IN THE SUPREME COURT OF THE STATE OF OHIO

IN RE ELEANOR BALANDAApplicant/Appellant,

-vs.-

Ohio Supreme Court Case No.

08-1181Eighth District Court of AppealsCase No. CA 07 089861

OHIO DEPARTMENT OF JOB ANDFAMILY SERVICES

Appellee.

Cuyahoga County Courtof Conunon Pleas No.CV 06 598845

MEMORANDUM IN SUPPORT OF JURISDICTION

RICHARD A. MYERS, JR. (0040164)HEHR & MYERS CO., L.P.A.4401 Rockside Road, Suite 200Independence, Ohio 44131440-449-3266216-447-9595 fax

Counsel for AppellantEleanor Balanda

DRDD4JUN s 8 20UU

CLERN OF COURTSUWRfM1E COURT OF OHIO

TODD K. DEBOE (0072034)Assistant Attorney GeneralHealth and Human Services Section30 East Broad Street, 26th FloorColumbus, OH 43215-3400(614) 466-8600-phone(614) 466-6090-faxtdeboe@ag.state.oh.us

Counselfor Appellee,The Ohio Department ofJob andFamily Services .

TABLE OF CONTENTS

PROPOSITION OF LAW:

Asset contained in a Irrevocable Trust are countable resource forpurposes of determining Medicaid Eligibility only when they first satisfythe requirements of Ohio Administrative Code Section 5101:1-39-27.1(the trust rule) and second the Ohio Administrative Code Section5101:1-39-05 (the resource rule)

EXPLANATION OF WHY TFIIS COASE IS OF PUBLICOR GREAT GENERAL INTEREST Page 3

STATEMENT OF THE CASE AND FACTS Page 5

LAW AND ARGUMENTIN SUPPORT OF PROPOSITION OF LAW Page 7

2

EXPLANTATION PUBLIC OR GREAT GENERAL INTEREST

The Instant Case presents this Honorable Court with an opportunity to address a

matter of first impression regarding conflicting language contained in the Ohio

Administrative Code relating to Medicaid Eligibility. Medicaid eligibility is a maze of

complicated regulations contained in the Ohio Administrative Code and the Ohio Revised

Code. To further complicate the matter of Medicaid eligibility for an applicant is the

series of overriding Federal Statutes that provide the foundation for all of the state

specific rules. This case specifically allows this Honorable Court the opportunity to

clarify the conflict between to sections of the Ohio Administrative Code regarding

Medicaid eligibility.

Ohio consists of 88 individual counties. In each county, the County

Commissioners have established a Department of Jobs and Family Services to attend to

the needs of the residents of their county. Each County Department of Jobs and Family

Services contains a separate department addressing Medicaid eligibility for the residence

of their respective county. In order to ensure the consistency and uniformity of

administrative determinations, each County must utilize the same rules in the evaluation

of the cases before them. Most importantly, each county needs a clear, uniform standard

to review the issues relating to the cases presented for consideration of Medicaid benefits.

A significant absence of a uniform standard for determinations creates uncertainty and

lack of consistency in the eligibility decisions being made by the individual counties

throughout Ohio. The ultimate result is inconsistent decisions varying between the

individual Counties, frequently unfounded by Ohio law.

3

Of current concern is the inconsistency between two sections of Chapter 5101 of

the Ohio Administrative Code. The first section is Ohio Administradve Code Section

5101:1-39-27.1, the Trust Rule. The second section is Ohio Administrative Code Section

5101:1-39-05, the Resource Rule. Under the Trust Rule, any asset contained in an

irrevocable trust that could be used for an applicant for Medicaid benefits are countable

resources in the application process. Under the Resource Rule, the same assets countable

under the Trust Rule are not countable assets in the application procedure. A direct

conflict exists between the two sections of the Ohio Administrative Code.

The instant case offers this Court the unique opporhuuty to clarify the direct

conflict between the two sections of the Ohio Administrative Code and provide the 88

separate Departments of Jobs and Family Services, the Ohio citizens applying for

Medicaid Benefits and all the attorneys providing counsel to either of these two entities

with a concise interpretation and resolution of the conflict. By accepting this case, this

Honorable Court can ensure that important issues, such as the one involved in this case,

are given appropriate and uniform level of review across the State of Ohio for all

applicants for Medicaid benefits.

4

STATEMENT OF THE CASE AND FACTS

Eleanor Balanda, at all times relevant to this action, was a resident of the Slovene

Home for the Aged. She was first institutionalized on December 17, 2001. After filing an

initial application for Medicaid for the Aged benefits in December, 2004, Vincent Balanda,

the husband of Eleanor Balanda, attended the original face to face conference with the

Cuyahoga County Department of Job and Family Services, hereinafter "ODJFS". ODJFS,

determined Eleanor and Vincent Balanda possessed marital assets in the amount of

$173,840.55. Resources allocated to Eleanor Balanda's were determined to be $86,920.11.

