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SJC Rejects Spousal Refusal

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To obtain Medicaid (MassHealth in Massachusetts) coverage of nursing home care, the resident must spend down their countable assets (virtually everything other than the family home) to $2,000. If they are married, their spouse, known as the “community spouse,” must also spend down their countable assets to approximately $150,000, the so-called Community Spouse Resource Allowance or CSRA.

A problem can arise if the community spouse refuses to cooperate with the process. Then the spouse in the nursing home may not qualify for benefits because they cannot supply the necessary information to show that the community spouse’s assets have been spent down to the CSRA limit. As a safety hatch, federal Medicaid law states that in such situations the nursing home resident’s eligibility for coverage will be evaluated based on their assets alone so long as they assign to the state their rights to spousal support. This has often been referred to as “spousal refusal” or the “just-say-no” strategy and can be found in federal law at 42 U.S.C. § 1396r–5(c)(3). It has been codified in Massachusetts at 130 Code Mass. Regs. § 517.011.

Costa Moves to Nursing Home and Applies for MassHealth

This is what happened when Costa Tingos moved to a nursing home in 2015 and applied for MassHealth. He and his wife, Mary, had been married in 1957 and lived together throughout their marriage despite some difficulties, in large part due to Costa’s gambling. As a result, they kept their finances separate. After Costa moved to the nursing home, Mary continued to coordinate his care and managed his finances under a durable power of attorney.

When Costa applied for MassHealth, Mary refused to provide any of her own financial information other than their joint tax returns.

Ping Ponging Between Court and Board of Hearings

This commenced a judicial odyssey. MassHealth denied Costa’s application for coverage. He appealed to a fair hearing in which the hearing officer upheld the denial saying that Costa “did not produce any evidence from the community spouse, testimonial or otherwise, confirming her unwillingness to cooperate.” Nor was there any evidence “regarding any efforts [Costa] had undertaken to compel the spouse to cooperate.”

In 2018, the Superior Court vacated this decision finding that Costa had not received sufficient notice as to why his application was denied, which explains why he did not present the evidence the hearing officer sought. This led to another fair hearing after which his application was again denied.

Then it happened all over again. Another Superior Court judge vacated the hearing decision stating that Costa again had not received sufficient notice, this time that he needed to show specific efforts he had taken to access Mary’s financial information. After another hearing in 2020, Costa’s application was denied a third time. This time, in 2022, a third Superior Court judge upheld the denial. Costa appealed.

What Does “Refuses to Cooperate” Mean?

In reviewing this decision in Freiner v. Secretary of the Executive Office of Health and Human Services (SJC-13514, June 14, 2024), the Massachusetts Supreme Judicial Court focuses on the language of the Massachusetts regulation which states that spousal refusal will be allowed in cases where the “community spouse refuses to cooperate or whose whereabouts are unknown.” The Court reasons that “refusal to cooperate” does not refer to the single action of refusing to cooperate with the application for MassHealth but to a broader lack of cooperation comparable to “the sweeping inability to locate the community spouse.”

To read this otherwise, the SJC says, would undermine the very structure of Medicaid and MassHealth to only provide coverage where the community spouse’s assets have been spent down to the CSRA. “As we have previously noted, a core purpose of the Medicaid program is to preserve the Commonwealth’s limited resources for those unable to afford medical care on their own.”

While the SJC acknowledges “that Mary kept her finances separate from Costa, and MassHealth does not challenge Costa’s position that the marriage suffered strife stemming from Costa’s gambling and financial mismanagement. Nonetheless,” the decision continues “the record also shows that the couple maintained long-standing and ongoing cooperation. The couple lived together for over fifty years until Costa’s admission to the nursing facility, and they both contributed to household expenses. . . . . After Costa moved into the long-term care facility, Mary continued to cooperate with Costa; she helped coordinate his care, served as his representative under his power of attorney, managed his bank account, and paid his bills.”

As a result, the SJC upholds the MassHealth denial.

What About Federal Law and Second Marriages?

One interesting question that does not seem to have come up in this litigation is whether the Massachusetts regulation is consistent with federal law which says nothing about cooperation between spouses or the lack thereof. Instead, it simply states that the nursing home spouse’s application should be evaluated based on their finances alone if they assign their rights to spousal support to the state. One wonders whether the Massachusetts regulation itself might be challenged.

Despite the fact that the federal statute says nothing about cooperation, most elder law practitioners (our firm included) only use spousal refusal where there has been a clear separation of finances by the married couple. Often this is accompanied by an actual physical separation between the spouses.

In many other cases, it involves a second marriage where the two spouses have kept their finances separate. This may or may not be accompanied by a pre-nuptial agreement setting out their financial commitments. It’s not totally clear how this second situation would be treated by a happily married couple who nonetheless keep their finances separate because they have separate sets of children and grandchildren. In such cases, this decision may be an impetus to remain unmarried.

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