Merritt v. Ohio Dept. of Job & Family Servs.

[Cite as Merritt v. Ohio Dept. of Job & Family Servs., 2021-Ohio-4540.]

IN THE COURT OF APPEALS

TWELFTH APPELLATE DISTRICT OF OHIO

BUTLER COUNTY

JEROME MERRITT, :

Appellant, : CASE NO. CA2021-04-044

: OPINION

- vs - 12/27/2021

:

OHIO DEPARTMENT OF JOB AND :

FAMILY SERVICES,

:

Appellee.

ADMINISTRATIVE APPEAL FROM BUTLER COUNTY COURT OF COMMON PLEAS

Case No. CV2020-11-1687

sb2 inc., and Amy C. Baughman, for appellant.

Dave Yost, Ohio Attorney General, and Theresa R. Dirisamer, Assistant Attorney General,

for appellee.

PIPER, P.J.

{¶1} Appellant, Jerome Merritt, appeals a decision of the Butler County Court of

Common Pleas upholding a decision of appellee, the Ohio Department of Job and Family

Services ("the Agency").

{¶2} Jerome is an elderly man who suffered a stroke and requires long-term, 24-

hour skilled nursing care. Jerome's son, Glenn Merritt, arranged for Jerome's admission to

Butler CA2021-04-044

Heritagespring of West Chester ("Heritagespring") to receive necessary care, and Jerome

designated Glenn his healthcare and general power of attorney. As part of the process of

obtaining Medicaid benefits, Glenn authorized Heritagespring to act as Jerome's Medicaid

Authorized Representative.

{¶3} Heritagespring filed an application for long term Medicaid benefits on

Jerome's behalf and requested both ongoing and retroactive coverage. It also advised

Glenn to establish a Qualified Income Trust ("QIT") on Jerome's behalf should Jerome's

income level be too high to qualify him to receive benefits. Glenn then established the QIT

and funded it with a $100.00 deposit, but did not make subsequent deposits until several

months later.

{¶4} Jerome receives $1,358 in monthly Social Security benefits, as well as

$2,353.48 in monthly retirement benefits. Out of his total monthly benefits, Jerome pays

two ex-wives monthly spousal support of $300 and $1,755.99. Even though there were

spousal support obligations, Jerome's application for long-term Medicaid was denied for

being over the maximum income limit. Once Glenn properly funded the QIT, Jerome's

Medicaid eligibility was established as of July 2020. However, he was not credited for the

months between his initial denial and his proper funding of the QIT. Glenn appealed the

decision on behalf of Jerome and an Agency hearing officer held a hearing on the matter.1

{¶5} The Agency hearing officer upheld the initial decision denying Jerome's

request for long-term Medicaid. Glenn then appealed that decision on Jerome's behalf to

the Butler County Court of Common Pleas, and the Common Pleas Court affirmed the

Agency's decision. Glenn now appeals that decision, raising the following assignments of

1. At first, the Agency denied the request for a hearing because it determined that the attorney who filed the

request did not have proper authorization to request a hearing on Jerome's behalf. However, this court

reversed that decision, finding that proper authorization had been given so that a hearing should be held.

Merritt v. Ohio Dept. of Job & Family Servs., 12th Dist. Butler No. CA2019-09-160, 2020-Ohio-2674.

-2-

Butler CA2021-04-044

error. For ease of discussion, we will address some assignments of error together when

the issues are interrelated.

{¶6} Assignment of Error No. 1:

{¶7} JEROME MERRITT'S ACTUAL NEED FOR A QIT IS QUESTIONABLE,

HOWEVER, THIS ALLEGED NEED SHOULD NOT PRECLUDE HIM FROM BEING

AWARDED BENEFITS FROM THE DATE OF THE APPLICATION BECAUSE HIS

INCOME WAS NOT CORRECTLY BASED UPON HIS AVAILABLE INCOME.

{¶8} Assignment of Error No. 2:

{¶9} ASSUMING, ARGUENDO, THAT JEROME MERRITT DID REQUIRE A QIT

TO QUALIFY, NOTHING IN THE OAC STATES THAT RETROACTIVE COVERAGE IS

NOT APPLICABLE ONCE A QIT IS ESTABLISHED.

Administrative Appeals

{¶10} According to R.C. 5101.35(E), "an appellant who disagrees with an

administrative appeal decision of the director of job and family services * * * may appeal

from the decision to the court of common pleas."

