Ramey v. Reinertson

                                                                    F I L E D
                                                              United States Court of Appeals
                                                                      Tenth Circuit
                                    PUBLISH
                                                                      OCT 4 2001
                   UNITED STATES COURT OF APPEALS
                                                                 PATRICK FISHER
                                                                           Clerk
                               TENTH CIRCUIT



 LORY ANN RAMEY,

       Plaintiff-Appellee,

 RENEE M. FARMER,

       Plaintiff-Cross-Appellant,

 SHERRY S. SHUPE,                              Nos. 00-1121 & 00-1143

       Intervenor-Appellee,

 v.

 KAREN REINERTSON, in her
 official capacity as Executive Director
 of the Colorado Department of Health
 Care Policy and Financing,

       Defendant-Appellant-Cross-
       Appellee.


        APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF COLORADO
                     (D.C. NO. 98-WM-1261)


Ann M. Hause, Assistant Attorney General, Denver, Colorado (Ken Salazar,
Attorney General, with her on the briefs), for Appellant.

R. Eric Solem, Solem, Mack & Steinhoff, P.C., Denver, Colorado (David F.
Steinhoff, Solem, Mack & Steinhoff, P.C., Denver, Colorado; Mary Helen Miller,
Boulder, Colorado, with him on the briefs), for Appellees and Cross-Appellant.
Before HENRY * and PORFILIO , Circuit Judges, and        OWEN, District Judge.   **




HENRY , Circuit Judge.


      This appeal requires our examination of the Social Security Act (“Act”), in

particular those provisions relating to the Medicaid program, established in 1965,

see 42 U.S.C. § 1396a. We recognize, as have other courts, that “[t]he Social

Security Act is among the most intricate ever drafted by Congress. Its Byzantine

construction, as Judge Friendly has observed, makes the Act ‘almost unintelligible

to the uninitiated.’” Schweiker v. Gray Panthers, 453 U.S. 34, 43 (1981)

(hereinafter Gray Panthers) (quoting Friedman v. Berger, 547 F.2d 724, 727 n.7

(2d Cir. 1976)).

      Before us are essentially two issues to determine: (1) whether a particular

section of the Act, 42 U.S.C. § 1396a(k) (1986), though repealed effective August

10, 1993, still applies to trusts established before that date and (2) whether

recipients of Supplemental Security Income for the Aged, Blind and Disabled

(“SSI”) are also entitled to Medicaid benefits under Colorado’s medical assistance



      *
           Judge Henry vouched in for oral arguments.
      **
         The Honorable Richard Owen, Senior United States District Judge for
the Southern District of New York, sitting by designation.

                                         -2-
program. We have jurisdiction pursuant to 28 U.S.C. § 1331 (2001) and, for the

reasons stated below, affirm.



                                I. BACKGROUND

      For purposes of clarity, we provide first a brief discussion of the relevant

provisions of the Act, namely the Medicaid program and the SSI program.



      A. Medicaid Program

      The Medical Assistance program, commonly known as “Medicaid,” “is a

cooperative federal-state venture designed to afford medical assistance to persons

whose income and resources are insufficient to meet the financial demands of

necessary care and services.” New Mexico Dep’t of Human Servs. v. Department

of Health & Human Servs. Health Care Fin. Admin., 4 F.3d 882, 883 (10th Cir.

1993). Under this federal program administered by the states, participating states

receive partial reimbursement for the costs of providing medical services as well

as reimbursement for the costs of administering the program.

      Each participating State develops a plan containing reasonable
      standards . . . for determining eligibility for and the extent of medical
      assistance. An individual is entitled to Medicaid if he fulfills the
      criteria established by the State in which he lives. State Medicaid
      plans must comply with requirements imposed both by the Act itself
      and by the Secretary of Health and Human Services [“Secretary of
      HHS”] . . . .


                                         -3-
Gray Panthers, 453 U.S. at 36-37 (internal quotation marks and citations omitted)

(emphasis added). Participation in the program is optional, see Colorado Health

Care Ass’n v. Colorado Dep’t of Social Servs., 842 F.2d 1158, 1164 (10th Cir.