In order to be eligible for benefits, Eleanor Balanda is only entitled to possess total

countable resources of $1,500. As a result, the Medicaid Application was denied because

Eleanor Balanda possessed excess resources of $85,420.11. Eleanor Balanda would not

qualify for Medicaid benefits until she spent down the $85,420.11.

Eleanor Balanda commenced her spend down of her excess resources immediately.

She continued to pay the expenses related to the Slovene Home for the Aged, for her

prescription medications and other medical needs. As part of the spend-down, on February

1, 2005, her husband, Vincent Balanda, established an irrevocable trust named the Balanda

Family Trust. Vincent Balanda is the Grantor of the Trust, his niece, Irene J. Check, PHD.,

of Evanston, Illinois is the Trustee. Neither Vincent Balanda or Eleanor Balanda, serve as

Trustees, nor could they ever serve as a Trustee. On March 15, 2005 an initial deposit was

made to the Balanda Family Trust dated February 1, 2005, hereinafter "Trust", in the

amount of $18,000.00. The funds were deposited into an account designated for the Trust at

the Toupa Lithuanian Credit Union. The transfer of the funds was a competed gift to the

tnast by Vincent Balanda. On April 7, 2005, a second transfer was made to the trust in the

5

amount of $18,000.00. On November 3, 2005, a final gift was made to the trust in the

amount of $4,800.00. The total of all the gifts to the trust was $40,800.00..

On December 29, 2005, Eleanor Balanda submitted a second application for

Medicaid Nursing Home benefits to ODJFS. The face to face interview was conducted on

January 23, 2006. At the face to face interview, the applicant submitted a copy of the

Balanda Trust to ODJFS. The total balance in the trust account was $40,857.47 as of

November 3, 2005 with accrued interest. On March 2, 2006, the Application for Medicaid

Nursing Home benefits was denied for excess resources. The ODJFS considered the Trust

assets of $40,857.47 as an available resource to Eleanor Balanda.

On March 9, 2006, a State Hearing request was filed objecting to the denial of

Medicaid benefits for Eleanor Balanda. On June 12, 2006, the decision was issued, denying

the objections presented by Eleanor Balanda. An Administrative Appeal was filed to the

Ohio Department of Jobs and Family Services on June 29, 2006, challenging the decision of

the State Hearing officer. ON July 13, 2006, the appeal was overruled and the hearing

decision was affrmed.

On August 14, 2006, Eleanor Balanda filed an Appeal to the Cuyahoga County

Court of Common Pleas. The case was assigned to Judge John D. Sutula. On April 12,

2007, the Cuyahoga County Court of Common Pleas affirmed the decision of the

Administrative Appeal.

On May 14, 2007, Eleanor Balanda filed a Notice of Appeal to the Eighth District

Court of Appeals. After the first opportunity to argue the case since the State Hearing in the

spring of 2006, the Eight District Court of Appeals affinned the decision of the Cuyahoga

County Court of Common Pleas on May 5, 2008.

6

LAW AND ARGUMENT

Asset contained in a Irrevocable Trust are countable resource forpurposes of determining Medicaid Eligibility only when they first satisfythe requirements of Ohio Administrative Code Section 5101:1-39-27.1(the trust rule) and second the Ohio Administrative Code Section5101:1-39-05 (the resource rule)

Medicaid is, and always has been, a program to provide basic health coverage to

people who do not have sufficient income or resources to provide for themselves. Ramey

v. Reinertson (10`l' Cir. 2001), 268 F.3d 955, 961. An individual can`provide for

themselves' only with assets they own or control. Without such ownership or control,

individuals become necessarily dependant on the actions and fiscal resources of others.

The Ohio Legislature has developed a test to determine whether an individual

who applies for Medicaid is truly able to pay for his/her medical care. The Ohio

Administrative Code states:

Part of this test requires the individual to list his/her `resources.'"Resources" are cash, personal property, and real property in which anindividual and/or the individual's spouse has an ownership interest, hasthe legal ability to convert to cash, and is not legally prohibited from usingfor maintenance and support. O.A.C. 5101:1-39-05(A)(8).

This definition of `resources' is required as part of the determination of whether an

individual is `truly able to pay for his/her medical care.' Thus, an individual's

`ownership interest' must also be a required part of this rights-based determination. An

ownership interest in property, whether real or personal, is any interest recognized by law

that can be protected or enforced in a court of law. O.A.C. 5101:1-39-05(A)(8)(a).

