July 29 2011
DA 10-0541
IN THE SUPREME COURT OF THE STATE OF MONTANA
2011 MT 178
JOSHUA MICONE,
Petitioner and Appellant,
v.
DEPARTMENT OF PUBLIC HEALTH
AND HUMAN SERVICES,
Respondent and Appellee.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV 09-625(A)
Honorable Ted O. Lympus, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Shelly F. Brander, Kaufman, Vidal & Hileman, P.C., Kalispell, Montana
For Appellee:
Barbara B. Hoffmann, Department of Public Health and Human Services,
Helena, Montana
Submitted on Briefs: May 25, 2011
Decided: July 29, 2011
Filed:
__________________________________________
Clerk
Justice Michael E Wheat delivered the Opinion of the Court.
¶1 Joshua Micone (Joshua) appeals from an order of the Eleventh Judicial District Court,
Flathead County, affirming the Department of Public Health and Human Services’
(Department) determination that Joshua repay Medicaid benefits received between 2003 and
2006.
¶2 Joshua raises two issues on appeal:
¶3 Issue One: Did the District Court err in determining that the Hearing Officer did not
violate § 2-4-623(a), MCA, when he did not issue a decision within ninety days after the case
was deemed submitted?
¶4 Issue Two: Did the District Court correctly determine that substantial credible
evidence supported the Department’s finding that Jennifer Micone’s (Jennifer) interest in
Jump Investments was an available resource?
BACKGROUND
¶5 In January 2003, Joshua applied for Medicaid benefits for himself and his family by
completing a form that requires applicants to list all property which the applicant and/or a
member of the applicant’s household owns. Joshua did not report Jennifer’s interest in Jump
Investments, a family limited partnership, on the initial application or any subsequent
applications. Unaware of Jennifer’s interest in Jump Investments, 1 the Department approved
Joshua’s application for Medicaid benefits.
1
Jennifer had been a limited partner in Jump Investments since the mid 1990’s.
2
¶6 The Micone family received Medicaid benefits, totaling $22,657.32, from January
2003 through May 2006. In June 2006, the Department notified Joshua that his household
was ineligible for Medicaid benefits paid over the past three years because Jennifer’s interest
in Jump Investments exceeded the available resource limit to qualify for Family Medicaid.
The Department demanded that Joshua repay the $22,657.32 in benefits paid.
¶7 Joshua contested the demand for repayment. A Hearing Officer from the Board of
Public Assistance of the State of Montana (Board) conducted a hearing in March 2008. The
Hearing Officer issued his decision in February 2009, finding that Jennifer’s interest in Jump
Investments was a countable and available resource. Joshua appealed and the Board upheld2
the Hearing Officer’s findings in April 2009. Joshua petitioned for judicial review, and the
District Court affirmed the Board in September 2010.
¶8 Joshua appeals.
STANDARD OF REVIEW
¶9 Actions brought before the Board are subject to the Montana Administrative
Procedure Act (MAPA), Title 2, chapter 4, MCA. The applicable standard of review is set
forth in § 2-4-704(2), MCA:
The court may not substitute its judgment for that of the agency as to the
weight of the evidence on questions of fact. The court may affirm the decision
of the agency or remand the case for further proceedings. The court may
reverse or modify the decision if substantial rights of the appellant have been
prejudiced because: (a) the administrative findings, inferences, conclusions,
2
The parties dispute whether the Hearing Officer issued a decision or a proposal for decision and
whether, subsequently, the Board affirmed the Hearing Officer or adopted the Hearing Officer’s
proposal. This dispute forms the basis of Issue One.
3
or decisions are: (i) in violation of constitutional or statutory provisions . . .
(v) clearly erroneous in view of the reliable, probative, and substantial
evidence on the whole record. . . .
¶10 We review findings of fact for clear error and conclusions of law for correctness. In
re Hofer, 2005 MT 302, ¶¶ 13-14, 329 Mont. 368, 124 P.3d 1098. A finding is clearly
erroneous if it is not supported by substantial evidence; if substantial evidence supports it,
but the tribunal misapprehended the effect of the evidence; or if, after reviewing the record,
this Court is left with the definite and firm conviction that a mistake has been committed. Id.
at ¶ 13. The above standard applies to both the district court’s review of the administrative
decision and this Court’s subsequent review of the district court decision. Id. at ¶ 14.