1988) (“While participation in the Medicaid program is optional, once a State

elects to participate, it must comply with federal statutory requirements.”), and

Colorado is currently a participant in the Medicaid program. See Hern v. Beye,

57 F.3d 906, 913 (10th Cir. 1995) (observing that “because Colorado has decided

to participate and accept federal Medicaid funds, it must do so on the terms

established by Congress”).

      B. SSI Program

      Prior to 1972, the SSI program did not exist. Instead, the Act provided for

four welfare programs known as Old Age Assistance, Aid to the Blind, Aid to the

Permanently and Totally Disabled, and Aid to Families with Dependent Children

(“AFDC”). See Schweiker v. Hogan, 457 U.S. 569, 573 n.2 (1982). In 1972,

Congress attempted to streamline these various programs, combining the first

three into a new program known as Supplemental Security Income for the Aged,

Blind and Disabled. See Gray Panthers, 453 U.S. at 38 (noting that “Congress

replaced three of the four categorical assistance programs with [SSI]”). The

purpose of the newly created program was to afford cash assistance for basic

necessities (but not medical expenses) to disabled persons who met the resource


                                         -4-
eligibility requirements. See Miller v. Ibarra, 746 F. Supp. 19, 23 (D. Colo.

1990).

         The creation of SSI, however, engendered concern because “Congress

imposed the requirement that all recipients [of] SSI . . . were entitled to

Medicaid.” Gray Panthers, 453 U.S. at 38. This

         portended increased Medicaid obligations for some states . . . .
         Congress feared that these States would withdraw from the
         cooperative Medicaid program rather than expand their Medicaid
         coverage in a manner commensurate with the expansion of [SSI].
         [I]n order not to impose a fiscal burden on these States or discourage
         them from participating [in Medicaid], Congress offered what has
         become known as the § 209(b) option[:] Under it, States could elect
         to provide Medicaid assistance only to those individuals who would
         have been eligible under the state Medicaid plan in effect on January
         1, 1972 [i.e., before SSI]. States thus became either SSI States or §
         209(b) States depending on the coverage that they offered.

Id. (internal quotation marks and citations omitted). Colorado is a SSI state. See

Colo. Rev. Stat. § 26-4-201(1)(i) (1999).

         Under SSI, states, at their option, may provide assistance not only to the

“categorically needy,” but also to the “optionally categorically needy,” who are

those applicants eligible for SSI but are not receiving it or who are ineligible for

SSI but meet other statutory criteria. See New Mexico Dept. of Human Servs., 4

F.3d at 883. For instance, one of the groups covered under Colorado law are

persons in institutions, provided the applicant meets the specified income level.

See id. § 26-4-301(1)(g).


                                           -5-
      C. Trusts

       “In structuring the Medicaid program, Congress chose to direct [the]

limited funds to persons who were most impoverished . . . ..” Mattingly v.

Heckler, 784 F.2d 258, 266 (7th Cir. 1986). Similarly, Congress created the SSI

program “to guarantee a minimum subsistence income level for aged, blind, and

disabled persons.” White v. Apfel, 167 F.3d 369, 376 (7th Cir. 1999); see also

Reed v. Heckler, 756 F.2d 779, 781 n.1 (10th Cir. 1985). Accordingly, eligibility

for both Medicaid and SSI benefits is a function of the applicant’s “available”

assets. If the applicant’s “available” assets exceed a statutory ceiling, then

coverage is denied. See 42 U.S.C. § 1396a(a)(10)(I)(II).

      In an effort to maximize their income that would not tally as an “available”

asset, many applicants for Medicaid and SSI tried to “shelter,” or shield, their

assets. One common instrument for sheltering was an irrevocable trust. Not

surprisingly, Congress responded to the use of this technique with condemnation.

For example, in 1986, Congress reiterated its intent that Medicaid was designed to

provide basic medical care for those without sufficient income or resources to

provide for themselves and thus passed 42 U.S.C. § 1396a(k).

