Appeal from the Circuit Court of the 13th Judicial Circuit La Salle County, Illinois No. 01-MR-180 Honorable Robert C. Carter Judge Presiding
The opinion of the court was delivered by: Justice Slater
This action was brought by James P. Gayan, as agent under the Lucille M. Gayan Power of Attorney, and subsequently by James P. Gayan as Special Representative of Lucille M. Gayan, deceased, against the Illinois Department of Human Services ("IDHS") and the Illinois Department of Public Aid ("IDPA") (collectively, "the State agencies"). The State agencies found that the plaintiff, Lucille Gayan, had "available assets" as defined by the Medicaid Act, of $250,066.42 in the form of the Lucille M. Gayan Trust. See 42 U.S.C. §1396p(d)(3)(B) (2000). Therefore, the State agencies determined that the plaintiff was required to "spend down" this amount before Medicaid would cover the medical expenses associated with her long-term nursing care. The plaintiff appealed this ruling to the trial court, and named only the IDHS as a defendant. The trial court affirmed the decision of the State agencies. For the following reasons, we affirm.
On December 20, 1993, the 80-year-old plaintiff placed assets valued at $129,700 into an irrevocable trust. At the same time, the plaintiff transferred certain assets to the trustee, including various certificates of deposit and net life insurance proceeds. Pursuant to the terms of the Irrevocable Trust Agreement, the plaintiff was to receive a distribution of income, within the trustee's discretion, for a period of 29 months. Thereafter, the trustee was directed to pay the cost of custodial care provided to or for the plaintiff, limited to the following expenditures:
"a. a personal needs allowance in the minimum amount allowed under Article V of the Illinois Public Aid Code, as amended from time to time, and pursuant to regulations promulgated thereunder;
b. amounts to cover Medicare and other health insurance premiums;
c. amounts to cover incurred expenses for medical or remedial care not paid for by Medicaid;
d. amounts to cover over-the-counter drugs or other medically necessary items ordered by a physician but not paid for by Medicaid; and
e. amounts necessary to cover medical transportation."
In July 1999, the plaintiff entered Rivershores Nursing Home in Marseilles. On March 6, 2000, the plaintiff applied for Medicaid with the IDPA. The IDHS processed the application and determined that the trust had a market value of $250,580.65. The local office of the IDHS then determined that the plaintiff had to "spend down" $250,066.42 before becoming eligible for Medicaid funding for her custodial care. The IDHS informed the plaintiff that she had 60 days to seek a hearing if she disagreed with its decision. Plaintiff sought a hearing, which was held on September 4, 2001.
At the hearing, the plaintiff appeared through her counsel. Counsel testified that the trust was drafted to pay income to the plaintiff in the trustee's discretion for 29 months, until June of 1996. After that time, the trustee was authorized to pay income and principal, if necessary, for plaintiff's custodial care, limited to the five expenditures set out in the trust. According to the plaintiff's counsel, the family felt that the trust would be considered a "special needs trust" and that it would not be counted against the plaintiff after March of 2000. After the passage of a sixty-month "look back" period, it was intended that the assets of the trust would only be available to pay whatever Medicaid did not pay.
At the conclusion of the hearing, the IDHS held that, under the terms of the trust, the payments from the trust are determined by the trustee who has discretion over how much money can be distributed to the plaintiff. In addition, it held that the trust agreement contained no provisions or terms that precluded the withdrawal from the principal of the trust for the plaintiff's needs, and that the trust allowed the distribution of funds to satisfy the cost of custodial care for any period that the plaintiff may be receiving it. Accordingly, it held that the local office of the IDHS correctly determined that the principal of the plaintiff's trust was an available asset.
On September 26, 2001, Linda Baker, Secretary of the IDHS, affirmed the hearing officer's decision and adopted it as a final administrative decision. The Director of the IDPA also adopted the hearing officer's findings as the final administrative decision of the IDPA. On October 29, 2001, the plaintiff filed a complaint in the trial court seeking reversal ...