IN THE MISSOURI COURT OF APPEALS
WESTERN DISTRICT
ANNA DANNA, )
)
Appellant, ) WD77213
)
vs. ) Opinion filed: December 2, 2014
)
MISSOURI DEPARTMENT OF )
SOCIAL SERVICES, FAMILY )
SUPPORT DIVISION, )
)
Respondent. )
APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI
THE HONORABLE ROBERT M. SCHIEBER, JUDGE
Before Division Two: Joseph M. Ellis, Presiding Judge,
Victor C. Howard, Judge and Mark D. Pfeiffer, Judge
Anna Danna (Claimant) appeals from the judgment of the circuit court reversing the
denial of nursing home benefits by the Director of the Missouri Department of Social Services,
Family Support Division (Division) and ordering the Division to approve her application for
benefits as of the date the State of Missouri was named as a primary beneficiary of an annuity
policy, which named Claimant and her husband as annuitants. Although the circuit court
reversed the Director‟s decision, Claimant challenges the date when her benefits were to
commence. As the party aggrieved by the Director‟s decision, Claimant filed an appellant‟s brief
claiming that the Director erred in denying her application for benefits. Rule 84.05(e). In her
sole point on appeal, Claimant contends that the Division erred in rejecting her application for
benefits, and the Director erred in affirming the rejection, because the Division acted in an
arbitrary, capricious, and unreasonable manner in not giving her prior notice or the opportunity
to change the beneficiary of the annuity. The circuit court‟s judgment is affirmed.
Factual and Procedural Background
Claimant moved into a nursing home on June 28, 2012, and on August 2, 2012, she
applied for MO HealthNet nursing home assistance. On January 8, 2013, the Missouri
Department of Social Services, Family Support Division rejected Claimant‟s application because
“countable resources exceeded the limits” for the program. Claimant appealed to the Director of
the Division pursuant to section 208.080, RSMo Cum. Supp. 2013, and a hearing officer
conducted a telephone hearing on April 5, 2013.
At the hearing, the Eligibility Specialist for the Division, who evaluated Claimant‟s
application, presented evidence that Claimant‟s husband, Mitchell Danna, owned an annuity
issued by Massachusetts Mutual Life Insurance Company, which named himself and Claimant as
annuitants. When Claimant moved into the nursing home in June 2012, the annuity policy had a
value of $31,204.68. At that time, the claimant and her husband owned jointly or separately non-
exempt resources, including the annuity policy, totaling $54,662.63. The spousal share was
$27,331.31, half the amount of total resources. In August 2012, when Claimant applied for
benefits, the annuity policy had a value of $30,004.50. At that time, Claimant and her husband
owned jointly or separately non-exempt resources, including the annuity policy, totaling
$45,904.24. Claimant‟s share of the couple‟s non-exempt resources at that time was $18,572.93,
after subtraction of the $27,331.31 spousal share.
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During her investigation of Claimant‟s eligibility, the Eligibility Specialist sent a written
request for interpretation of the annuity policy to the Income Maintenance Program and Policy
Department of the Division in November 2012. The Eligibility Specialist received a response
that the annuity was actuarially sound and provided for equal payments for the rest of the
annuitants lives but that the State of Missouri was not named as the contingent beneficiary upon
the death of both spouses. The response concluded that in its current form, the income stream of
the annuity was a countable resource. It further provided, “[I]f the Dannas were to add the state
of Missouri as the primary beneficiary using the correct statutory language, the income stream
would not be a countable resource.”
Claimant did not present any evidence at the hearing but requested the hearing record be
kept open for a period of time, which the hearing officer granted. On May 6, 2013, Claimant
sent the hearing officer a letter and several exhibits. One of the exhibits contained evidence that
as of April 2013, the State of Missouri was named as primary beneficiary of the annuity.
The Director of the Division issued a decision and order on May 21, 2013, affirming the
Division‟s rejection of Claimant‟s application. It determined that at the time Claimant moved
into the nursing home and during the time when her application for benefits was pending, the
annuity did not name the State of Missouri as primary beneficiary. Accordingly, the remaining
guaranteed payments due under the annuity were an available resource. Because Claimant‟s
available resources exceeded the $1000 maximum, she was ineligible for MO HealthNet
benefits. The Director also noted that since the Division‟s rejection of Claimant‟s application,
the State of Missouri appeared to have been named as primary beneficiary of the annuity so that
it may have become an exempt resource. It concluded that if so, Claimant likely would have
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become eligible for benefits as of the month when the State of Missouri was named as
beneficiary of the annuity.
Claimant filed an application for judicial review of the Director‟s decision with the
circuit court. The circuit court entered a judgment reversing the Director‟s decision and ordering
the Division to approve Claimant‟s application as of the date the State of Missouri was named as
a primary beneficiary of the annuity policy.1 This appeal by Claimant followed.