Access to property or a right to use property does not make that property a resource if

there is no ownership interest. O.A.C. 5101:1-39-05(A)(8)(a). Under Medicaid's test, an

7

individual who has no ownership interest in the cash or property can not truly pay for

their medical care with it.

The process of reviewing an individual's resources begins with the submission of

a Medicaid Application to the Ohio Department of Job and Family Services, hereinafter

"ODJFS". If a Medicaid applicant has excessive "available resources," then they are

deemed to not be "financially needy" at the time of application, and Medicaid benefits

will be denied until the applicant has spent down their "available resources" to the

permissible amount.

Under Ohio law, the applicant for Medicaid benefits is entitled to total countable

assets of $1,500. This amount was established in 1972 and has never been adjusted for

inflation or other factors. Any amount above the permitted amount of $1,500 will be

considered an excess asset and result in the denial of benefits. When calculating the total

assets, the ODJFS will consider all resources of the applicant. The primary question

presented by this case is the determination of Appellant's "resources" under the Ohio

Administrative Code, and which are "available" to the applicant?

The Ohio Administrative Code defines the Assets and Resources that will be

viewed as countable toward the Applicant's maximum holdings of $1,500.00. Pursuant

to Ohio Administrative Code Section 5101:1-39-05(B)(2) "Assets" include all income

and resources of the individual and of the individual's spouse. Subsection (3) defines a

"Countable resources" as those resources remaining after all exemptions have been

applied.

Ohio Administrative Code Section 5101:1-39-05(B)(10) defines a "Resources":

Resource means cash, personal property, and real property an individualand/or the individual's spouse has an ownership interest in, has the legal

8

ability to access in order to convert to cash (if not already cash), and is notlegally prohibited from using for support and maintenance.

(a) An ownership interest in property, whether real or personal, is anyinterest recognized by law that can be protected or enforced in a court oflaw. Ownership interest includes either legal title or equitable interests.Access to property or a right to use property does not make that property aresources if there is no ownership interest.

(b) Property cannot be a resources if the individual lacks the legal abilityto access funds for spending or to convert noncash property into cash.

(i) Property, or an interest in real or personal property, must have a cashvalue that is available to the individual upon liquidation or sale of theproperty.(c) Even with ownership interest and legal ability to access property, alegal restriction against the property's use for the owner's own supportand maintenance means the property is not a resource.

Pursuant to Ohio Administrative Code Section 5101:1-39-05(C)(1) ODJFS must

evaluate and calculate the value of all resources held by an individual and the individual's

spouse. This is action is performed during the Resource Assessment. An individual is

ineligible for medical assistance if he or she has an ownership interest in resources with

an aggregate or total countable value greater than the resource limit.

Pursuant to Ohio Administrative Code 5101:1-39-35(B)(5) a "Resource

assessment" means the process where the resources of both the institutionalized spouse

and the community spouse are assessed to determine the couple's total countable

resources existing at the beginning of the first continuous period of institutionalization.

The Applicant is required to provide documentation of ownership and current value of

the couple's countable resources. All resources determined available at the time of the

first period of institutionalization must be used in the resource assessment.

When a transfer is made to a third party individual or entity without the

legal right to the return of the property and the transfer is not a method of compensation

9

for goods or services, the transfer is a completed gift. The transfers at issue in this case

were made to the Trust. Article III of the Balanda Family Trust sets forth:

During the lifetime of VINCE BALANDA and ELEANORBALANDA, the Trustee shall hold, administer and distribute the trustestate held hereunder in accordance with the following provisions.

Al. Any one Trustee, whether at such time or times as two ormore Trustees are serving hereunder, or at such time or times as only one(1) Trustee is serving hereunder, may distribute to or for the benefit ofeither VINCE BALANDA OR ELEANOR BALANDA, as much or moreof the net income or principal or both of the trust estate being heldhereunder, such amount or amounts whether the whole or a lesser amount,as said Trustee, in its sole, absolute and unfettered discretion, deemsappropriate and advisable. The Trustee, in its sole and absolutediscretion, at any time or times, may exclude or withhold as much of thenet income or principal or both of the trust estate from VINCEBALANDA OR ELEANOR BALANDA, as it deems appropriate andadvisable. Neither VINCE BALANDA OR ELEANOR BALANDA shallpossess any demand rights to the net income, the principal or both of thetrust estate. (emphasis added) Concurrence of more than one Trusteesshall not be required. At the end of each taxable year the Trustee shall addany undistributed income to the principal of the trust estate being heldhereunder.