{¶11} "R.C. Chapter 2506 governs the standards applied to appeals of

administrative agency decisions." Hindu Soc. of Greater Cincinnati v. Union Twp. Bd. of

Zoning Appeals, 12th Dist. Clermont No. CA2018-11-081, 2019-Ohio-2494, ¶ 17. "A

common pleas court reviewing an administrative appeal pursuant to R.C. 2506.04 weighs

the evidence in the whole record and determines whether the administrative order is

unconstitutional, illegal, arbitrary, capricious, unreasonable, or unsupported by the

preponderance of the substantial, reliable, and probative evidence." Bingham v. City of

Wilmington Bd. of Zoning Appeals, 12th Dist. Clinton No. CA2012-05-012, 2013-Ohio-61, ¶

6. An agency's decision is presumed to be valid and the burden is upon the party contesting

the determination to prove otherwise. Terrace Park v. Anderson Twp. Bd. of Zoning

-3-

Butler CA2021-04-044

Appeals, 1st Dist. Hamilton Nos. C-140741 and C-140745, 2015-Ohio-4602, ¶ 13.

{¶12} An appeal to the court of appeals, pursuant to R.C. 2506.04, is more limited

in scope. Queen v. Union Twp. Bd. of Zoning Appeals, 12th Dist. Fayette No. CA2015-05-

011, 2016-Ohio-161, ¶ 13. "[T]he standard of review for courts of appeals in administrative

appeals is designed to strongly favor affirmance." Cleveland Clinic Found. v. Cleveland Bd.

of Zoning Appeals, 141 Ohio St.3d 318, 2014-Ohio-4809, ¶ 30. As such, during our review,

this court may not substitute its judgment for that of the common pleas court. Smith v.

Warren Cty. Rural Zoning Bd. of Zoning Appeals, 12th Dist. Warren No. CA2018-07-078,

2019-Ohio-1590, ¶ 18. Rather, "this court must affirm the common pleas court's decision

unless it finds, as a matter of law, that the lower court's decision was not supported by a

preponderance of reliable, probative, and substantial evidence." Taylor v. Wayne Twp. Bd.

of Trustees, 12th Dist. Butler No. CA2008-02-032, 2009-Ohio-193, ¶ 10.

{¶13} "Within the ambit of questions of law for appellate-court review is whether the

common pleas court abused its discretion[.]" Independence v. Office of the Cuyahoga Cty.

Executive, 142 Ohio St.3d 125, 2014-Ohio-4650, ¶ 14. An abuse of discretion is indicated

where there is an arbitrary, unreasonable, or unconscionable attitude on the part of the

common pleas court. Natl. Amusements, Inc. v. Union Twp. Bd. of Zoning Appeals, 12th

Dist. Clermont No. CA2002-12-107, 2003-Ohio-5434, ¶ 7. An "arbitrary" decision "is one

made 'without consideration of or regard for facts [or] circumstances.'" State v. Beasley,

152 Ohio St.3d 470, 2018-Ohio-16, ¶ 12. A decision is "unreasonable" where it is not

supported by a sound reasoning process. Nationwide Agribusiness Ins. Co. v. Heidler, 12th

Dist. Clinton Nos. CA2018-06-003, CA2018-07-004, CA2018-09-012, and CA2018-09-015,

2019-Ohio-4311, ¶ 46.

Qualified Income Trust - QIT

{¶14} In his first two assignments of error, Jerome argues that he does not need to

-4-

Butler CA2021-04-044

maintain a QIT because his available income is below the maximum income threshold if the

amounts of his spousal support obligations are not considered as part of his available

income. Additionally, Jerome argues that even if he needed a QIT, once established,

retroactive coverage is not prohibited.

{¶15} A QIT is a trust that allows an individual whose income is otherwise over the

income level to have income excluded when determining Medicaid eligibility. The QIT

receives the excess income into the trust to be used specifically for healthcare purposes.

Ohio Adm.Code 5160:1-6-03.2(B)(6). According to Ohio Adm.Code 5160:1-6-03.1(H), the

first step in determining one's income for purposes of qualifying for long-term Medicaid

coverage is to first "total only the individual's gross income, earned and unearned * * * then

exclude the following income types." The code then lists 23 exclusions, none of which are

applicable in the case sub judice.

{¶16} According to Ohio Adm.Code 5160:1-3-03.1(B)(1), "eligibility for medical

assistance is dependent in part upon the amount of monthly income available to or received

by the individual." (B)(1)(a) goes on to provide, "gross income, prior to any deductions or

exclusions, that can be reliably anticipated is considered available in calculating countable

income for a month. * * * Any portion of the income which is retained by an individual into

the next month becomes a resource." Ohio Adm.Code 5160:1-3-03.1(B)(1)(b).

