Appeal from the Appellate Court for the First District; heard
in that court on appeal from the Circuit Court of Cook County;
the Hon. F. Emmett Morrissey, Judge, presiding.
MR. JUSTICE SCHAEFER DELIVERED THE OPINION OF THE COURT:
Rehearing denied September 30, 1976.
The plaintiffs in this case are 20 elderly persons, each of whom entered into a contract with Deutsches Altenheim (German Old People's Home), a not-for-profit corporation organized in 1885 to maintain a home for aged Germans in needy circumstances. The terms of each contract provided that the plaintiff (designated as applicant) conveyed to the Home:
"* * * all property and estate, both real and personal (including goods, money, securities and credits), of which said applicant is owner or possessor, or which may come to her [him] in the future, including annuities and pensions, and in case they are not assignable, the applicant agrees to deliver up the moneys as received * * *."
In consideration for the transfer to the Home of all of the plaintiff's present and future assets the Home agreed to:
"* * * admit the said applicant as an inmate of said DEUTSCHES ALTENHEIM for and during the period of said applicant's life; to provide her during the period of her sojourn therein with a comfortable and sanitary home, good food, necessary clothing, entertainment, reading matter, medical treatment, attention and nursing and, on her demise, a decent burial."
During 1971 each of the plaintiffs applied for public assistance. Those applications were denied by the Cook County Public Welfare Department on the ground that the needs of the applicants were met by their contracts for lifetime care. After a hearing the Illinois Department of Public Aid affirmed the ruling of the county department. On administrative review the circuit court of Cook County held that the plaintiffs were eligible for public assistance, and directed that payments be made retroactively to each plaintiff to the date of the application for assistance. The Appellate Court, First District, affirmed. (29 Ill. App.3d 546.) Because this result conflicts with the earlier decision of the appellate court in Reynolds v. Department of Public Aid (1975), 26 Ill. App.3d 933, we granted leave to appeal.
The Public Aid Code contains the following relevant provisions concerning the eligibility of an applicant for financial assistance:
"Income available to the person, when added to contributions in money, substance, or services from other sources, including contributions from legally responsible relatives, must be insufficient to meet the person's basic maintenance needs as defined by standards established by the Illinois Department." Ill. Rev. Stat. 1971, ch. 23, par. 3-1.2.
"Persons who are residents of or who are being maintained by a private institution may qualify only if they have not purchased care and maintenance in the institution by cash or by transfer of property, or having purchased care and maintenance, only after the amount of the cash or property has been wholly consumed for care and maintenance." (Ill. Rev. Stat. 1971, ch. 23, par. 3-1.5.)
The rules of the Illinois Department of Public Aid state:
"A resident who has an agreement for life-care with the private institution by virtue of a written or oral contract or agreement, or of provisions stated in the institution's Articles of Incorporation, by-laws, or other official documents or publications, shall be considered not in need of public assistance on the basis that he has a resource to meet his needs." Rules & Regulations Ill. Dept. of Public Aid, Art. 8, Rule 8.02.02.
The validity of this rule was attacked in Reynolds v. Department of Public Aid (1975), 26 Ill. App.3d 933, and it was there sustained upon the following grounds:
"* * * In some instances where one pays for care and maintenance the cost may be properly allocable to the amount of care and maintenance purchased, either in terms of the nature and quantity of the goods and services, or the period of time during which the care and maintenance is furnished. Here, however, no such allocation can be made until the recipient has died. The contract or agreement is for life, and the assets, although they may be actually considered as consumed by the Home by its costs prior to death, are properly allocable from the date or [sic] transfer over the entire remaining span of the recipient's lifetime. The contract is a gamble of sorts. The Home or other institution furnishing the care under a non-allocable life care contract may lose or gain financially, depending upon such factors as its cost for the care furnished, the value of the assets transferred, and the life span of the recipient. Under such agreement the recipient may likewise benefit or sustain a financial loss, depending upon many of the same factors. * * * In light of the stated purpose of the Illinois Public ...