The Trustee shall be entitled to purchase property, real or personal,for the use by person named in this Trust, when the Trustee deems saidaction to be in the best interest of the person and to retain such property intrust in lieu of making any distribution which would otherwise bepermitted hereunder

2. We do not intend to displace any source of income otherwiseavailable to VINCE BALANDA OR ELEANOR BALANDA for theirbasic support, such as food and shelter, including any governmentalassistance program to which VINCE BALANDA OR ELEANORBALANDA are or may be entitled. This trust is not intended to be aresource for them and is not available to them. No part of the corpus orincome from the corpus of this trust shall be used to supplant or replaceany public assistance benefits which they are to receive from or throughany county, state, federal or other governmental agency. Neither the Stateof Ohio nor any Federal, State or Local public entity or subdivision,department, or agency thereof may compel the Trustee to pay to it incomeor principal from the trust estate in reimbursement of costs incurred bysuch govennnental entity in respect of care or services rendered to VINCEBALANDA OR ELEANOR BALANDA.

10

In the event the State of Ohio or any Federal or Local public entity,subdivision, department or agency shall make demand for said funds, thistrust shall be continue and manage and distribute the funds as if VINCEBALANDA and ELEANOR BALANDA had died.

Pursuant to Article III of the Trust, the Trustee is not obligated to use any of the

funds, income or principal, for Vincent or Eleanor Balanda (the Appellant). The Trustee

is empowered to use as much of the income or principal of the trust estate as the Trustee,

in its sole and absolute and unfettered discretion deems appropriate and advisable. The

Trust continues to empower the Trustee with language that she is absolutely entitled to

exclude or withhold as much of the net income and principal of the trust from Vincent

and Eleanor Balanda as she deems appropriate and advisable. Neither Vincent or Eleanor

Balanda possess any demand rights to the income or principal of the trust. In short,

neither Vincent Balanda nor Eleanor Balanda possess a legal right to the funds. The trust

does not provide Vincent Balanda nor Eleanor Balanda with a legal cause of action to

demand the funds. Because no rights were retained to the funds, the transfer of the

$40,800.00 to the trust is a competed gift by Vincent and Eleanor Balanda. The gifts to

the trust subjected Eleanor Balanda to the required waiting period for Medicaid benefits,

which she served and private paid the Slovene Home for the Aged for the required time

period.

The Trust Rule states in its opening: "This rule governs when a trust is counted as

a resource and/or income." O.A.C. 5101:1-39-27.1(A)(1). The Appellant does not deny

that the Trust Rule identifies the assets held in the trust as a potential resource. In turn,

the opening of the Resources Rule states: "This rule defines how resources are treated for

purposes of determining Medicaid eligibility." O.A.C. 5101:1-39-05(A). Thus, based

11

upon the language of each section's introduction, it is clear that the Trust Rule is used to

determine if a trust assets are potentially to be counted as a resource, whereas the

Resources Rule is then used to determine the trust asset's treatment as a resource when

determining Medicaid eligibility.

The Resources Rule specifically states in its definitions section that, "Trusts are

defined under rule 5101:1-39-27.1 of the Administrative Code." O.A.C. 5101:1-39-

05(B)(10). This is a clear indication that we are to look to the Trust Rule as part of the

Resources Rule. However, that does not mean that, once a trust is defmed and/or

identified as a`countable resource' under the Trust Rule, the other provisions of the

Resources Rule will not apply to that resource's treatment during the actual determination

of Medicaid eligibility. Rather, by expressly incorporating the Trast Rule as providing

the defmition for `trusts,' it is clear that trusts are defined under the Trust Rule, yet are

still treated as resources under the Resources Rule. Nothing in either rule, after all,

indicates that `trusts' are defmed and treated- or otherwise dealt with- under the Trust

Rule alone.

Moreover, the Trust Rule never provides a separate definition of "resources,"

despite its use of the term. In contrast to this, the Resources Rule clearly defines

`resources' as: "cash, personal property, and real property that an individual and/or

spouse has an ownership interest in, has the legal ability to access in order to convert to

cash (if not already cash), and is not legally prohibited from using for support and

maintenance." O.A.C. 5101:1-39-05(B)(8). This is a clear embodiment of the rights

based theory of property, seen throughout the rules of Medicaid. By specifically failing

to provide separate definitions, the Trust Rule must depend on term defmitions already in

12

existence within the Medicaid rules- more specifically, within the Resources Rule itself.

This brings to light, yet again, the fact that the Trust Rule is meant to serve as a definition

of `trusts,' and not as an all inclusive rule.

"All statutes that relate to the same general subject matter `must be read in pari

material. ... And, in reading such statutes in pari material, and construing them together,

[a] court must give such a reasonable construction as to give the proper force and effect

to each and all such statutes'." Bartchy v. State Bd. OfEdn., 2007-Ohio-300, ¶8.