      Section 1396a(k) was known as the MQT statute, “MQT” being an acronym

for Medicaid qualifying trust. The statute defined MQT as


                                         -6-
      a trust, or similar legal devise, established (other than by will) by an
      individual (or an individual’s spouse) under which the individual may
      be the beneficiary of all or part of the payments from the trust and the
      distribution of such payments is determined by one or more trustees
      who are permitted to exercise any discretion with respect to the
      distribution to the individual.

42 U.S.C. § 1396a(k)(2).

      With the passage of § 1396a(k), MQTs were no longer a permissible means

to shelter assets for purposes of Medicaid eligibility. Section § 1396a(k) clarified

that the amount “available” to an applicant for purposes of determining Medicaid

eligibility included

      the maximum amount of payments that may be permitted under the
      terms of the trust to be distributed to the grantor, assuming the full
      exercise of discretion by the trustee or trustees for the distribution of
      the maximum amount to the grantor.

Id. § 1396a(k)(1).

      In the years that followed, Congress remained true to its conviction that

MQTs were an impermissible means of sheltering assets for purposes of Medicaid

eligibility. In fact, in 1993, § 1396a(k) was repealed by Congress and replaced by

another statute even less forgiving of such trusts. See 42 U.S.C. § 1396p(d)

(1993). This statute added stringent criteria regarding the treatment of MQTs

such as the inclusion of the corpus and proceeds of various irrevocable trusts as

countable resources. See H.R. Rep. No. 103-111, at 207-08 (1993).




                                         -7-
      D. Ms. Ramey, Ms. Farmer, and Ms. Shupe

      In the instant case, we are concerned with the eligibility of three persons

for Medicaid benefits who are also in possession of certain trusts established

before August 10, 1993. The Colorado Department of Health Care Policy and

Financing (“Colorado Department”) contends that the trusts of Ms. Ramey, Ms.

Farmer, and Ms. Shupe are MQTs, which therefore disqualifies them from

receiving Medicaid benefits. The following material facts are not in dispute.



             1. Lory Ann Ramey

      Ms. Ramey, currently residing in an assisted living facility, first qualified

as a categorically eligible SSI recipient – and therefore a Medicaid recipient as

well – in 1992. See Gray Panthers, 243 U.S. at 38 (noting that all SSI recipients

are also entitled to Medicaid). On July 22, 1992, Ms. Ramey’s father, Donald

Ramey, established an irrevocable trust for her benefit and for the express

purpose of protecting her from losing her SSI and Medicaid benefits. The trust’s

assets later grew when Ms. Ramey was awarded proceeds during divorce

proceedings with her spouse.

      In 1994, the Social Security Administration (“SSA”) reviewed Ms. Ramey’s

trust and found that it met the SSA’s requirements so that Ms. Ramey was still

entitled to SSI – and therefore Medicaid – benefits. In 1998, however, the


                                         -8-
Colorado Department, upon its own review of the trust (which by then had assets

totaling approximately $90,000), determined that the trust was a MQT. The

Colorado Department thereby terminated Ms. Ramey’s Medicaid benefits

beginning May 31, 1998.



             2. Renee M. Farmer

      Ms. Farmer, who currently resides in a full-service nursing home, created

an irrevocable “special needs” trust for her benefit on December 30, 1992, with

proceeds she received from an inheritance. In April 1996, she began to receive

Medicaid benefits. In 1997, the Colorado Department reviewed her trust and

determined that, because the trust’s assets were a countable resource for purposes

of Medicaid (i.e., the trust qualified as a MQT), Ms. Farmer was no longer

Medicaid eligible.



             3. Sherry S. Shupe

      Ms. Shupe’s situation is largely comparable to that of Ms. Ramey. In

January 1990, Ms. Shupe was found to be categorically eligible for SSI benefits

and therefore qualified for Medicaid benefits, too. Subsequently, during divorce

proceedings, the overseeing court issued an order creating a trust for the benefit

of Ms. Shupe. In January 1998, the Colorado Department concluded that the trust


                                        -9-
was a MQT and therefore terminated her Medicaid benefits effective August 31,

1998.