DISCUSSION
¶11 Issue One: Did the District Court err in determining that the Hearing Officer did not
violate § 2-4-623(a), MCA, when he did not issue a decision within ninety days after the case
was deemed submitted?
¶12 The role of the judge in statutory interpretation “is simply to ascertain and declare
what is in terms or in substance contained therein, not to insert what has been omitted or to
omit what has been inserted.” Section 1-2-101, MCA. If the plain language of the statute is
clear and unambiguous, no further interpretation is required. Miller v. Eighteenth Jud. Dist.
Ct., 2007 MT 149, ¶ 38, 337 Mont. 488, 162 P.3d 121. “Where there are several provisions
or particulars, such a construction is, if possible, to be adopted as will give effect to all.”
Section 1-2-101, MCA. Section 2-4-623, MCA, provides that “a final decision must be
issued within 90 days after a contested case is considered to be submitted for a final decision
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unless, for good cause shown, the period is extended for an additional time not to exceed 30
days.”
¶13 The parties do not dispute the timeline of events. The Hearing Officer held a
contested hearing on March 12, 2008. Following the hearing, the Hearing Officer issued an
amended briefing schedule, requiring that the parties submit initial briefs on or before April
18, 2008, and response briefs on or before May 2, 2008. Micone filed his response brief on
May 2, 2008. The Hearing Officer did not issue a decision until nine months later on
February 3, 2009. The Board heard oral argument from the parties on March 19, 2009, and
issued its decision on April 6, 2009, eighteen days after oral argument.
¶14 In District Court, Micone argued that the Hearing Officer’s decision was void
because, in violation of § 2-4-623, MCA, he did not issue the decision within ninety days
after the case was considered submitted. The Department conceded that the Hearing Officer
did not comply with § 2-4-623, MCA, but argued that the District Court could not reverse
unless Micone’s substantial rights had been prejudiced as a result of the delay. The District
Court determined the parties had incorrectly interpreted what constitutes a “final decision”
under § 2-4-623, MCA. Specifically, the District Court concluded that pursuant to § 2-4-
621, MCA, the Hearing Officer’s decision constituted a “proposal for decision,” which was
not subject to § 2-4-623, MCA. Further, the District Court concluded the Board’s adoption
of the Hearing Officer’s “proposal for decision” constituted the “final decision” for purposes
of § 2-4-623, MCA. The District Court affirmed the Board because it had issued its order
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adopting the Hearing Officer’s proposal within ninety days after the matter was deemed
submitted.
¶15 On appeal, Micone asserts that the Hearing Officer’s decision is the “final decision”
because the Board’s order did not include findings of fact and conclusions of law, as required
by § 2-4-623, MCA, and both the Board and Hearing Officer utilized terminology treating
the Hearing Officer’s decision as the “final decision.” Further, Micone alleges the District
Court exceeded the scope of judicial review by upholding the Board’s decision on different
grounds than that advocated by the Department.
¶16 When a majority of the agency officials who are responsible for rendering the final
decision in a contested case have not heard the case, the decision, if it is adverse to a party
other than the agency, may not be issued until the parties have received a “proposal for
decision” and have been given an opportunity to file exceptions and present briefs and oral
argument to the decision-rendering agency officials. Sections 2-4-621(1) and (3), MCA.
The “proposal for decision” becomes the “final decision” unless, within fifteen days of the
hearing officer’s mailing the “proposal for decision” to the parties, the Board receives a
request for review. Admin. R. M. 37.5.331(7)-(8) (2007). When the Board receives a timely
request for review, it is considered the “agency” under § 2-4-621, MCA, who renders the
“final decision.” Admin. R. M. 37.5.331(4)(c) (2007).
¶17 Micone’s argument that the Board’s decision is not the final decision because it does
not contain findings of fact and conclusions of law, as required by § 2-4-623(1)(a), MCA, is
unpersuasive because § 2-4-621(3), MCA, provides that the Board may adopt the “proposal
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for decision” as its final order. The Board did exactly this, as evinced in its order: “Having
considered the record in this case, the [Board] hereby unanimously affirms the decision the
Hearing Officer rendered on February 3, 2009.” Further, the terminology used by the parties
does not dictate that the Hearing Officer’s decision is the “final decision.” Although the
Board did “affirm,” rather than “adopt” the Hearing Officer’s decision, the use of incorrect
terminology does not alter the plain meaning of §§ 2-4-621 and -623, MCA, which, as
applied here, require that the Board’s decision constitute the “final decision.”