"'Unless words are otherwise defined or a contrary intent is clearly expressed,' we must

give words contained in a statute `their plain and ordinary meaning'." Bartchy v. State

Bd. Of Edn., 2007-Ohio-300, ¶7. Clearly, then, the Trust Rule is dependant on both the

definitions and treatment provisions of the Resources Rule- yet the Resources Rule

specifically states that it depends on the Trust Rule only to provide the definition of

`trusts.'

The Trust Rule also states in its introduction that, "[t]he application of [the Trust

Rule] to the trust will result in a detennination that the trust or a portion of the trust is a

countable resource, countable income, both income and a resource, or not countable as

income or a resource.°' O.A.C. 5101:1-39-27.1(A)(4). At first appearance, the Trust Rule

would appear to be inconsistent with the Resources Rule. The appropriate detemiination

for a court to make when statutes are inconsistent or irreconcilable is that the statute later

enacted prevails. State v. Rush (1998), 83 Ohio St.3d 53, 58; O.R.C. 1.52. The Resources

Rule's last prior effective date was 7/1/2005, whereas the Trust Rule's last prior effective

date was 11/7/2002. O.A.C. 5101:1-39-05; O.A.C. 5101:1-39-27.1. Still, these are not

necessarily irreconcilable statutes. It is still under the Resources Rule that the `treatment

13

of non-exempt resources and detemiination of resource availability' process occurs.

O.A.C. 5101:1-39-05(C). In fact, nowhere does the Trust Rule state the required

treatment of the trust as a countable resource or countable income. Rather, it merely

determines whether a trust or portion thereof could be counted as a resource and/or

income, leaving the actual treatment of the resource/income up to the Resources Rule.

O.A.C. 5101:1-39-27.1(A)(4). It can not stand alone as some sort of all-inclusive `trust

rule,' as it fails to provide the second step in the process.

In the absence of specific contrary definitions, other Medicaid rules must provide

additional necessary definitions, and to further lay out how trusts are to be treated after

being deemed resources under the Trust Rule. Most notably, a contrary definition for

`resources' is absent from the Trust Rule. In fact, the Trust Rule lacks a definition for a

`countable resource,' despite the statement that "[t]he application of [the Trust Rule] to

the trust will result in a determination that the trust or a portion of the trust is a countable

resource...". O.A.C. 5101:1-39-27.1(A)(4). Thus, when correctly interpreted and

applied, the Trust Rule and the Resources Rule form a two tier test. Assuming that a trust

(or portion thereof) has been determined under the Trust Tier to be a countable resource,

it is clear that we must then turn to the definitions and treatment processes found within

the Resources Tier, wherein `countable resources' are defined as "those resources

remaining after all exemptions have been applied" in order to complete the eligibility

determination. O.A.C. 5101:1-39-05(B)(2). Thus, `countable resources' are non-exempt

resources- and it is the Resources Rule which lays out the "[flreatment of non-exempt

resources and determination of resource availability" process, not the Trust Rule. O.A.C.

5101:1-39-05(C). Under the Resources Rule, then, the "CDJFS must evaluate and

14

calculate the value of all resources held by an applicant/recipient and his or her spouse.

An applicant/recipient is ineligible for Medicaid if he or she has an ownership interest in

resources with an aggregate or total countable value greater than the resource limitation."

O.A.C. 5101:1-39-05(C)(1). (emphasis added).

The Resources Rule specifically incorporates the definition of `trusts' as

defmed under the Trust Rule. As a result, once a trust asset is defined as a resource

and/or income under the Trust Rule, it is then one of the potential `resources' treated

under O.A.C. 5101:1-39-05(C)(1). The applicant/recipient is then required to have an

ownership interest in the trust to be proved ineligible under the Resources Rule,

regardless of the trust being deemed a resource under the Trust Rule. This also helps to

explain the lack of additional definitions in the Trust Rule. The Trust Rule is meant to be

used in conjunction with the Resources Rule, not in lieu of it. Thus, under the Resources

Rule, an applicant/recipient would have to have "any interest recognized by law that can

be protected or enforced in a court of law" in the trust income or principal. O.A.C.

5101:1-39-05(B)(8)(a). This requirement is consistent with the rights based theory of

property on which Medicaid has traditionally focused its rules. This use of both the

Resources Rule and the Trust Rule in a two tier test allows for Medicaid to more easily

define categories of trusts, while still maintaining a balance with the traditional public

policies it has always upheld.