                                  II. PROCEDURE

        This case, which originated as an action for declaratory and injunctive

relief pursuant to 42 U.S.C. § 1983, has had a complicated procedural history.

Plaintiffs Ms. Ramey and Ms. Farmer (“plaintiffs”) and intervenor Ms. Shupe

(“intervenor”) appealed the termination of their Medicaid benefits by the

Colorado Department. 1 The district court granted the plaintiffs’ motion to amend

the complaint to a class action complaint, and two classes were subsequently

created. Subclass (a) consisted of individuals who had been denied Medicaid

benefits by the Colorado Department on the basis that they held MQTs. This

subclass included Ms. Farmer. Subclass (b) consisted of individuals who received

SSI benefits and who had been denied Medicaid benefits by the Colorado

Department, once again, because they held MQTs. This subclass included Ms.

Ramey and Ms. Shupe. For purposes of this appeal, we shall address the

plaintiffs and the intervenor by name, cognizant that they represent the interests

of the subclasses.




        There were various proceedings before an administrative law judge
        1

regarding Ms. Farmer’s trust that are not before this court.

                                         -10-
      Cross-motions for summary judgment were filed soon after class

certification. Upon the district court’s referral, the magistrate judge determined

that Ms. Ramey’s and Ms. Shupe’s trusts were not MQTs. More important, the

magistrate judge also determined that, because the Secretary of HHS evaluated

the two trusts and found both Ms. Ramey and Ms. Shupe eligible for SSI benefits,

they were automatically entitled to Medicaid benefits. See Herweg v. Ray, 455

U.S. 265, 268 (1982) (noting that a SSI state “is required to make Medicaid

assistance available to all recipients of SSI benefits”). Upon de novo review, the

district court agreed with the magistrate judge on the latter point. It declined,

however, to make any finding as to whether Ms. Ramey’s and Ms. Shupe’s trusts

were in fact MQTs.

      As for Ms. Farmer’s trust, the magistrate judge rejected Ms. Farmer’s

argument that her trust was a “special needs” trust exempt from calculation as a

resource under 20 C.F.R. § 416.1201(a). She then concluded that 42 U.S.C. §

1396a(k), though now repealed, was applicable to her trust and that her trust did

qualify as a MQT under the statute. Therefore, the Colorado Department properly

denied Ms. Farmer Medicaid benefits. The district court adopted this reasoning in

a subsequent order.

      This appeal concerns the Colorado Department’s contention that the district

court erred in its conclusions as to Ms. Ramey’s and Ms. Shupe’s trusts. The


                                        -11-
Colorado Department proffers three interpretations of the Act, two promulgated

by the Health Care Financing Administration (“HCFA”) Department of HHS, and

one by SSA, in support of its argument that the state must make Medicaid

eligibility determinations independent of the Secretary of HHS.

      Ms. Farmer also cross-appeals, arguing that the Colorado Department

improperly terminated her Medicaid benefits on the basis of 42 U.S.C. §

1396a(k). Ms. Farmer does not dispute that, under § 1396a(k), her trust would

qualify as a MQT. Rather, she simply asserts that, if § 1396a(k) had not been

applied, then her trust would not be counted toward her gross income and

therefore she would qualify for Medicaid benefits.

      For the reasons set forth below, we affirm the district court.



              III. MS. FARMER’S CROSS-APPEAL, NO. 00-1143

      We begin by addressing Ms. Farmer’s challenge as to whether trusts such as

hers, created before August 10, 1993, continue to be governed by 42 U.S.C. §

1396a(k), which was repealed in 1993 and replaced by 42 U.S.C. § 1396p(d). See

page 7, supra. According to Ms. Farmer, because Congress repealed § 1396a(k),

that provision cannot apply to her trust. In response, the Colorado Department

argues that Congress intended that § 1396a(k) be applied to all trusts established

on or before August 10, 1993, with the even more stringent criteria of § 1396p(d)


                                        -12-
to be reserved for trusts established after August 10, 1993. We hold that the

Colorado Department is correct.

