Appeal from Circuit Court of Menard County No. 02MR12. Honorable M. Carol Pope, Judge Presiding.
The opinion of the court was delivered by: Justice Appleton
Plaintiff, Martha Gillmore, as the executrix of Mary A. Fillbright's estate, appeals from the circuit court's order affirming the administrative decision of the Illinois Department of Human Services (Department). The Department awarded Fillbright medical assistance beginning January 1, 2002. However, the award was subject to a penalty period from April 2002 through January 2004 because Fillbright's purchase of an annuity on January 31, 2002, was considered a nonallowable transfer of assets. Plaintiff appealed to the circuit court, arguing the Department erred in implementing the penalty because the purchase of the annuity conformed to federal law. We affirm.
On January 31, 2002, Fillbright, age 78, applied for medical assistance under the Medical Assistance--No Grant (MANG) program administered by the Department. Fillbright was seeking financial assistance for her residential long-term care. The same day she applied for MANG, Fillbright purchased a single-premium annuity in the amount of $73,713. The annuity was based on her life expectancy of 116 months with payments to Fillbright for 115 months in the amount of $188.94 and a final payment in month 116 of $72,741.94. Fillbright's life expectancy was derived from federally approved life-expectancy tables.
On March 11, 2002, the Department's local office determined that Fillbright's purchase of the annuity constituted a nonallowable transfer of assets subject to an ineligibility period. Her benefits, which had been approved effective January 1, 2002, were subject to a penalty where no benefits would be paid between April 2002 and January 2004.
Fillbright appealed the office's decision. On June 25, 2002, the Department conducted an administrative hearing before a hearing officer. On July 28, 2002, the Department, through its secretary, Linda Renee Baker, considered and adopted the hearing officer's findings of fact and affirmed the office's decision. In evaluating Fillbright's appeal, the Department questioned whether Fillbright received fair-market value on her purchase of the annuity. The Department determined that she did not receive fair-market value since she was not being paid in "approximately equal periodic payments" over the term of the annuity in accordance with section 120.387(e)(13) of Title 89 of the Illinois Administrative Code (89 Ill. Adm. Code §120.387(e)(13) (Conway Greene CD-ROM March 2002)).
The Department held as follows: "In this case, the annuity clearly does not pay benefits in approximately equal periodic payments over the term of the annuity, and the local office correctly determined that, accordingly, fair[-]market value was not received. The local office correctly determined a 22[-]month penalty period for [long-term care] services, from April 2002 through January 2004, based on the amount of the transfer and the private rate for [long-term care] services at the facility where [Fillbright] resides."
On August 22, 2002, Fillbright filed a complaint for administrative review with the circuit court of Menard County, claiming the Department's decision was in error and contrary to federal law. Fillbright claimed the Department's decision violated her state and federal constitutional rights to due process and equal protection. On September 15, 2003, the circuit court affirmed the Department's decision to impose the penalty period. In its order, the court held:
"Once the Department determined the annuity in this case was not purchased for fair-market[-]value, it was incumbent upon [Fillbright] to show that in fact it was a fair[-]market value transfer. Plaintiff relied solely on a legal argument for her position and presented no testimony to the hearing officer concerning the fair[-]market value of the transfer. Under these circumstances, this court is unable to find that the Department erred. Accordingly, the decision of the Department is hereby affirmed."
This appeal followed. While her case was pending on appeal, Fillbright died. Martha Gillmore was appointed as executrix of Fillbright's estate and proceeds herein as special administratrix on behalf of the decedent.
Plaintiff claims the Department's regulation requiring an annuity be paid "in approximately equal periodic payments" interposes a requirement for the purposes of Medicaid eligibility that does not exist in federal law. She claims administering this additional requirement is improper and illegal. The Department claims the requirement is consistent with ...