the State. 42 U.S.C. § 1396r5(d)(2)–(3). If this calculation results in a shortfall between the community spouse’s monthly income and the Allowance, the community spouse’s monthly income allowance becomes the difference between the two amounts. 42 U.S.C. § 1396r-5(d)(2).
Either spouse may petition for a “fair hearing before the State agency[,]” i.e., FSSA, to argue that the Allowance should be increased. 42 U.S.C. § 1396r5(e)(2)(B); see also 42 U.S.C. § 1396a(a)(3) (defining “fair hearing”). Pursuant to his provision, the Allowance may be increased if the spouses establish “that the community spouse needs income, above the level otherwise provided by the [Allowance], due to exceptional circumstances resulting in significant financial duress.” 42 U.SC. § 1396r-5(e)(2)(B). In some cases, such as this one, the Allowance would have to be increased for the institutionalized spouse to be eligible for Medicaid benefits at all.
At the state level, the State Medicaid Statute provides that institutionalized Medicaid recipients who have a community spouse may “retain an income allowance for the purpose of supporting a community spouse” if “(1) the community spouse’s income is less than the [Allowance]” established under federal law; and “(2) an increased amount is necessary to increase the community spouse’s income to the [Allowance].” Ind. Code § 12-15-2-25(b). The State Medicaid Statute provides that “[i]f either spouse establishes that a higher allowance is needed due to exceptional circumstances resulting in significant financial duress, the [Allowance] may be increased after an administrative hearing or by a court order.” Ind. Code § 12-15-2-25(c) (emphasis added).
II. Intervention
FSSA contends that, because it was a necessary party to the guardianship action, the trial court abused its discretion in denying its motion to intervene…
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Keeping in mind that facts alleged in FSSA’s motion to intervene must be accepted as true, FSSA has established a clear interest in this proceeding, specifically that
[t]he FSSA is harmed by the Court’s Order because […] the community spouse’s income allowance is deducted from the amount of income that a Medicaid member must pay to his or her long-term care institution post-eligibility. Therefore, if the community spouse’s income is artificially and unlawfully inflated above the limits established by statute, the institutionalized spouse will pay a lower proportion of his or her income to the institution, and the Medicaid Program will have to pay a higher amount to cover the remainder of the medical costs.
Appellant’s App. Vol. II p. 51. Moreover, FSSA’s ability to protect this interest is clearly impeded by this proceeding. As FSSA notes, it cannot adjust Cheryl’s allowance on its own because it is bound by court orders on spousal support, even if erroneous. [Footnote omitted.] Finally, it is undisputed that no party to the guardianship action, one result of which was the Support Order, adequately represented FSSA’s interests. In summary, we have little hesitation in concluding that FSSA has a right to intervene in this action and that the trial court abused its discretion in denying its motion to do so. See In re Guardianship of Weber, 201 N.E.3d 220, 225–27 (Ind. Ct. App. 2022) (affirming the trial court’s grant of FSSA’s motion to intervene post-judgment where the court had ordered spousal support from an incapacitated spouse).
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The trial court concluded that the State Medicaid Statute supports the Support Order, i.e., the Support Order is justified by the trial court’s finding of exceptional circumstances that would result in significant financial duress to Cheryl in the absence of support. FSSA contends that the Allowance cannot be increased without an administrative hearing, while the Adduccis contend that the trial court’s finding of exceptional circumstances renders an administrative hearing unnecessary. We agree with FSSA. As mentioned, the MCCA requires a “fair hearing before the State agency” to determine if the Allowance should be increased, 42 U.S.C. § 1396r-5(e)(2)(B), and it is well-settled that “under the Supremacy Clause of the United States Constitution, federal law is the supreme law of the land.”…
To the extent that the State Medical Statute may be read to allow for the Allowance to be increased without an FSSA hearing, it is in conflict with the MCCA’s requirement of a “fair hearing before the State agency” and is therefore preempted. See Blumer, 534 U.S. at 478 (“The MCCA allows an increase in the standard allowance if either spouse shows, at a state-administered hearing, that the community spouse will not be able to maintain the statutorily defined minimum level of income on which to live after the institutionalized spouse gains Medicaid eligibility.”) (emphasis added). Should the Adduccis wish to have the Allowance increased, they must first avail themselves of FSSA’s administrative processes.
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Conclusion
We conclude that the trial court abused its discretion in denying FSSA’s motion to intervene and in denying FSSA’s motion for relief from judgment. Because we also conclude that neither the State Medicaid Statute nor the doctrine of necessaries sustains the Support Order, we remand with instructions to grant FSSA’s motion to intervene, grant FSSA’s motion for relief from judgment, and vacate the Support Order. [Footnote omitted.]
We reverse the judgment of the trial court and remand with instructions.
Crone, J., and Tavitas, J., concur