      As discussed above, Congress enacted § 1396a(k) in 1986 in response to

the prevalent use of irrevocable trusts by affluent persons to qualify for Medicaid

benefits. See Cohen v. Commissioner of the Div. of Med. Assistance, 668 N.E.2d

769, 770-72 (Mass. 1996). The House Committee on Energy and Commerce

recommended passage of § 1396a(k), along with other provisions, with the

following statement:

      The Committee feels compelled to state the obvious. 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. When affluent individuals use Medicaid qualifying trusts
      [i.e., MQTs] and similar “techniques” to qualify for the program,
      they are diverting scarce Federal and State resources from low-
      income elderly and disabled individuals, and poor women and
      children. This is unacceptable to the Committee.

Id. at 772 (quoting H.R. Rep. No. 265, 99th Cong., 1st Sess., pt. 1, at 72 (1985)

(emphasis added).

      We believe it is clear that, when Congress amended the Medicaid

qualifications in 1993 to provide even more restrictive requirements on MQTs

(i.e., the repeal of § 1396a(k) and the enactment of § 1396p(d)), it did not at the

same time intend to abandon all eligibility requirements for trusts created before

August 10, 1993, and once again allow persons to “divert[] scarce Federal and

State resources.” Id. In other words, the 1993 amendments did not remove trusts

                                         -13-
dated before August 10, 1993 from the ambit § 1396a(k). See Cook v.

Department of Soc. Servs., 570 N.W.2d 684, 686-87 (Mich. Ct. App. 1997).

      Notably, the few cases that have addressed this very issue have reached the

same conclusion. See Williams v. Kansas Dep’t of Soc. & Rehab. Servs., 899

P.2d 452, 455 (Kan. 1995) (acknowledging that § 1396a(k) “was repealed in

1993, but it applies” to the trust at issue, created in 1992); Sanders v. Pilley, 684

So. 2d 460, 464 (La. Ct. App. 1996) (stating that trust created in 1991 was

reviewed “[u]nder the prior law applicable to this case,” i.e., § 1396a(k)); Cohen,

668 N.E.2d at 773 n.14 (holding that the 1986 Medicaid eligibility test, which

includes § 1396a(k), is still applicable to trusts created before August 10, 1993);

National Bank of Detroit v. Department of Soc. Servs., 614 N.W.2d 655, 659

(Mich. Ct. App. 2000) (applying the 1986 Medicaid eligibility test, which

includes § 1396a(k), to pre-August 10, 1993, trusts); Cook, 570 N.W.2d at 687

(holding that the 1986 Medicaid eligibility test, which includes § 1396a(k), is still

applicable to trusts created before August 10, 1993); Ronney v. Department of

Soc. Servs., 532 N.W.2d 910, 912 (Mich. Ct. App. 1995) (applying § 1396a(k) to

a trust established before August 10, 1993); In re Kindt, 542 N.W.2d 391, 396

(Minn. Ct. App. 1996) (applying § 1396a(k) to a trust created before August 10,

1993, even though “Congress repealed this provision in 1993”).

      In addition, the federal agency responsible for the Medicaid program, the


                                          -14-
Department of HHS, has indicated in its State Medicaid Manual “that trusts

established before August 1993 continue to be governed under the 1986 statutory

scheme.” Cook, 570 N.W.2d at 686 (citing the HCFA, Department of HHS, State

Medicaid Manual § 3257 (1995)). Accordingly, we affirm the district court’s

application of § 1396a(k), enacted in 1986, to trusts dated before August 10,

1993, and its determination that Ms. Farmer was ineligible for Medicaid benefits.


