CATHERINE T. MACHUNIS
RHODE ISLAND DEPARTMENT OF HUMAN SERVICES, MELBA DEPENA AFFIGNE, DIRECTOR
County Superior Court
Plaintiff: Henry H. Katz, Esq.
Defendant: Gregory Hazian, Esq.
matter before the Court is an appeal from a decision of the
Department of Human Services (DHS) affirming the denial of
Catherine T. Machunis' (Mrs. Machunis) application for
Medical Assistance. The DHS Hearing Officer found that Mrs.
Machunis does not qualify for Medical Assistance benefits
because the value of the Trust Indenture (Trust) exceeds the
$4000 resource limit set forth in the DHS Medical Assistance
Policy Manual. Mrs. Machunis requests that this Court reverse
the decision of the DHS Appeals Office; remand the matter to
the DHS Appeals Office for entry of a decision granting the
appeal; or allow Mrs. Machunis to qualify for Medical
Assistance as of December 1, 2014. For the reasons set forth
below, this Court affirms the DHS decision. Jurisdiction is
pursuant to G.L. 1956 § 42-35-15.
Facts and Travel
Machunis applied for Long Term Care with the DHS in December
of 2014. (Admin. Hr'g (Hr'g) Decision 4, Jan. 19,
2016). The application, known as a DHS-2 Statement of Need,
requires an applicant to set forth all assets held
individually or in a trust. The application was completed and
it documented that Mrs. Machunis was the beneficiary of a
Trust executed on August 29, 1991. (Trust 1, Agency Ex. 9).
The Trust held certain assets, including bank accounts. DHS
ruled the assets held in the Trust totaled $78, 149.57.
(Hr'g Decision 4). On September 9, 2015, DHS sent a
notice denying Mrs. Machunis' application for Medical
Assistance benefits because the resources available to her
were in excess of the DHS resource limit of $4000. (Hr'g
Decision 4; Agency Ex. 4, Denial Notice).
the Agency's notice of denial, Mrs. Machunis filed a
timely request for a formal hearing (Request for a Hearing,
Oct. 7, 2015, Agency Ex. 1). A hearing was convened on
December 3, 2015 (Hr'g Decision 4). The issues discussed
at the hearing concerned the following three sections of the
Executive Office of Health and Human Services Medicaid Code
of Administrative Rules (MCAR): 0382.05.50 Trust Established
Prior to 8/11/93; 0382.50.05.05 Evaluating a Medicaid
Qualifying Trust; and 0382.50.15 Trust Evaluation Process.
The issue before the Hearing Officer was whether the Trust
should be counted as a qualifying resource in determining
Mrs. Machunis' eligibility for Medical Assistance.
Machunis appeared through her counsel and presented
testimony. (Hr'g Transcript (Tr.) 1, Agency Ex. 15). DHS
representatives also appeared at the hearing. Id. at
2. DHS presented evidence that the Trust is a Medicaid
Qualifying Trust established before August 11, 1993; the
amount available for distribution to Mrs. Machunis from the
principal is a resource; and, the amount available to Mrs.
Machunis as income is the amount that could have been
distributed to the beneficiary from the income. Id.
at 9. Mrs. Machunis' sole dispute with DHS was the
consideration of any money held in the Trust as a countable
resource. Id. at 14, 15.
was submitted to the Hearing Officer by Mrs. Machunis. The
evidence included a copy of a letter from Navigant Credit
Union listing three accounts that are associated with Mrs.
Machunis' Trust, and copies of banking statements that
detail interest accrued and notice of certificate of
maturity. Other exhibits included copies of the Medical
Assistance denial notice, the Trust, a Quit-Claim Deed, and a
copy of the response from DHS legal counsel to the Long Term
Trust authorizes the Trustee to pay for the needs and
expenses of Mrs. Machunis during her lifetime. (Trust 3,
Agency Ex. 9). The Trust further provides, in the event that
Mrs. Machunis becomes physically or mentally disabled due to
an illness, that the Trustee has the sole discretion to
distribute the amount that is deemed best for her care,
support, and education. Id. at 3, 4-5. Upon the
death of Mrs. Machunis, the Trustee would settle all estate
expenses and make equal payments of $5000 to each of Mrs.
