WILLETT v. MYERS

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Court of Appeal, First District, Division 1, California.

Norma WILLETT, etc., Plaintiff and Appellant, v. Beverlee MYERS, etc., Defendant and Respondent.

Civ. AO15248.

Decided: July 21, 1983

H. David Grunbaum, Santa Clara County Bar Assoc. Law Foundation, Inc., Public Interest Law Firm, San Jose, for plaintiff and appellant. John K. Van De Kamp, Atty. Gen. by Catherine M. Van Aken, Deputy Atty. Gen., San Francisco, for defendant and respondent. Lucien Wulsin, Jr., National Health Law Program, Los Angeles, Evelyn Frank, Legal Aid Soc. of Alameda County, Oakland, Tricia Berke, Legal Aid Soc. of San Mateo County, Redwood City, for amici curiae James Maker and Bernadette Weseman.

This is a class action challenging the validity of a Medi-Cal regulation (Cal.Admin.Code, tit. 22, § 50603).   We conclude that the regulation is valid and affirm the judgment.

STATUTORY AND REGULATORY BACKGROUND

A discussion of the facts of this case requires an explanation of the underlying statutes and regulations, which are “of labyrinthine complexity” and “almost unintelligible to the uninitiated.”  (Friedman v. Berger (2d Cir.1976) 547 F.2d 724, 727, cert. den., 430 U.S. 984, 97 S.Ct. 1681, 52 L.Ed.2d 378.)

Under the medical assistance program known as Medi-Cal, persons who receive AFDC (Aid to Families with Dependent Children), SSI/SSP (Supplemental Security Income/State Supplement) or certain other public assistance benefits are automatically eligible for Medi-Cal coverage at no cost to them.  (Welf. & Inst.Code, §§ 14005.1, 14050.1.) 1  Other indigent persons may also qualify for coverage,2 but such Medi-Cal recipients must contribute toward the cost of their medical care.  (§§ 14005.4, 14005.7).   The amount of a person's contribution is determined by subtracting from the person's income a “maintenance need” figure—i.e., a predetermined amount deemed necessary for the person's living expenses.   Any excess income must be contributed toward the person's medical care before the Medi-Cal program will assume coverage.  (§§ 14005.4, 14005.7.)   This contribution is called “share of cost.”  (§ 14054.)

The maintenance need levels for both the medically indigent and the medically needy family person (see fn. 2) are defined by statute as follows:  “(a) For the purposes of Sections 14005.4, and 14005.7, except as specified in subdivision (b) of this section, the income levels for maintenance per month shall be 133 1/313 percent of the highest amounts which would ordinarily be paid to a family of the same size without any income or resources under subdivision (a) of Section 11450, except that in the case of a single individual the amount of the income level for maintenance per month shall be 85 percent of the standard for a two-person family under Section 11452 and that in the case of a family of 11 persons or more the amount of the income level for maintenance per month shall be the amount for a 10-person family plus for each additional person the amount specified in Section 11452 for additional needy persons.”  (§ 14005.12, emphasis added.) 3  (The statute was amended after trial in 1981 to change the percentage figures in the formula.)   As noted in section 14005.12, a single individual is treated differently from someone who lives with a family member;  the latter may have lower living expenses because of the “economies of scale.” 4

Pursuant to the statutory formula of section 14005.12, the maintenance need for a single individual (85 percent of $408, or $346.80) is higher than the per person maintenance need for a family member.  (E.g., 133 1/313 percent of $408 is $543.87 for a two-person family, which is $271.93 per person.)   This difference reflects the Legislature's long-standing recognition that living expenses are proportionately reduced in a family setting.   For example, the schedule of AFDC benefits provides lower amounts of aid per person as the family size increases.  (See fn. 3.)   In Dandridge v. Williams (1970) 397 U.S. 471, 479–480, 90 S.Ct. 1153, 1158–59, 25 L.Ed.2d 491, the Supreme Court acknowledged the inherent “economies of scale” in large families and approved the diminished per capita payments of AFDC benefits.  (See also Cooper v. Swoap (1974) 11 Cal.3d 856, 861–863, 115 Cal.Rptr. 1, 524 P.2d 97, cert. den. 419 U.S. 1022, 95 S.Ct. 498, 42 L.Ed.2d 296, accepting the AFDC grant schedule based solely on family size.)