         IV. MS. RAMEY’S AND MS. SHUPE’S APPEAL, NO. 00-1121

      The Colorado Department asserts that the district court erred in determining

that, as SSI recipients, Ms. Ramey and Ms. Shupe were automatically entitled to

receipt of Medicaid benefits. According to the Colorado Department, it was

required to conduct its own independent review of assets held in trust by SSI

recipients to determine their Medicaid eligibility. We disagree.

      As noted above, Colorado is a SSI state. The Supreme Court has

emphasized that, in a SSI state, “the State is required to make Medicaid assistance

available to all recipients of SSI benefits.” Herweg, 455 U.S. at 268 (emphasis

added); see also DeJesus v. Perales, 770 F.2d 316, 319 n.3 (2d Cir. 1985) (noting

that “eligibility for SSI confers automatic eligibility for Medicaid”) (emphasis

added); Ross v. Giardi, 680 A.2d 113, 118 n.7 (Conn. 1996) (“recogniz[ing] that

states are statutorily required to provide [M]edicaid benefits . . . to those

individuals who are receiving SSI benefits”). Whether an applicant is entitled to

                                          -15-
SSI depends on whether he or she meets SSI’s eligibility requirements – an

inquiry that is different from a state’s Medicaid eligibility requirements.

      Colorado law does not refute the state’s responsibility for SSI recipients

with respect to Medicaid benefits. Indeed, Colo. Rev. Stat. § 26-4-201 states that:

      In order to participate in the [M]edicaid program, the federal
      government requires the state to provide medical assistance to certain
      eligible groups. . . . Subject to the availability of federal financial aid
      funds, the following are the individuals or groups that are mandated
      under federal law to receive [Medicaid] benefits under this article:

      ...

      (i)    Individuals receiving supplemental security income [i.e., SSI] .
             ...

Colo. Rev. Stat. § 26-4-201(I)(i) (emphasis added). The three arguments raised by

the Colorado Department, primarily based on instructions in the HCFA,

Department of HHS, State Medicaid Manual, do not lead us to conclude

otherwise.



      A. HCFA § 3215

      The HCFA is the administrative arm of the Department of HHS. In its

State Medicaid Manual, it instructs that, in order to determine eligibility for

Medicaid, payments from a MQT should be considered as an “available” asset –

even if the person is “categorically needy.” See Aplt’s Addendum at 112 (HCFA

§ 3215). Because SSI recipients fall into the “mandatory categorically needy”

                                          -16-
category, see 42 C.F.R. § 435.120, the Colorado Department argues that it is

obligated to review a SSI recipient’s MQT assets for Medicaid eligibility.

      To begin, we note that this court – as the Colorado Department points out –

must give deference to HCFA’s interpretations. See New Mexico Dep’t, 4 F.3d at

884-85. However, even though deference is required, we stress that the State

Medicaid Manual does not have the force and effect of law, nor is it binding on

this court, because it was not promulgated pursuant to the notice and comment

requirements of the Administrative Procedure Act, 5 U.S.C. § 553 (“APA”). See

5 U.S.C. § 553(b)(3)(A) (1996) (noting that notice and comment procedures of the

APA do not apply to “interpretative rules”). Thus, to the extent the State

Medicaid Manual conflicts with the purpose of the Act, we do not follow it. See

New Mexico Dep’t, 4 F.3d at 885.

      We hold that HCFA § 3215 does not dictate an independent review by the

Colorado Department of the MQTs of SSI recipients because to bind SSI

recipients to the instruction would controvert the goal of SSI – i.e., to assist low-

income individuals who are aged, blind, and disabled who qualify for benefits

through SSI’s own internal eligibility requirements. Our conclusion is buttressed

by the following points. First, the Colorado Department offers no case law

casting doubt upon the coextensiveness of SSI and Medicaid eligibility. See Gray

Panthers, 453 U.S. at 38 (emphasizing that all SSI recipients are also entitled to


                                         -17-
Medicaid benefits). Second, the subset of the “mandatory categorically needy”

includes persons other than SSI recipients – for example, AFDC participants,

certain aliens, expectant mothers, and newborns. HCFA § 3215, then, does not

become moot because it is not applicable to SSI recipients. It still may be applied

to other “mandatory categorically needy” individuals and to § 209(b) states.