Standard of Review
When the circuit court reverses the decision of an administrative agency, the appellate
court reviews the agency‟s decision rather than the judgment of the circuit court. Vaughn v. Mo.
Dep’t of Soc. Servs., 323 S.W.3d 44, 46 (Mo. App. E.D. 2010). “The party aggrieved by the
agency‟s decision bears the burden of persuasion to demonstrate that the decision is erroneous.”
Id. The whole record is reviewed to determine if the agency‟s decision is: (1) in violation of
constitutional provisions; (2) in excess of the statutory authority or jurisdiction of the agency; (3)
unsupported by competent and substantial evidence upon the whole record; (4) unauthorized by
law for any other reason; (5) made upon unlawful procedure or without a fair trial; (6) arbitrary,
capricious, unreasonable; or (7) involves an abuse of discretion. § 536.140.2; Vaughn, 323
S.W.3d at 46-7. Substantial evidence is competent evidence that, if believed, has probative force
upon the issues. Missouri Real Estate Appraisers Comm’n v. Funk, 306 S.W.3d 101, 106 (Mo.
App. W.D. 2010). “An administrative agency acts unreasonably and arbitrarily if its decision is
not based on substantial evidence.” Bd. of Educ. of City of St. Louis v. Mo. State Bd. of Educ.,
271 S.W.3d 1, 11 (Mo. banc 2008)(internal quotes and citation omitted). An agency action is
1
In her motion to amend judgment or alternatively for a new trial, Claimant stated that she reapplied for benefits the
same day the Director issued its decision and that the Division approved that application with an eligibility date of
February 1, 2013.
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capricious if it is whimsical, impulsive, or unpredictable. Id. “To meet basic standards of due
process and to avoid being arbitrary, unreasonable, or capricious, an agency‟s decision must be
made using some kind of objective data rather than mere surmise, guesswork, or gut feeling.” Id.
(internal quotes and citation omitted). The appellate court defers to the agency‟s factual
findings, but where the agency‟s decision is based upon an interpretation, application, or
conclusion of law, the decision is reviewed de novo. Vaughn, 323 S.W.3d at 47.
Point on Appeal
In her sole point on appeal, Claimant contends that the Division erred in rejecting her
application for benefits, and the Director erred in affirming the rejection, because the Division
acted in an arbitrary, capricious, and unreasonable manner in not giving her prior notice or the
opportunity to change the beneficiary of an annuity before rejecting her application.
“Medicaid is a „cooperative program under which the federal government reimburses
state governments for a portion of the costs of providing medical assistance to low income
recipients.‟” Vaughn, 323 S.W.3d at 47 (quoting In re Estate of Shuh, 248 S.W.3d 82, 84 (Mo.
App. E.D. 2008)). Missouri participates in Medicaid through a program called MO HealthNet. §
208.151.1(7), RSMo Cum. Supp. 2013; Vaughn, 323 S.W.3d at 47. “MO HealthNet provides
Medicaid benefits to eligible claimants for nursing home assistance.” Vaughn, 323 S.W.3d at 47
(citing § 208.151.1). The Division determines a claimant‟s eligibility for these benefits. §
208.010.1, RSMo Cum. Supp. 2013; Vaughn, 323 S.W.3d at 47. “To aid the exercise of its
statutory authority, the Division has also promulgated regulations.” Vaughn, 323 S.W.3d at 47
(citing § 207.020.1(5)).
In determining a claimant‟s eligibility for benefits, the Division must “consider and take
into account all facts and circumstances surrounding the claimant, including his or her living
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conditions, earning capacity, income and resources, from whatever source received….” §
208.010.1. See also Vaughn, 323 S.W.3d at 47. An individual claimant is ineligible for benefits
if she “[o]wns or possesses resources in the sum of one thousand dollars or more….” §
208.010.2(4). See also Vaughn, 323 S.W.3d at 47.
Section 208.212, RSMo Cum. Supp. 2007, governs the effect annuities have on Medicaid
eligibility. Specifically, it provides:
For purposes of MO HealthNet eligibility, the stream of income from investment
in annuities shall be excluded as an available resource for those annuities that:
(1) Are actuarially sounds as measured against the Social Security Administration
Life Expectancy Tables, as amended;
(2) Provide equal or nearly equal payments for the duration of the device and
which exclude balloon-style final payments;
(3) Provide the state of Missouri secondary or contingent beneficiary status
ensuring payment if the individual predeceases the duration of the annuity, in an
amount equal to the MO HealthNet expenditure made by the state on the
individual‟s behalf; and
(4) Name and pay the MO HealthNet claimant as the primary beneficiary.