¶18 In support of his argument that the District Court exceeded the scope of judicial
review, Micone cites Hilands Golf Club v. Ashmore, which holds that, pursuant to § 2-4-
702(1)(b), MCA, a party generally cannot raise an issue for the first time on appeal unless
good cause is shown. Hilands Golf Club v. Ashmore, 2002 MT 8, ¶ 21, 308 Mont. 111, 39
P.3d 697. This rule has no application here. Micone challenged the timeliness of the
Hearing Officer’s order before the Board. Thus, the District Court was not considering a
new issue raised for the first time on appeal, but, rather, based its decision upon different
grounds than that advocated by the Department. The District Court did not exceed the scope
of judicial review. We conclude the District Court correctly concluded that the time
requirement imposed by § 2-4-623, MCA, was not violated in this case.
¶19 Issue Two: Did the District Court correctly determine that substantial credible
evidence supported the Department’s finding that Jennifer’s interest in Jump Investments
was an available resource?
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¶20 Only resources that are “available” and “countable” are considered in determining
Medicaid eligibility. Hofer, ¶ 5. Here, both the Hearing Officer and District Court relied
upon the Family Medicaid Manual in concluding that Jennifer’s share was an available
resource. The manual provides that a resource is available when it is actually available to the
individual or the individual has a legal or equitable interest in the property or asset and has
the legal or equitable ability to access funds or to convert non-cash property into cash,
regardless of whether the individual has the practical ability to do so.
¶21 Jennifer’s grandparents, John and Darlene, established Jump Investments, a limited
family partnership, in 1994, with the purpose of establishing an estate planning tool for
themselves and providing an educational fund for their children and grandchildren. The
Certificate and Articles of Limited Partnership provide, in relevant part:
[A] Limited Partner may at any time sell, transfer, or assign its Limited
Partnership interest; provided, however, that each of the remaining Limited
Partners shall have a right of first refusal to purchase a proportionate share of
said Limited Partnership interest on the same terms offered by the Limited
Partner disposing of his interest. . . . This Limited Partnership is formed by a
closely-held group who know and trust one another . . . . The limited
Partnership interest have not, nor will be registered or qualified under federal
or state securities laws. The Limited Partnership interest may not be offered
for sale, sold, pledged or otherwise transferred unless so registered or
qualified, or unless an exemption from registration or qualification exists.
(Emphasis added.)
¶22 Jump Investments’ net assets for 2003 to 2006 were approximately $411,000 in 2003;
$391,000 in 2004; $418,000 in 2005; and $428,000 in 2006. Jennifer, as one of the twelve
limited partners, is entitled to an 8.1666% share of the partnership’s total value. Jennifer has
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never offered to sell her share to other members of the partnership, and it is unknown
whether any member of the partnership would have any interest or resources to purchase her
share. The cost of registering or qualifying Jennifer’s share according to federal and state
securities laws is undetermined.
¶23 At the contested hearing, Tammy Harmon (Harmon), a representative from the
Flathead County Office of Public Assistance, testified that Jennifer’s interest in Jump
Investments constituted an available resource, which exceeded the then $3,000 resource
limit, because it was saleable and worth more than $3,000. The Office of Public Assistance
determined Jennifer’s share was worth $9,799.92 by taking approximately half of the net
value of Jump Investments ($200,000) and multiplying it by Jennifer’s interest in the
partnership (8.1666%) and discounting that amount in order to account for Jennifer’s lack of
control over the partnership (40%).3 Ken Kettinger (Kettinger), Jump Investments’
accountant, testified that Jennifer’s share is saleable, but has a market value of zero;
however, Kettinger could not determine whether the Department’s valuation was “a good or
bad number.” The Hearing Officer found that the Department reasonably valued Jennifer’s
share and “likely erred, but only on the side of caution.” The Hearing Officer noted that
although Kettinger opined that Jennifer’s share has a market value of zero, Kettinger
admittedly has no experience or expertise in determining the value of a share like Jennifer’s.
3
The IRS allows discounts of 20% to 40% for minority interests.
