Health Law Case Brief: Louise Morrison v. Dr. Julian Harris, Director, Office of Medicaid

Author: Patrick C. Cento, Esq.

In Morrison v. Harris, the Massachusetts Superior Court reinforces the discretionary authority of agency hearing officers in the adjudication of disputes regarding financial eligibility for Massachusetts Medicaid (“MassHealth”) benefits.  Specifically, the decision, authored by Associate Justice Curran, confirms this administrative discretion with respect to agency determinations of the value of services rendered to MassHealth applicants by family members prior to an application for MassHealth benefits.  Compensation to such family members for care provided can, as happened here, be classified as “impermissible transfers,” and limit eligibility for MassHealth.  The opinion holds that this administrative discretion extends, at least in part, to the methodology of calculating the value of services, as well as to the underlying determination of the fair market value of the care provided, including whether family-provided care is skilled or unskilled labor.

Factual and Procedural Background

In 2003, an aging Louise Morrison moved into a rental unit within the home of her daughter, Lisa Ohlson.[i]  Between 2003 and 2006, Ms. Ohlson provided certain housekeeping and custodial services to her mother.[ii]  In 2006 Mrs. Morrison was diagnosed with Alzheimer’s disease and the scope of services provided increased.[iii]    On September 5, 2007, Mrs. Morrison and her daughter entered into a “Care Employment Agreement,” under which Ms. Ohlson would act as a caretaker for her mother in exchange for regular monthly payments of $750 for rent, and $14,904 for “services described in this agreement.”[iv]  Mrs. Morrison made these payments from September 2007 until July 2008, though Ms. Ohlson continued to provide services to her mother until June 2009, at which point Mrs. Morrison was admitted to a nursing home.[v]

After being admitted to the nursing home, Mrs. Morrison applied for MassHealth long-term care benefits, and on September 28, 2009, MassHealth denied her application on the basis of financial ineligibility.[vi]  Specifically, MassHealth cited Mrs. Morrison’s transfer of $155,536 between September 2007 and July 2008 as constituting “impermissible transfers for less than fair market value under 130 Code Mass. Regs. § 520.018.”[vii] In particular, 130 CMR 520.018, states that MassHealth will deny an application for nursing facility services if that resident transfers “countable resources” (i.e., financial resources) for less than fair market value during a look-back period.[viii]            Mrs. Morrison then requested and received a hearing with the Office of Medicaid Board of Hearings, at which Ms. Ohlson and her husband testified and gave evidence that payments from Mrs. Morrison to Ms. Ohlson were in exchange for services provided and that the hourly rates for such services were at the same rates charged by adult care companies providing similar services.[ix]  On March 24, 2010, the hearing officer denied Mrs. Morrison’s appeal in part and approved it in part, finding that the transfers for services were disqualifying transfers, but that the rent payments were permitted transfers.[x]

On April 23, 2010, Mrs. Morrison filed a complaint for judicial review in Massachusetts Superior Court under G.L. c. 30A § 14, and a motion for judgment on the pleadings.[xi]  In its opinion on June 10, 2011 (the “2011 Superior Court Decision”), the court allowed in part and denied in part Mrs. Morrison’s motion, recognizing that the contract between Mrs. Morrison and her daughter was valid and that Ms. Ohlson had provided valuable services.[xii]  The court vacated the hearing officer’s determination and remanded the matter for the purpose of determining the fair market value of Ms. Ohlson’s services and the appropriate eligibility date based on the value of those services.[xiii]

After allowing Ms. Morrison and MassHealth to submit new evidence on the issue of fair market value, and denying a motion by Mrs. Morrison to reconvene the hearing, the hearing officer issued a remand decision reducing the impermissible asset transfer to $59,403.68 and a disqualification period of 217 days.[xiv]  This determination was made using the wages paid to unskilled caregivers employed by MassHealth under the Personal Care Attendant program, rather than using the rates paid to professional home caregivers offered by Ms. Morrison.[xv] Ms. Morrison appealed this decision, alleging that the Office of the Medicaid Board of Hearings’ estimation of the value of services Ms. Ohlson provided to her was arbitrary and capricious and an abuse of discretion.[xvi]

The Court’s Decision

The Court noted the standard of review under G.L. c. 30A, § 14, including the fact that the Court may affirm, remand, set aside, or modify the agency decision if it determines that the rights of any party may have been prejudiced because the agency decision is unconstitutional, in excess of the agency’s authority, based upon an error of law or unlawful procedure, unsupported by substantial evidence, or arbitrary or capricious, an abuse of discretion, or otherwise not in accordance with law.