{¶17} Thus, the plain meaning of the code makes clear that "available" income is

determined by the person's gross income before any deductions or exclusions are

calculated. As such, one's gross income is not reduced by required monthly obligations or

payments. While one's "resources" may be impacted by monthly obligations, such do not

impact one's gross income unless expressly excluded by the code section mentioned

above.

{¶18} The same may be said for the meaning of "income" as stated in Ohio

-5-

Butler CA2021-04-044

Adm.Code 5160:1-1-01(B)(32). "Income" means cash, * * * or something of value which is

received, available, and attributable to an individual." (Emphasis added.) Based on the

clear definitions noted above, Jerome was not entitled to have his monthly spousal support

payments deducted from his income for purposes of determining whether the QIT was

necessary.2 After reviewing the record, and based on Jerome's undisputed monthly

income, the Common Pleas Court did not abuse its discretion in affirming the Agency's

determination that Jerome's income exceeded the maximum threshold and that a QIT was

required for Medicaid eligibility.

Application of Federal Law

{¶19} Jerome suggests that Ohio has not set forth reasonable standards for

determining Medicaid eligibility. According to 42 U.S.C. 1396a(a)(17), a state must provide

"reasonable standards" for determining eligibility requirements that take into account

income and resources "available" to the applicant. However, the federal statute does not

define the term "available," and only directs states to adopt reasonable standards that are

"consistent with [Medicaid] objectives." Lankford v. Sherman, 451 F.3d 496, 509 (8th

Cir.2006). The Lankford court determined that "the reasonable-standards provision focuses

on the aggregate practices of the states in establishing reasonable Medicaid services"

based upon financial need. Id. However, the court noted that Congress did not provide

"meaningful instruction" on the interpretation of how "reasonable standards" apply to

medical needs. Id. Instead, states are granted "broad discretion" to implement the general

2. Ohio Adm.Code 5160:1-3-03.1 was amended in 2020, and now provides in relevant part, "(C) Under certain

circumstances, the amount of income determined available to an individual may be greater than the amount

of income that the individual actually receives for his or her own use. The following types of income deductions

are not subtracted from the individual’s countable income for purposes of determining eligibility for medical

assistance. This list is not all-inclusive. (1) Court-ordered income deductions. (a) This includes child and/or

spousal support, even if such support is paid directly to the former spouse or child’s guardian by the employer

or benefit payer." (Emphasis added.) This amendment clearly supports our analysis of how the code instructs

an agency to determine eligibility.

-6-

Butler CA2021-04-044

goals of Medicaid's reasonable-standards provision.

{¶20} Ohio acted within its broad discretion in setting the terms for Medicaid

assistance by setting forth the process for determining eligibility based upon the applicant's

gross income, before deductions are calculated. Thus, there is no conflict between federal

law and Ohio's applicable code.

Notice

{¶21} Jerome also asserts that he lost several months of eligibility because the

Agency did not provide him notice that a QIT was required and notify him of how much

funding the QIT would require. While there is no requirement listed in the code regarding

an agency's duty to inform an applicant that a QIT may be required, the record indicates

that the Agency did inform Glenn that a QIT may be necessary, that Jerome's application

for long-term care was denied because his income exceeded the maximum threshold, and

that Jerome may become eligible by depositing excess funds into a QIT. Moreover, the

notice of denial included a statement that Jerome's QIT was underfunded. Thus, the record

indicates that the Agency performed its duty under the code to determine Jerome's eligibility

and state the reasons for denial. The Agency's denial provided relevant notice of the QIT

issue and properly informed Jerome that he needed to set up and properly fund the QIT in

order to ensure eligibility.

Retroactivity

{¶22} The relevant code in place at the time of Jerome's application provided,

(b) The administrative agency shall approve retroactive

eligibility for medical assistance effective no later than the first

day of the third month before the month of application if the

individual:

(i) Reports he or she received medical services of a type

covered by medical assistance within the three months prior to

the application month; and

-7-

Butler CA2021-04-044

(ii) Requests retroactive eligibility be determined; and

(iii) Would have been eligible for medical assistance at the time

the services were provided if an application had been made at

that time, regardless of whether the individual was alive when

the application actually was made. Actual income received in

each retroactive month shall be used to determine eligibility for

that month.

Ohio Adm.Code 5160:1-2-01(L)(1)(b).3

{¶23} Given our analysis above, Jerome's income made him ineligible for long-term

Medicaid and he was required to fund a QIT with his excess income in order to become

eligible. Thus, he remained ineligible until his QIT was properly funded, and he was not

eligible prior to that date, retroactively or otherwise.