The fact that Appellant has no enforceable right to the Trust is absolutely

relevant. It proves she has no ownership interest in the Trust income or principal. The

Trust, even if it is counted as a resource under the Trust Rule, does not make her

ineligible for Medicaid when properly treated under the Resources Rule. Trusts may be

15

properly defined and counted as a resource under the Trust Rule, but the overall treatment

of an applicant's resources is controlled by the Resources Rule. Applicants are required

to have an ownership interest in resources with an aggregate or total countable value

greater than the resource limitation in order to be deemed ineligible for Medicaid under

that Resources Rule. O.A.C. 5101:1-39-05(C)(1). Appellant has no such protected or

legally enforceable ownership interest in the Balanda Family Trust. Rather, she is not

(nor could she be) a Trustee- moreover, she has no demand rights to the net income, the

principal or both of the trust estate. Further, the Trustee, in its sole and absolute

discretion, may exclude or withhold as much of the net income or principal or both of the

trust estate from Vince Balanda or Eleanor Balanda, as it deems appropriate and

advisable.

The Trust Rule merely "governs when a trust is counted as a resource and/or

income." O.A.C. 5101:1-39-27.1(A)(1). It is the Resources Rule of Medicaid that

"defines how resources are treated for purposes of determining Medicaid eligibility".

O.A.C. 5101:1-39-05(A). ODJFS has thus erred in determining that the three gift

transfers to the Balanda Family Trust were resources available to Appellant, for purposes

of determining her eligibility for Medicaid. The Cuyahoga County Court of Common

Pleas erred in failing properly apply the Ohio law to the decision of the ODJFS ruling.

Because the decision of the ODJFS fails to follow the clear mandates of the Ohio

Administrative Code and centuries of trust law, any decision to support same is

inherently arbitrary and capricious and must be reversed by this Honorable Court.

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IV) CONCLUSION

For the foregoing reasons, the Appellant/Applicant Moves this Honorable Court

to grant jurisdiction to review the errors of the lower courts in affirming the decision of

the Ohio Department of Jobs and Family Services and deem the assets transferred into the

Balanda Family Trust dated Februaty 1, 2005 unavailable for purposes of calculating the

resource assessment for Appellant.

Respectfully submitted,

ehr & Myers Co, L.P.A.HARD A. MYERS, J

Independence, Ohio 44131440-449-3266216-447-9171 faxramyers@hehrmyers.comAttorney for Applicant/Appellant

4401 Rockside Road, Sui

CERTIFICATE OF SERVICE

A true and accurate copy of the foregoing Memorandum in Support of Jurisdiction hasbeen sent to Assistant Attorney General Todd K. Deboe, Health and Human ServicesSection, 30 East Broad Street, 26th Floor, Columbus, Ohio 43215-3400, Counsel forAppellee, on June 17, 2008.

ARD A.

17

MAY 5 0 200$

hCnurt nf Appeals uf (94iuEIGHTH APPELLATE DISTRICT

COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINIONNo. 89861

ELEANOR BALANDA

PLAINTIFF-APPELLANT

vs.

OHIO DEPARTMENT OF JOB. AND FAMILY SERVICES

DEFENDANT-APPELLEE

JUDGMENT:AFFIRMED

Administrative Appeal from theCuyahoga County Court of Common Pleas

Case No. CV-598845

BEFORE: Celebrezze, J., Gallagher, P.J., and MeMonagle, J.

RELEASED: Apri124, 2008

JOURNALIZED: MAY 5 - 2008CA07089861 51409611

1111111 Illl1 11111 1111111111 IIIII IIIII IIIII Illl IW1&0 65 6 00 8I9

-i-

ATTORNEY FOR APPELLANT

Richard A. Myers, Jr.Hehr & Myers Co., L.P.A.4401 Rockside RoadSuite. 200Independence, OH 44131

ATTORNEYS FOR APPELLEE

Marc DannOhio Attorney GeneralBY: Todd K. DeboeAssistant Attorney GeneralHealth & Human Services Section30 East Broad Street26th FloorColumbus, Ohio 43215-3400

FILED AND JOURNALIumPER APP. R. 22(E)

MAY 5 - 2008GERALD E. PIJERST

CLERK 0 OJR7- APpEALB

BY ^ DEP

ANNOU`di CEMENT OF DECISIONPER APP. R. 22M, 221D) A^' 26(A}_

REC I'V^I)

APR 2 4 2000d8ERALD @, FuEft67

CLERK . CI ®FAPpEALSHY ®E9;

CA07089861 51189379 l

IIIIIIIIIIIIIIIIIIIIIIIIIIIlN1111111111{NIIIIIN ;N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D)and 26(A); Loc.App.R. 22. This decision will be journalized and will become thejudgment and order of the court pursuant to App.R. 22(E) unless a motion forreconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days ofthe announcement of the court's decision. The time period for -review by the SupremeCourt of Ohio shall begin to run upon the journalization of this court's announcempntof decision by the clerk per App.R. 22(E). See, also, S.Ct. Prac.R. H, Section 2(A)(1).,

11A656 10820

-1-

FRANK D. CELEBREZZE, JR., J.:

Appellant, Eleanor Balanda ("Eleanor"), appeals the trial court'-si;•.

affirmatiori of the denial of her application for Medicaid benefits by the Ohi:cs'

Department of Job and Family Services ("the department"). After a thorougli-,..

review of the record, and for the reasons set forth below, we affirm.