Machunis' three grandchildren. Id. at 4.
the hearing, the Hearing Officer denied Mrs. Machunis'
request for relief based on her finding that the Trust assets
are a countable resource in excess of the resource limit of
$4000. (Hr'g Decision 5, 6). Prior to making her
determination, the Hearing Officer reviewed the testimony of
DHS and Mrs. Machunis' attorney. Id. at 4. The
Hearing Officer also analyzed the Trust, Mrs. Machunis'
Medical Assistance denial notice, DHS Senior Legal
Counsel's referral, and MCAR 0382.50.05 and
0382.50.05.05. Id. In doing so, the Hearing Officer
concluded that DHS was correct in determining that Mrs.
Machunis was ineligible because the assets held in her Trust
were over the resource level for Medical Assistance.
Id. at 6.
review of MCAR 0382.50.05, the Hearing Officer established
that the MCAR supported the proposition that a trust
established prior to August 11, 1993 is considered a Medicaid
Qualifying Trust, may be irrevocable or revocable, and does
not have use limitations on the funds. (Hr'g Decision 5).
The Hearing Officer noted that MCAR 0382.50.05 establishes
the procedure to properly evaluate a Medicaid Qualifying
Trust when determining Medical Assistance eligibility.
Id. Specifically, the Hearing Officer found that the
maximum amount which the Trustee may distribute from a
Medicaid Qualifying Trust is to be counted as an available
resource. The maximum amount is the amount the Trustee could
disburse if the Trustee exercised his or her full discretion
under the terms of the Trust. The Hearing Officer further
noted that under a Medicaid Qualifying Trust, distributions
are available to an individual who established the Trust,
whether or not the distributions are actually made.
Id. Therefore, the Hearing Officer concluded that
the Trustee had the full authority to disburse the assets
held in the Trust to Mrs. Machunis. Id.
Hearing Officer further noted that the Trust authorizes the
Trustee to "generally do all things in relation to the
Trust Estate which the Settlor could do if living and this
Trust had not been created." Id. Although Mrs.
Machunis' attorney argued that the Trust was not created
to allow discretion to give money to Mrs. Machunis but to
withhold money, the Hearing Officer disagreed. Id.
at 6. Rather, the Hearing Officer found that even though the
Trust gives the Trustee discretion to withhold money, it also
does not prevent the Trustee from giving money to Mrs.
Machunis for her benefit. Id. Therefore, the Hearing
Officer denied Mrs. Machunis' request for relief and
deemed Mrs. Machunis ineligible for Medical Assistance.
Machunis filed a timely appeal from the Hearing Officer's
decision to this Court pursuant to § 42-35-15(b). On
appeal, Mrs. Machunis argues that the Hearing Officer's
decision is in violation of constitutional or statutory
provisions; is in excess of their statutory authority; is
made upon unlawful procedure; is affected by other error or
law; is clearly erroneous in view of the reliable, probative,
and substantial evidence on the whole record; or is arbitrary
or capricious or characterized by abuse of discretion, or is
a clearly unwarranted exercise of discretion. Additionally,
Mrs. Machunis contends that since she is a Long Term Care
patient and is disabled, the Trustee is limited to
distributions only from the principal income and cannot
distribute any portion of the principal to her or for her
benefit. Therefore, Mrs. Machunis argues the assets held in
her Trust are not countable resources when determining
Medical Assistance eligibility
response, DHS contends that the Hearing Officer properly
denied Mrs. Machunis' application for Medical Assistance.
DHS argues that Mrs. Machunis is the beneficiary of a
revocable trust that was created prior to August 11, 1993.
Further, DHS avers that Mrs. Machunis presented no evidence
that her Trust falls under any exceptions that would render
the assets in her Trust as not countable. Therefore, DHS
argues that the proceeds of the Trust are countable resources
under the MCAR and Mrs. Machunis is ineligible for Medical
Standard of Review
court reviews a contested administrative decision pursuant to
the Administrative Procedures Act, § 42-35-15(g). This
section provides that:
The court shall 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, or it may reverse or modify the
decision if substantial rights of the appellant have been