The Court then addressed Mrs. Morrison’s first contention: that the calculations used by the hearing officer in determining the fair market value of Ms. Ohlson’s services contravened the 2011 Superior Court Decision and as such, are arbitrary, capricious, and unsupported by substantial evidence.

The 2011 Superior Court Decision indicated that Ms. Ohlson provided the services from September 2007 until Mrs. Morrison’s admission to the nursing home in 2009 and that, from the second month’s payment to the final payment, the payments can be viewed as payments for services rendered in the previous month.  The hearing officer on remand, however, excluded Ms. Ohlson’s September 2007 hours when calculating the total value of her services.  Mrs. Morrison argued that this exclusion was an abuse of discretion by the hearing officer because it violated the 2011 Superior Court Decision.  The court observes that “[w]hile the hearing officer’s calculation may have misinterpreted the direction of the prior Court decision, the impact on the total value is de minimis (and actually in Mrs. Morrison’s favor).”[xvii]  In footnote 4 of the opinion, the court points out that to follow Mrs. Morrison’s logic and include the value of services rendered in September 2007, the hearing officer would be required to include the value of compensation for hours of service rendered in July 2008 (which were not actually included, as there was no compensation in August 2008).  Given the difference in the relative value of services rendered in September 2007 and July 2008, such a calculation would actually overvalue Ms. Ohlson’s services and result in an additional 7 days of ineligibility for Mrs. Morrison.  The court definitively states that such a slight aberration in the hearing officer’s methodology, and one benefiting Mrs. Morrison, does not rise to the level of an abuse of discretion.[xviii]

Mrs. Morrison’s second argument was that the hearing officer’s use of the Personal Care Attendant program rates in estimating the fair market value of Ms. Ohlson’s services was unsupported by substantial evidence and contrary to MassHealth regulations.  The court cites MassHealth regulations indicating that fair market value is based upon an estimate of the “prevailing price” at the time of the transfer and indicates that the “only question . . . is whether there is substantial evidence that the value assigned to Ms. Ohlson’s services by the hearing officer is a reasonable estimate of the value based on the prevailing price” at the time.[xix]  The court states that while “Ms. Ohlson may offer services beyond those of a completely unskilled provider, it is also undisputed that she has no certification or education that would qualify her as a nurse or care provider.”[xx]  Accepting the hearing officer’s determination that Ms. Ohlson was more akin to an unskilled home care provider than a provider at a commercial home health services company, “the Court defers to the discretionary authority and expertise of the agency charged with making [the] determination.”[xxi]

Lastly, the court dismisses Mrs. Morrison’s argument that by not reconvening the hearing for further testimony upon remand, her procedural due process rights were violated.  The court noted that on remand, there “was no real factual issue considered” because the number of hours of services provided to Ms. Morrison by her daughter was accepted; and according to the court, the “only matter to be decided” by the hearing officer on the remand was “how to properly value those services.”  The court determined that because Mrs. Morrison was given the opportunity to submit evidence on this issue, she was afforded due process of law, and it was within the hearing officer’s administrative authority and discretion to make a determination based upon the evidence presented regarding the value of the services and deny Mrs. Morrison’s request to reconvene the hearing.

Patrick Cento is a 2012 graduate of Boston University School of Law, and preparing to begin a position as an attorney with the City of New York Human Resources Administration in the Medical Insurance and Community Services Administration (MICSA) Division.  Since graduating from law school, Patrick has worked as a law clerk for Brookline District Court Judge Mary White, as a legal fellow at the City of Boston Law Department, and has been active in the New Lawyers Section of the Boston Bar Association.  He is admitted to the Massachusetts Bar and is awaiting admission in New York. 

[i] Morrison v. Harris, 2013 WL 424883 at *1 (Mass. Super. Jan. 5, 2013).

[ii] Id.

[iii] Id.

[iv] Id.

[v] Id.

[vi] Id.

[vii] Id. at 2.

[viii] 130 C.M.R. §520.018(B) (2009).

[ix] Morrison v. Harris, 2013 WL 424883 at *1 (Mass. Super. Jan. 5, 2013).

[x] Id. at 2.

[xi] Id. at 2.

[xii] Id.

[xiii] Id.

[xiv] Id.

[xv] Id.

[xvi] Id. at 3.

[xvii] Id.

[xviii] Id.

[xix] Id. at 4.

[xx] Id..

[xxi] Id.


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