The facts that lead to this appeal began in 2001. On December 17, 2001,

Eleanor became a resident of the Slovene Home for the Aged ("the nursirig

home"). In December 2004, Eleanor filed an application for Medicaid; however,

the department denied her application after it determined that she and'`-^^ r. .

husband, Vincent, possessed marital assets totaling $173,840.55.

department deterinined that Eleanor's assets were $86,920.11, which exceede) d,

the $1,500 limit required in order to receive Medicaid.

According to Eleanor, she immediately began to spend her excess mone3Y

on nursing home expenses, prescription medication costs, and other medica!

bills. On February 1, 2005, Vincent established the Balanda Family Trust(`s.`'ie

Balanda trust"). Vincent was the grantor and his niece, Irene Check, was t;

4d:t6trustee of this irrevocable trust. Under Article II of the Balanda trust, a^ie

grantor does not have the right to terminate, modify, or amend the trust. TTi:e

grantor also does. not have the right to withdraw any assets. Article III under

IKig 656 ^0 821.

-2-

the Balanda trust allows the trustee, in her discretion, to distribute money t

for the benefit of either Eleanor or Vincent.

In 2005, a total of $40,800 was deposited into the Balanda trust,. which

included two separate deposits of $18,000 each and one deposit of $4,800,

On December 29, 2005,. Eleanor submitted another application fox

Medicaid benefits. The balance contained in the trust was $40,857.47. ,

March 2, 2006, the department again denied her benefits on the basis thatl^,^i

available resources exceeded Medicaid's $1,500 limit. The departmMA

considered the Balanda trust assets as one of Eleanor's available resources:

On July 13, 2006, the Administrative Appeal Decision affirmed t&

department's decision, and on April 12, 2007, the trial court also affirmed the

decision.

Eleanor brings this appeal, asserting one assignment of error for 1'is

review.

'^'I. The Cuyahoga Court of Common Pleas erred in failing to appropriately

weigh the evidence to determine whether or not the decision of the Ohio

Department of Job and Family Services made the correct determination iii

finding the funds transferred into and held in the Balanda family trust da.tecl

February 1, 2005 were available countable resource of Eleanor Balanda."

1-3656 960822

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Eleanor argues that the trial court erred when it affirmed Q4.6

department's decision to deny her Medicaid application. More specifically, sh:e

alleges that the department should not have considered the assets in tlie

Balanda trust when concluding that her resources exceeded $1,500 because ".:

has "no ownership interest in the trust." This argument is without merit.

We review an order of an administrative agency under an abus^:`

discretion standard. Pons v. Ohio State Med. Bd. (1993), 66 Ohio St.3d 619, 627;

1993-Ohio-122, 614 N.E.2d 748. "An abuse of discretion involves far more tliW'i

a difference in opinion. The term discretion itself involves the idea of choice,'bkt

an exercise of the will, of a determination,. made between competirig

considerations. In order to have an `abuse' in reaching such determinatioxi,'

result must be so palpably and grossly violative of fact and logic that it evidences.

not the exercise of will but perversity of will, not the exercise of judgment

.^.•defiance thereof, not the exercise of reason but rather of passion or bid's:'•'

,Huffman v. Hair Surgeon, Inc. (1985), 19 Ohio St.3d 83, 87, 482 N.E.2d 1248^.^''

To constitute an abuse of discretion, the ruling must be more than lega`ll

error; it must. be unreasonable, arbitrary, or unconscionable. Blakemore'.u:

Blakemore (1983),. 5 Ohio St.3d 217, 450 N.E.2d 1140.. Further, unless t

construction of a statute or rule is unreasonable, reviewing courts should folTtiw

'tS@ 656 A 0 8 23

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the agency's construction. Morning View Care Center-Fulton v. Ohio Dept: o'

Human Servs., 148 Ohio App.3d 518, 2002-Ohio-2878, 774.N.E.2d 300, at

"An individual is entitled to Medicaid if he fulfills the criteria establis)ie

.., e

by the State in which he lives." Schweicker v. Gray Panthers (1981), 453 U.S:84;

36-37, 101 S.Ct: 2633, 69 L.Ed.2d 460. Two sections of the Ohio Administrative

Code, Ohio Adm. Code 5101:1-39-05 ("the resource rule") and Ohio Adm. Code

5101:1-39-27.1 .("the trust rule") apply in this case. The resource rule sets

resource limitation; lists types of resources; and states what constitute

"countable resource" in order to determine whether an applicant is eligible^or

Medicaid. The trust rule defines the treatment of a trust (a specific typV`' ,

,resource) in order to determine whether a particular trust constitutes. ; a

countable resource.'