The Department of Health Services is authorized to issue regulations implementing the Medi-Cal program (§§ 10725, 14124.5) and has done so.   In determining eligibility for Medi-Cal coverage and share of cost, the Department looks at what it calls the Medi-Cal Family Budget Unit (MFBU), which is the basic unit of persons living together who will be included in the determinations.  (Cal.Admin.Code, tit. 22, §§ 50060, 50371.)   Family members who receive public assistance are not part of the MFBU (Cal.Admin.Code, tit. 22, § 50373(a)(1));  those persons are automatically eligible for Medi-Cal coverage and are not required to share the costs of their medical care.   In the same vein, the income of family members who are public assistance recipients (who have been excluded from the MFBU) is not included in determining the share of cost of other family members.  (Cal.Admin.Code, tit. 22, § 50557.)

To calculate the maintenance need of the MFBU, the Department has devised the following table (in effect at the time of trial):  “(a) The maintenance need for the members of the MFBU living in the home shall be the following:

“(b) Eligibility or share of cost determinations made on or after July 1, 1981, shall be based upon the provisions of this section.”  (Cal.Admin.Code, tit. 22, § 50603.)   It is this regulation which is challenged by plaintiffs.   (Following trial, the regulation was amended and substantially rewritten.) 5

FACTS

Plaintiff Norma Willett lives with her severely disabled son, Greg.   Greg receives $326.34 per month in federally-funded Supplemental Security Income (“SSI”) as augmented with state funds (“SSP”), and $62.50 monthly child support from his father, a total monthly income of $388.84.   Plaintiff earns $318.25 per month for performing services as Greg's attendant under the In Home Supportive Services Program.

As a public assistance recipient, Greg automatically receives full Medi-Cal coverage without charge.   In 1976, plaintiff applied for Medi-Cal coverage for herself and at the time of trial was assigned a maintenance need level of $275 (one person living with a PA recipient) pursuant to regulation 50603.   That is, from her income ($318), $275 was deducted for living expenses.   In any month in which plaintiff incurred medical expenses, she was required to pay the first $43 of her health care expenses (her share of cost) before the Medi-Cal program would cover the remainder.

Plaintiff contends that defendant's determination of a maintenance need level of $275 per month, based upon the formula contained in the regulation, is incorrect and that the regulation, to the extent that it contains a category covering “1 person, when all other family members are PA or Other PA recipients,” is invalid.   She argues that the formula for “1 person in all other situations” should apply, resulting in a maintenance need of $359.   Applying that figure, plaintiff would have no share of cost since her income ($318) is lower than that maintenance need.   Plaintiff petitioned for a writ of mandate and filed a complaint seeking a declaration that the regulation was invalid and an order enjoining the Department from requiring her to pay any share of cost.   The trial court denied the petition and concluded that the Medi-Cal regulation was consistent with the statutory formula.   Plaintiff appeals.

ISSUES

I. Is Regulation 50603 Consistent with Welfare and Institutions Code Section 14005.12?

 As noted above, a medically needy Medi-Cal recipient's share of cost is determined by subtracting a maintenance need from income.  (§ 14054.)   It was undisputed below that plaintiff qualifies for Medi-Cal coverage as a “medically needy family person,” since she lives with a public assistance recipient child.  (§ 14051.)   A family person's share of cost is determined by deducting from the family income a maintenance need according to family size.   “A medically needy family person whose monthly family income in excess of the amount required for maintenance established pursuant to Section 14005.12, by family size (exclusive of any amounts considered exempt as income under Chapter 2 (commencing with Section 11200) of this part) is not sufficient to provide for the costs of health care or coverage less any amount by which the value of the family's other resources exceeds the value established in accordance with Section 14006, or a reasonable portion of such value thereof as may be determined in accordance with standards established by the director.”  (§ 14005.7, subd. (b), emphasis added.)