§ 208.212.1.
Section 208.080 establishes a right and procedure of administrative appeal from the
Division‟s decision denying MO HealthNet benefits. Amos v. Estate of Amos, 267 S.W.3d 761,
763 (Mo. App. E.D. 2008). The statute requires the Director to “give the applicant for
benefits…reasonable notice of, and an opportunity for, a fair hearing.” § 208.080.7. At the
hearing, the applicant shall be entitled to introduce into the record “any and all evidence, by
witnesses or otherwise, pertinent to such applicant‟s or recipient‟s eligibility between the time he
or she applied for benefits or services and the time the application was denied.” Id. Similarly,
the Director‟s decision must be based on the facts as they existed on the date the application was
rejected. Specifically, section 208.080.6 provides:
If the division has rejected an application for benefits or services and the applicant
appeals, the decision of the director as to the eligibility of the applicant at the time
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such rejection was made shall be based upon the facts shown by the evidence
presented at the hearing of the appeal to have existed at the time the rejection was
made.
The Director‟s decision affirming the Division‟s rejection of Claimant‟s application for
benefits was supported by competent and substantial evidence and was not arbitrary, capricious,
or unreasonable. Claimant moved into a nursing home on June 28, 2012, and applied for MO
HealthNet nursing home assistance benefits on August 2, 2012. The Division rejected her
application on January 8, 2013, because “countable resources exceeded the limits” for the
program. The evidence presented at the administrative hearing revealed that at the time
Claimant moved into the nursing home and during the time when her application was pending,
Claimant‟s husband owned an annuity naming both spouses as annuitants. When Claimant
moved into the nursing home, she owned jointly or separately resources totaling $52,662.63,
with the spousal share half that amount. As of the early August application date, Claimant
owned jointly or separately resources totaling $45,904.34. In accordance with section 208.212,
these totals properly included the remaining guaranteed payments under the annuity because the
State of Missouri was not named as primary beneficiary. Claimant presented evidence that the
beneficiary designation on the annuity had been changed as of April 2013. This designation,
however, occurred months after the Division‟s January 2013 rejection. Under section 208.080.6,
the Director‟s decision must be based on the facts as they existed on the date the application was
rejected. As the State of Missouri was not named as primary beneficiary when the Division
rejected Claimant‟s application, the Director was prohibited from considering the later
beneficiary designation change, and the annuity was properly counted as an available resource.
Because Claimant‟s available resources after subtraction of the spousal share exceeded the
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resource maximum, she was ineligible for benefits, and the Director properly affirmed the
Division‟s rejection of her application.
Claimant contends that the Division acted in an arbitrary, capricious, and unreasonable
manner in not giving her prior notice or the opportunity to change the beneficiary of the annuity
before rejecting her application. Specifically, she asserts that the Division failed to follow 13
CSR 40-2.010 when the Eligibility Specialist rejected her application without notification after
requesting an interpretation of the annuity and being advised that in its current form, the income
stream of the annuity was a countable resource but that if the Dannas added the State of Missouri
as a beneficiary, Claimant would be eligible for benefits. Thirteen CSR 40.2.010(1) provides:
Any person shall have the right to file an application included herein for any type
of assistance or service administered by the Family Support Division. The Family
Support Division shall inform the applicant of the types of assistance and services
which are available, the requirements of eligibility, and additional information
necessary, if any, to determine eligibility.
Claimant‟s argument, however, was not preserved for appellate review. At the
administrative hearing, the Division introduced the Eligibility Specialist‟s written request for
interpretation of the annuity and the response. Claimant, through her attorney, made no
argument about the interpretation of the annuity. In a letter to the hearing officer after the
hearing in which Claimant presented additional evidence, Claimant‟s attorney made the
following statement about the interpretation of the annuity policy: “The Eligibility Specialist
provided the interpretation of the policy to the applicant after the application was rejected. It
was mailed to the applicant on March 12, 2013, in preparation for the initial hearing date.” No
claim was made at the hearing or in the later letter, however, that the Division violated 13 CSR
40-2.010(1) by not informing Claimant that if she designated the State of Missouri as a
beneficiary, she would be eligible for benefits. Disposition of that claim would require findings
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of fact and conclusions of law that do not appear in the record. The appellate court will not set
aside an administrative action unless the agency has been given a prior opportunity to consider
the point. Dueker v. Mo. Div. of Family Servs., 841 S.W.2d 772, 776 (Mo. App. E.D. 1992). An
issue that has not been presented for determination at the administrative hearing is not preserved
for appellate review. Id. The point is denied.
The circuit court‟s judgment is affirmed.
_______________________________________
VICTOR C. HOWARD, JUDGE
All concur.
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