The Resource Rule - Ohio Adm. Code 5101:1-39-05

The resource rule imposes a resource eligibility limit of $1,500. Ohio Adi4:

Code 5101c1-39-05(A)(9). Resources inclu.de cash, personal property, and're:al

; ^-ex:rs•.property, as long as the person has.an ownership interest in it; has the leg^

ability to access it in order to convert to cash (if not already cash); and is nQt

' On October 1, 2006, Ohio Adm. Code 5101:1-39-05, and Ohio Adm. Code5101:1-39-27.1 were amended. Because Eleanor filed her application for Medicaid 'in:2004, we apply the versions of Ohio Adm. Code 5101:1-39-05, and Ohio Adm. Code5101:1-39-27.1 effective on November 7, 2002.

10656 ^980824

-5-

legally prohibited from using it for support and maintenance. Ohio Adm. COdii

5101:1-39-05(A)(8). After any exemptions have been applied, the remainingg

resources ("countable resources') are counted towards the $1,500 limit. Ofii IQ

Adrn. Code 5101:1-39-05(A)(2).

The Trust Rule - Ohio Adm. Code 5101:1-39-27.1

The department must determine whether trust property is a count01

resource and/orcountable income. OhioAdm. Code 5101:1-39-27.1(A)(4). Uxj.d^^

the trust rule, five types of trusts exist. Ohio Adm. Code 5101:1-39-27.1(A)'

Under OhioAdm. Code 5101:1-39-27.1(C)(2)(a), a category two trust exists wlie$e

"the assets of the individual were used to form all or part of the corpus of tli^

trust; the trust was not established by a will; and the trust was established liy

the [applicant or her spouse]."

The Balanda trust is a category two trust because Eleanor's assets

used to form part of the corpus; the trust was not established by will; and'

trust was established by Eleanor's husband.

Having determined that the Balanda trust is a category two trust, we

must now decide whether the trust is a countable resource. Because e

Balanda trust cannot be revoked by the grantor or the court, it is an irrevocali]e

trust. Ohio Adm. Code 5101:1-39-27.1(B)(9). "If there are.any circumstances

under which payment from [an irrevocable] trust could be made to or for t

YKW656 P6Q825.

-6-

benefit of the applicant/recipient, the portion from which payments could bd

made shall be considered a resource available to the applicant/recipient. TYre

[department] shall not take into account when payments can be made: :'AE

payment that can be made only in the future satisfies this provision." (Emph; ^;°'s'.^i^s^,...:.. . . ..3..,'.

added.) Ohio Adm. Code 5101:1-39-27.1(C)(2)(c)(i). Circumstances exist und&

which payments can be made from the Balanda trust for Eleanor's benefit:

Because the Balanda trustee may make distributions to Eleanor, that portioriof

the trust must be considered one of Eleanor's countable resources.

Importantly, we note that under Ohio Adm. Code 5101:1-39-27.1(C)(2)(e^,

"the availability of a trust in this category shall be considered without regaM,^^

the purpose for which the trust is established; whether the trustees hay.e;apr

exercise any discretion under the trust; any restrictions on when or wheiR

distributions may be made from the trust; or any restrictions on the use';'Qf

distributions from the trust." Therefore, the fact that the Balanda trustee lias

sole discretion to make distributions is irrelevant in determining whether the

Balanda trust is a resource.

We also note that Eleanor argues that we should apply the trust rule firat;

and then apply the resource rule. We disagree. The resource rule states V

there is a resource limitation of $1,500, and that "countable resources" are tlipse

resources that remain after any exemptions apply. It is necessary to then turn

IMA 55^ PN n R9 r,

-7-

to the trust rule, to determine whether a. specific trust is a countable resou^,..,.`^.;

We find that the Balanda trust qualifies as a resource in determiiiirig

whether. Eleanor is eligible for Medicaid. Accordingly, Eleanor's assignmeri

error is overruled.

Judgment affirmed.

It is ordered that appellee recover from appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to said court to carry;,,....y°S4'

judgment into execution.

A certified copy of this entry shall constitute the mandate pursuanrf^

Rule 27 of the Rules of Appellate Procedure.

SEAN C. GALLAGHER, P.J., andCHRISTINE T. MeMONAGLE, J., CONCUR.

11,0656 40827

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