Consequently, the statutory formula for determining plaintiff's maintenance need is the general formula based upon her family size:  133 1/313 percent of a two-person family's AFDC benefits ($408), or $543.87.  (§ 14005.12.)   Plaintiff does not qualify for the special formula specified for a “single individual.”   Plaintiff is not a single individual.   She does not live alone, but lives in a two-person family and has relatively lower living expenses as a result.

Under the statutory formula, this maintenance need would be deducted from the entire family's income (§ 14005.7, subd. (b)), if Greg's income were allowed to be included.   Thus, both plaintiff's income ($318) and Greg's income ($388) would be considered in determining her share of cost.   Her share of cost would far exceed $43.

But another provision of the welfare laws prohibits consideration of Greg's income.  Welfare and Institutions Code section 11005.5 provides that aid granted to a public assistance recipient and the income of such recipient “shall not be considered in determining eligibility for or the amount of aid to any other recipient ․”  (E.g., Cooper v. Swoap, supra, 11 Cal.3d 856, 115 Cal.Rptr. 1, 524 P.2d 97 [adult recipient's grant of aid could not be imputed to AFDC recipient];  Rogers v. Detrich (1976) 58 Cal.App.3d 90, 128 Cal.Rptr. 261 [family member's receipt of SSI/SSP could not be considered in determining other person's eligibility for general assistance].)

In accordance with this principle, Greg's income is not considered by the Department;  only plaintiff's own income is used to determine her share of cost.   In calculating her maintenance need, however, the Department recognizes that plaintiff does not live alone;  she is not a “single individual.”   Plaintiff's maintenance need is set at one-half of the two-person MFBU maintenance need:  i.e., one-half of $550, or $275.6  Plaintiff is assigned the same per person maintenance need as a member of a two-person family.

Plaintiff's contention that she should have been assigned a need level of $359 as a one-person MFBU is unsound.   The regulation properly fixes the maintenance need level at the per person rate of the maintenance need of a two-person family in order to take account of the family size and the legislative recognition that the expenses of two persons living in one family unit are not double the expenses of one living alone.   We agree with the trial court that the regulation comports with the statutory formula.7

II. Does the Regulation Violate Welfare and Institutions Code Section 11005.5?

 Welfare and Institutions Code section 11005.5 provides that money paid to a recipient is for his individual needs and not for the benefit of another person.   Thus, “Aid granted ․ to a recipient ․ and the income or resources of such recipient ․ shall not be considered in determining eligibility for or the amount of aid to any other recipient ․”

Relying on Cooper v. Swoap, supra, 11 Cal.3d 856, 115 Cal.Rptr. 1, 524 P.2d 97, plaintiff contends the challenged regulation (Cal.Admin.Code, tit. 22, § 50603) impermissibly counts the income and resources of a public assistance recipient (Greg) in determining the aid given to another recipient (plaintiff).   We disagree.

In Cooper v. Swoap, supra, 11 Cal.3d 856, 115 Cal.Rptr. 1, 524 P.2d 97, the Supreme Court struck down the Department's policy of reducing AFDC benefits of recipients living with recipients of “adult aid programs” (now SSI/SSP).   The court reasoned in part that the Department's regulation violated the statutory prohibition of section 11006 (now § 11005.5) by imputing the adult aid recipient's benefits to others and rejected the Department's argument that the AFDC recipient received an intangible economic benefit equivalent to income by sharing housing with another aid recipient.  (Id., at pp. 865–870, 115 Cal.Rptr. 1, 524 P.2d 97;  see also North Coast Coalition v. Woods (1980) 110 Cal.App.3d 800, 168 Cal.Rptr. 95 [mere presence of unrelated adult male in the home could not be basis for reduction of AFDC benefits].)