{¶24} While Glenn argues that he would have established the QIT earlier had he

known one was needed, the record establishes that Glenn did establish the QIT before he

submitted the application for eligibility on Jerome's behalf. He did not, however, fully fund

the QIT, nor was it in compliance with the code's clear directive regarding eligibility

requirements based on income levels.

{¶25} After reviewing the record, we find that the trial court properly affirmed the

Agency's determination that Jerome's income exceeded the threshold maximum and that

he was not eligible for long-term Medicaid assistance until his QIT was fully funded. As

such, Jerome's first two assignments of error are overruled.

{¶26} Assignment of Error No. 3:

{¶27} THE JULY 19, 2018 DENIAL SHOULD BE OVERTURNED BECAUSE CMS

NEVER APPROVED THE OHIO REGULATIONS RELATING TO QITS AS THEY EXIST

CURRENTLY, AND BECAUSE THE STATE DID NOT RECEIVE CMS APPROVAL, THE

3. Under the most recent version of the regulation, effective December 14, 2020, this language is now located

in subsection (M)(1)(b).

-8-

Butler CA2021-04-044

REGULATIONS ARE NOT VALID. FURTHER, BECAUSE OHIO HAS NEVER OBTAINED

CMS APPROVAL FOR THE ENACTMENT OF THEIR QIT REGULATIONS, FEDERAL

LAW PREEMPTS STATE LAW.

{¶28} Jerome argues in his third assignment of error that the common pleas court

erred in denying his application for long-term Medicaid assistance because the Agency's

rules regarding QITs have not been approved by the Center for Medicare and Medicaid

Services ("CMS") and that federal law preempts Ohio's use of QITs.

{¶29} In his brief, Jerome recognizes that Ohio's Administrative Code allows for the

use of QITs, but argues that the state never approved the requirement that a QIT be created

and funded "prior to submitting a Medicaid application." However, the code does not require

the creation and funding of a QIT before a person may apply for coverage, only that the QIT

be created and funded before that person can be ruled eligible for Medicaid benefits. Thus,

there is no need for the CMS to approve the requirement that a QIT be created and funded

prior to submitting a Medicaid application, as suggested by Jerome, as no such requirement

exists.

{¶30} Jerome next argues that Ohio's use of QITs without taking into consideration

spousal support obligations renders the code in conflict with federal law and that federal

law preempts state law. However, and as noted above, Jerome's arguments center upon

a misguided use of the term "available." He continues to argue that his "available" income

must deduct his spousal support obligations from his monthly benefits.

{¶31} However, like Ohio, federal law does not exclude spousal support obligations

from one's available income. Johnson v. Flanagan, 179 Ga.App. 708, 710, 347 S.E.2d 643

(1986) (amounts that may be deducted from the individual's gross income "does not include

alimony payments"); see also Clark v. Commr. of Income Maintenance, 209 Conn. 390,

396, 551 A.2d 729 (1988) (reversing the lower court's decision because it subtracted the

-9-

Butler CA2021-04-044

applicant's alimony obligation when determining available income for Medicaid eligibility

pursuant to federal law). Instead, the federal regulations list "required" and "optional"

deductions, which again, are not applicable to the case sub judice according to 42 C.F.R.

435.725(c) and (d) and which do not include a deduction for spousal support obligations.

After reviewing the record, we find that Jerome's third assignment of error lacks

merit, and is thus, overruled.

{¶32} Assignment of Error No. 4:

{¶33} THE LOWER COURT'S APRIL 12, 2021 DECISION UPHOLDING THE

ADMINISTRATIVE APPEAL DECISION AFFIRMS THE AGENCY'S VIOLATION OF

FEDERAL LAW AND THE AMERICANS WITH DISABILITIES ACT AND THE

REHABILITATION ACT OF 1973, BECAUSE IT PLACES UNDUE BURDEN ON MR.

MERRITT, WHO IS DISABLED.

{¶34} Jerome argues in his final assignment of error that the common pleas court's

decision violates federal law because it places an undue burden on him.

{¶35} The record reveals that Jerome did not raise this argument before the Agency

or the common pleas court. "It is axiomatic that a party cannot raise new issues or legal

theories for the first time on appeal and failure to raise an issue before the trial court results

in waiver of that issue for appellate purposes." BAC Home Loans Servicing, LP v. Mullins,

12th Dist. Preble No. CA2013-12-015, 2014-Ohio-4761, ¶ 22. As such, we will not address

Jerome's argument, and his final assignment of error is overruled.

{¶36} Judgment affirmed.

HENDRICKSON and BYRNE, JJ., concur.

- 10 -