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¶24 On appeal, Micone asserts the District Court and Hearing Officer erroneously relied
upon the Department’s Family Medicaid Manual in valuing Jennifer’s interest because her
interest is not available due to insurmountable financial hurdles that prevent her from
marketing it. In addition, Micone argues no evidence exists supporting the Department’s
use of the 40% discount or $200,000 net worth in valuing Jennifer’s interest.
¶25 This Court has recognized that the Department’s Medicaid Manual is adopted and
incorporated by reference in Admin. R. M. 37.82.101. Accordingly, provisions of the
Medicaid Manual have the force of law. See Timm v. Mont. Dept. of Health & Human
Services, 2008 MT 126, ¶¶ 34-36, 343 Mont. 11, 184 P.3d 994; see also Grover v.
Cornerstone Constr. N.W., Inc., 2004 MT 148, ¶ 13, 321 Mont. 477, 91 P.3d 1278 (“A code
or standard . . . must have been adopted by a governmental agency so as to have the force of
law . . . .”). The Hearing Officer and District Court did not err in utilizing the Family
Medicaid Manual in evaluating whether Jennifer’s interest constituted an available resource.
¶26 Further, substantial credible evidence exists, which supports the Hearing Officer’s
findings that Jennifer’s interest has a fair market value in excess of $3,000. The Hearing
Officer considered testimony from Harmon and Kettinger regarding the value of Jennifer’s
interest and adopted Harmon’s valuation, which was based upon a discount employed by the
IRS and a conservative estimate of Jump Investments’ net worth. As the District Court
noted, § 2-4-704(2), MCA, prohibits a court from substituting its judgment for that of the
agency as to the weight of the evidence on questions of fact. McDonald v. Dept. of Envtl.
10
Quality, 2009 MT 209, ¶ 38, 351 Mont. 243, 214 P.3d 749. Micone has not presented any
evidence, at the hearing or otherwise, indicating the Department’s valuation method was
clearly erroneous. This Court will not substitute its judgment for that of the Hearing
Officer’s as to the weight of witness testimony. We conclude the District Court did not err in
determining that the Hearing Officer’s findings were not clearly erroneous.
CONCLUSION
¶27 For the foregoing reasons, we affirm.
/S/ MICHAEL E WHEAT
We Concur:
/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ BRIAN MORRIS
/S/ JIM RICE
Justice Patricia O. Cotter dissents.
¶28 I dissent. I would conclude that the final decision of the Board was untimely. I would
therefore reverse the decision of the District Court and remand with instructions to vacate
and dismiss as void the untimely decision. Because I would do so, I would not reach Issue
Two.
¶29 Section 2-4-623(1)(a), MCA, provides in pertinent part: “a final decision must be
issued within 90 days after a contested case is considered to be submitted for a final decision
unless, for good cause shown, the period is extended for an additional time not to exceed 30
days.” As the Court notes at ¶ 13, the timeline is not in dispute. A contested case hearing
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was held on March 12, 2008. The Hearing Officer then asked for briefs from the parties, the
final of which was filed on May 2, 2008. At this point, with all the evidence and arguments
having been presented, I maintain the case must be deemed submitted. The decision of the
Hearing Officer was entered on February 3, 2009, 276 days later. What the Court in its
Opinion deems the “final decision” of the Board was entered on April 6, 2009, 339 days after
the case was submitted. Regardless of whether the Hearing Officer’s decision of February 3
or the Board’s decision of April 6 is considered the “final” decision, it was clearly issued
more than 90 days after the contested case was submitted, and is therefore untimely.
¶30 Without saying so expressly, the Court has impliedly ruled that the 90-day limitation
set forth in § 2-4-623, MCA, did not commence to run until after the Board heard oral
arguments. (The Board’s decision was issued “eighteen days after oral argument” (¶ 13); the
Board “issued its order adopting the Hearing Officer’s proposal within ninety days after the
matter was deemed submitted” (¶ 14).). In other words, we do not deem a matter “submitted
for a final decision” until the hearing officer’s decision is reviewed by the officials of the
agency who are to render the final decision—here, the Board of Public Assistance.
Respectfully, this cannot be what MAPA intends. If this be the rule, then a hearing officer
can sit on a case for 276 days, as here—or 776 days for that matter—and no timeframes will
even commence to run until the hearing officer’s decision is in the hands of agency officials
for final decision.