There is nothing in Cooper v. Swoap, supra, 11 Cal.3d 856, 115 Cal.Rptr. 1, 524 P.2d 97, which invalidates the regulation here.   First, the court in no way rejected the concept of economies of scale or the use of family size to determine amount of aid.   What the court rejected was the Department's treatment of presumed cost savings as income to the AFDC recipient.   The court reasoned that the cost savings are built into the benefit schedule by virtue of its consideration of family size and should not be counted twice.  (Id., at p. 866, 115 Cal.Rptr. 1, 524 P.2d 97.)  Cooper is inapposite because such double treatment of the economies of scale is not involved in the case at bench.

Moreover, the Department's regulations here follow the mandate of section 11005.5.   Under the regulations Greg's income is excluded from consideration in determining plaintiff's share of cost.  (Cal.Admin.Code, tit. 22, § 50557.)   Greg's public assistance benefits are in no way attributed to plaintiff.

Plaintiff seems to reason that because Greg's income cannot be considered in determining plaintiff's share of cost, neither can his presence in the home be considered.   We find no validity in this reasoning.   The statutes expressly direct that the maintenance need will be calculated according to family size.   (§§ 14005.7, 14005.12.)   Implicit in this formula is a recognition of the economies of scale inherent in a family setting.   The exclusion of Greg's income does not transform plaintiff from a member of a two-person family into a single individual.   The “economies of scale” obtain whether a family member receives public assistance or not.   Thus, it is not Greg's public assistance benefits which are being attributed to plaintiff, but her residence with a family member and the concomitant reduction in living expenses.   We find nothing unlawful in the consideration of family size in determining maintenance need.  (Cf. Dandridge v. Williams, supra, 397 U.S. at pp. 479–480, 90 S.Ct. at pp. 1158–59.)

The fallacy in plaintiff's argument is exhibited in Corrigan v. Affleck (D.R.I.1981) 523 F.Supp. 498.   There, the court held that the Rhode Island Department of Social and Rehabilitative Services violated a federal statute by allocating to an AFDC recipient only her pro rata share of a two-person family's expenses.   The court reasoned that the Department could not “in any way take into account the presence of the SSI beneficiaries in the household.”  (Id., at p. 502.)   The distinction between Corrigan v. Affleck and this case which illustrates the weakness of plaintiff's contention is that the federal statute provided that a recipient of SSI must not be regarded as a member of the family;  herein, in contrast, only the income of the public assistance recipient is ignored, not his physical presence in the family household.  (See §§ 14005.7, 14005.12, 14051.)

III. Does the Regulation Violate Federal Law?

 Plaintiff and amici curiae contend that the regulation violates various provisions of the federal medical assistance program commonly called Medicaid.   The substantial contribution of federal funds in this scheme of “cooperative federalism” (King v. Smith (1968) 392 U.S. 309, 316, 88 S.Ct. 2128, 2133, 20 L.Ed.2d 1118) requires that state participation be conditioned upon a plan that meets federal criteria contained in Title XIX of the Social Security Act (42 U.S.C. §§ 1396 et seq.) and in regulations issued by the United States Department of Health and Human Services.

In essence, the federal provisions specify that states must use a single, uniform standard for each family of the same size.  (See 42 U.S.C. § 1396a, subds. (a)(10)(C)(i) and (a)(17).)   The federal regulation sets out with specificity the income standard:  “To determine eligibility of medically needy individuals, a Medicaid agency must use an income standard under this subpart that is—(a) Based on family size;

“(b) Uniform for all individuals in a covered group;

“(c) For FFP purposes, not in excess of 133 1/313 percent of the highest money payment that ordinarily would be made in the State AFDC program to an individual or a family of comparable size (see § 435.1007);  and

“(d) Reasonable (see § 435.812).”  (42 C.F.R., § 435.811.)