      B. HCFA § 3259

      HCFA § 3259 provides that

      [u]nder the trust provisions in § 1917(d) of the Act, you must
      consider whether and to what extent a trust is counted in determining
      eligibility for Medicaid. . . . These instructions apply to eligibility
      determinations for all individuals, including cash assistance
      recipients and others who are otherwise automatically eligible and
      whose income and resources are not ordinarily measured against an
      independent Medicaid eligibility standard.

Aplt’s Addendum at 114 (HCFA § 3259) (emphasis added). Based on this

instruction, the Colorado Department contends that the MQTs of SSI recipients

are subject to an independent review by the state for Medical eligibility

determinations.

      Ms. Ramey and Ms. Shupe argue that this section simply does not apply to

SSI recipients because it does not mention SSI recipients. More importantly, we

note that this instruction effects only those “trusts established on or after August

10, 1993.” Id. at 113. Ms. Ramey’s and Ms. Shupe’s trusts were established


                                         -18-
prior to this date, and so HCFA § 3259 is clearly inapplicable.

      In addition, § 3259.1 cites section 1917(d), which applies to a variety of

circumstances beyond initial Medicaid eligibility, such as “spend down”

requirements for 209(b) States and “deeming” of income determinations for both

SSI and § 209(b) States.   See Hayes v. Stanton , 512 F.2d 133, 140 (7th Cir 1975)

(examining spend down requirements);      Herweg , 455 U.S. at 269 (reviewing

“deeming” of income requirements for optionally categorically needy). Clearly,

the instruction grants States the power to reasonably regulate and may have a

practical effect for a variety of situations and will apply to trusts established on or

after August 10, 1993. However, the instruction is of no consequence here.




      C. SSA Program Operations Manual System

      The SSA’s policy guidelines are provided in the Program Operations

Manual System (“POMS”), which is a set of policies issued by the SSA “to be

used in processing claims.” McNamar v. Apfel, 172 F.3d 764, 766 (10th Cir.

1999). 2 POMS No. SI 01730.048(E) is entitled “Procedure Development and

Documentation, Section 1634 States.” See id. at 117 (POMS No. SI


      2
        Like the HCFA’s interpretative rules above, we defer to the POMS
provisions unless we determine they are “arbitrary, capricious, or contrary to
law.” Id.

                                          -19-
01730.048(E)). It provides that the “existence of a Medicaid trust will result in a

referral of the case to the Medicaid State agency for a Medicaid eligibility

decision.” Id. According to the Colorado Department, this policy guideline

indicates that the state must conduct its own review of MQT trusts of SSI

recipients for purposes of Medicaid, regardless of what the Secretary of HHS has

determined with respect to SSI eligibility.

      We hold that the policy guideline has no effect on the instant case because,

as with HCFA § 3259, it applies only to trusts established after August 10, 1993.

See id. at 115. We also note that Colorado and the Secretary of HHS have

entered into a written agreement which specifies that the Department of HHS

shall “[m]ake determinations . . . of Medicaid eligibility on behalf of the State” of

Colorado. See Aplt’s App. vol. I, at 523-24 (agreement between the Secretary of

HHS and Colorado). Finally, we can find nothing in Colorado’s statutes to

support the Department’s arguments, but only to undercut them.     See Colo. Rev.

Stat. 26-4-106(1) (“Local social security offices also determine eligibility for

medicaid benefits at the same time they determine eligibility for supplemental

security income”).   To the extent that the POMS No.   SI 01730.048(E) conflicts

with the Act’s requirement that SSI recipients are entitled to Medicaid benefits,

the Act prevails. We agree with the district court that because Ms. Ramey and Ms.

Shupe are undisputedly SSI recipients, they are entitled to Medicaid benefits from


                                         -20-
the State of Colorado.

                               III. CONCLUSION.

      For the reasons set forth above, we AFFIRM the district court’s order.




                                       -21-