¶31 The question of when a case is deemed “submitted for a final decision” was raised
recently in Knowles v. State ex rel. Lindeen, 2009 MT 415, 353 Mont. 507, 222 P.3d 595.
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The petitioner in that case argued that the decision of the Commissioner of Securities and
Insurance was untimely under § 2-4-623(1)(a), MCA, because it was issued well beyond the
90-day timeframe. As I posit here, Knowles argued that his case was “submitted for a final
decision” once the parties submitted their post-hearing briefs to the Hearing Examiner, and
that a decision by the Commissioner rendered more than 90 days after this date was untimely
and therefore void. We did not reach the merits of his argument, however, because the
contested case at issue was submitted for hearing before the 90-day requirement was adopted
and enacted into law in 2005 with the passage of SB 260. Knowles, ¶ 27.
¶32 The legislative history of SB 260 reveals that there was substantive debate about the
introduction of the 90-day limitation. The sponsor of the bill, Senator Gary Perry, first
proposed language providing: “[a] final decision must be issued within 90 days after a
contested case hearing unless, for good cause shown, the period is extended for an additional
time not to exceed 90 days.” Mont. S. 260.02, 59th Legis., 2005 Reg. Sess. 1 (Jan. 20,
2005). However, on April 15, 2005, Governor Schweitzer proposed several amendments to
SB 260. His letter proposing amendments provides in pertinent part:
Under my amendments, a written decision must be issued within 90 days after
a contested case is deemed submitted for decision to the final decision maker.
As the bill stands in its current form, the 90 day period begins to run from the
time of the close of the contested case hearing. Because many procedural
steps – such as the filing of exceptions and subsequent oral argument – may
occur after the close of the hearing, and because scheduling difficulties at
times prolong the completion of these steps, it is more realistic to require that
the clock for issuance of the written decision begin to run after the case is
deemed submitted, rather than at the close of the hearing.
Subsequently, Greg Petesch of Legislative Services proposed inserting language to the effect
13
that a final decision must be issued within 90 days after a case “is considered submitted for
decision to the final decisionmaker”; however, this language was not adopted. Rather, SB
260, as enacted, requires that a final decision must be issued “within 90 days after a
contested case is considered to be submitted for a final decision.”
¶33 Thus, while the legislative history sheds some light on the contours of the debate and
provides historical context, SB 260 as ultimately adopted does not clarify at what point “a
contested case is considered to be submitted for a final decision.” Is it after the contested
case hearing, after all post-hearing briefs and arguments have been completed and submitted
to the hearing officer, or is it only after the full agency receives the decision of the hearing
officer? Section 1-2-102, MCA, instructs that, in construing a statute, “the intention of the
legislature is to be pursued if possible.” I submit that the intent of the Legislature with
respect to when the 90-day timeframe commences remains unclear. This being so, we must
construe the statute “with a view to effect [its] objects and to promote justice.” Section 1-2-
103, MCA.
¶34 Justice is not served when the time for a decision in administrative matters is
completely open-ended. If the timeframe does not commence until after officials making the
final decision receive the decision of the hearing officer, then that timeframe will be
completely open-ended, as there will be absolutely no constraints or urgency imposed on the
hearing officer to make a timely decision. To promote justice and ensure prompt
administrative decisions, I therefore submit that “a contested case is considered to be
submitted for a final decision” once a contested case hearing has concluded and all post-
14
hearing briefs and arguments have been submitted in accordance with the schedule
implemented by the hearing officer. At this point, the 90-day timeframe should commence
to run (or 120 days with extension). It bears noting that such a construction would not come
as a surprise to DPHHS, which—as the Court notes at ¶ 14 of its Opinion—conceded in
these proceedings that the Hearing Officer failed to comply with § 2-4-623, MCA.
¶35 Here, the decision of the Hearing Officer was not entered until 276 days after all post-
hearing briefs were submitted, and the decision of the Board came 63 days later. I would
conclude the decision was therefore untimely, and would reverse and remand with
instructions to vacate the Board’s decision. I dissent from the Court’s refusal to do so.
/S/ PATRICIA COTTER
Justice James C. Nelson joins the Dissent of Justice Patricia O. Cotter.
/S/ JAMES C. NELSON
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