California's statute (Welf. & Inst.Code, § 14005.12) conforms to these requirements.   The formula for determining maintenance need is based on family size;  it is uniform for all covered groups (i.e., aged, blind, disabled, etc.);   it does not exceed 133 1/313 percent of the comparable AFDC benefit;  and it is presumptively reasonable.  “The following medically needy income standards are presumed to be reasonable:  (1) The agency provides one medically needy income standard for all covered medically needy groups.   Except as provided in paragraphs (c) and (d) of this section, the standard must at least equal the highest income or payment standard used to determine eligibility in the cash assistance programs (or an optional State supplement, if the agency provides Medicaid under § 435.230) related to the covered medically needy groups.”  (42 C.F.R., § 435.812(b)(1).)

California's regulation (Cal.Admin.Code, tit. 22, § 50603) implements the statutory formula by providing a chart of maintenance need amounts per MFBU, which generally corresponds to family size.   There are, however, certain situations in which the family size will differ from the MFBU:  where one family member receives public assistance income, and is excluded from the MFBU, or where a child has been voluntarily excluded from the MFBU because of his high income.   The chart has an extra line to cover the most common of such situations—a Medi-Cal recipient living with a public assistance recipient.   Here, the family size (two) must be taken into account despite the MFBU (one).   The chart therefore properly assigns the recipient the per person maintenance need for a two-person family.

Thus, the regulation, too, conforms to the federal standards.   The regulation fixes the standard according to family size;  it makes no distinction for aged, blind or disabled;  and it uses a percentage of AFDC benefits.

CONCLUSION

 Plaintiff's contention that she is entitled to a maintenance need of $359 based on an MFBU of one must fail, since, as we have already determined, she is not a single individual, and the formula for single individuals does not apply to her.   Federal law and the California statutes make clear that her maintenance need must be based on family size.

Since plaintiff is a member of a two-person family, her family maintenance need is $550, and her per person need is one-half of that, or $275.   The trial court was correct in so finding.

The judgment is therefore affirmed.

FOOTNOTES

FOOTNOTE.  

1.   Unless otherwise noted, all statutory references are to the Welfare and Institutions Code.

2.   Among those eligible for Medi-Cal benefits are the “medically indigent” (§ 14005.4) and the “medically needy family person” (§ 14005.7).   These terms are defined in sections 14051–14052.   Federal funds contribute only to the benefits of the medically needy.

3.   Sections 11450 and 11452, mentioned in section 14005.12, set forth the aid amounts and minimum standards for AFDC benefits.   At the time of trial, the statutory levels were:Number of eligible needy persons inL2-3  Maximum aidthe same home    1․ $ 248-    2․ 408-    3․ 506(§ 11450)- Number of needy persons in the same  L2-3Minimum basicfamily  L2-3standards ofL2-3  adequate care    1․ $ 248 -    2․ 408 -    3․ 506(§ 11452) -

4.   This interpretation of the undefined term “single individual” is the interpretation employed by the Department of Health Services.   As such, it is entitled to great weight by this court.  (Pacific Legal Foundation v. Unemployment Ins. Appeals Bd. (1981) 29 Cal.3d 101, 111, 172 Cal.Rptr. 194, 624 P.2d 244.)

5.   Plaintiffs do not complain about the differences between the figures in the regulation and those set forth in sections 14005.12, 11450 and 11452, presumably since the regulation provides for a slightly higher maintenance need than do the statutes.

6.   The regulation rounds off the amounts referred to in the statute;  thus, $543.87 (see p. 305, ante ) is rounded to $550.

7.   The trial court concluded the regulation's special category of “1 person living with a PA recipient” was technically inconsistent with the statute, since no such category is statutorily prescribed.   It is true that the statute has only two categories, family persons and single individuals, but we do not construe the regulation as setting up a special category outside this statutory scheme.   Rather, we see the classification “1 person living with a PA recipient” as one relating to family persons whose maintenance need must be based on family size, though income from public assistance recipient family members is excluded.

BREINER,* Justice Pro Tem. FN* Assigned by the Chairperson of the Judicial Council.

ELKINGTON, Acting P.J., and HOLMDAHL, J., concur.