                             NO. 4-10-0290        Filed 12/28/10

                       IN THE APPELLATE COURT

                              OF ILLINOIS

                            FOURTH DISTRICT

J. BRIAN McDONALD, as Independent     )   Appeal from
Administrator of the Estate of BETTY )    Circuit Court of
J. McDONALD,                          )   Sangamon County
          Plaintiff-Appellee,         )   No. 08MR554
          v.                          )
THE ILLINOIS DEPARTMENT OF HUMAN      )
SERVICES and MICHELLE R.B. SADDLER,   )
Its Secretary; and THE ILLINOIS       )
DEPARTMENT OF HEALTHCARE AND FAMILY   )
SERVICES and JULIE HAMOS, Its         )   Honorable
Director,                             )   John W. Belz,
          Defendants-Appellants.      )   Judge Presiding.
_________________________________________________________________

          JUSTICE POPE delivered the opinion of the court:

          This Medicaid case asks us to resolve a tension between

the need to preserve scarce public medical resources for the

truly needy and the desire of families to preserve their assets

while qualifying for medical assistance through a perceived

legitimate loophole.   This tension manifests itself in this case

where an applicant's eligibility for medical assistance was

delayed by the imposition of a penalty period by the transfer of

nearly $125,000 in cash gifts in the year leading up to her

application for benefits.

          In June 2007, plaintiff, J. Brian McDonald, acting
pursuant to power of attorney, applied for medical assistance on

behalf of his mother, Betty J. McDonald, to help cover her long-

term-care expenses.    Defendant, the Department of Healthcare and

Family Services (Healthcare and Family Services), investigated

Betty's application, and defendant, the Department of Human

Services (Human Services), approved Betty's application but

imposed a penalty period of noncoverage because of certain

nonallowable transfers Brian made on behalf of Betty.

            These nonallowable transfers consisted of systematic

monthly gifts from Betty's checking account to Brian and his

siblings.    Each month, one of Betty's children would receive two

checks: one for an amount less than twice Betty's monthly long-

term-care expenses and one for the exact amount of Betty's

monthly social-security benefits.    When added together, these

gifts totaled more than twice Betty's monthly long-term-care

expenses, resulting in a two-month penalty period for each

month's gifts.

            Brian appealed the penalty period, arguing the social-

security gifts, each of which was labeled a "gift of income" in

the check's memorandum line, were not subject to the asset-

transfer policy that resulted in the penalty.    Under Brian's

theory, only the gifts of assets should have been used in calcu-

                                - 2 -
lating the penalty period; since each gift of assets was for less

than twice Betty's monthly long-term-care expenses, each would

result in only one penalty month.   Brian claimed the transfers of

income were exempted from the penalty, citing Human Services'

"Cash, SNAP, and Medical Policy Manual" (Medical Policy Manual).

He also relied on a January 2001 letter from the chief of the

bureau of policy of the Department of Public Aid (later succeeded

by Healthcare and Family Services as the agency charged with

executing Illinois's Medicaid laws), which gave an interpretation

of the policy manual's asset-transfer provisions for an unrelated

individual.   After a hearing held before an administrative law

judge, Human Services upheld the imposition of the penalty

period, issuing the departments' final administrative decision.

          Brian then sought administrative review in the circuit

court, presenting two arguments.    First, Brian argued the depart-

ments misapplied their own policies, again citing the Medical

Policy Manual and the January 2001 letter.   Second, Brian alter-

natively argued the departments were estopped from changing the

way the policy manual was applied and from departing from the

January 2001 letter's interpretation of their policies.   The

court reversed and remanded to Human Services for it to rescind

the portion of the penalty period that resulted from the "gifts

                               - 3 -
of income."

            The departments appeal, arguing federal and state

statutory laws require Human Services to impose a penalty period

for transfers of income, as well as assets, for less than fair

market value and asserting the departments' own rules and poli-

cies are in accord with these statutes.     Again, Brian maintains

the departments misinterpreted their rules and policies and

argues, alternatively, the departments are estopped from depart-

ing from the interpretation provided in the January 2001 letter.

            We reverse the circuit court's judgment and affirm the

administrative decision because we find (1) the departments

correctly applied the law they are charged with enforcing; (2)

the relevant sections of the Medical Policy Manual do not con-

flict with that law; and (3) the departments were not bound by

the January 2001 letter.

                            I. BACKGROUND

            Betty moved into a nursing home in June 2006.   There,

she incurred continuing monthly long-term-care expenses of

$4,365.    Each month from June 2006 through December 2006, Betty

received $1,542.01 from social security and $573.90 from an

annuity.    Beginning January 2007, Betty's monthly income from

social security increased to $1,583.44, and she continued to

                                - 4 -
receive $573.90 from her annuity.    The annuity payments were

never deposited into any of Betty's bank accounts.     These annuity

payments were never considered by the departments in setting the

penalty period and are not an issue on appeal.     Beginning in June

2006 and continuing through June 2007, through Brian, as power of

attorney, Betty made gifts by check nearly each month to one of

her children.   These checks were marked as either gifts of assets

or gifts of income in the memorandum line.     Gifts of assets were

in the amount of $7,500 from June 2006 through August 2006 and in

the amount of $7,800 from September 2006 through June 2007.

Gifts of income were in the amount of $1,542.01 from June 2006

through December 2006 and in the amount of $1,583.44 from January

2007 through June 2007.

          Brian applied for medical-assistance benefits on

Betty's behalf in June 2007.   Healthcare and Family Services

determined the gifts noted above were nonallowable transfers

under the Medical Policy Manual and calculated a penalty period

from March 2007 through July 2008.     Healthcare and Family Ser-

vices approved Betty's application for medical assistance subject

to the 17-month penalty period.   On Betty's behalf, Brian ap-

pealed the portion of the penalty period attributable to the

"gifts of income," and Human Services upheld the full penalty

                               - 5 -
period after a hearing by an administrative law judge.

          After receiving the unfavorable administrative deci-

sion, Brian initiated this administrative-review action in the

circuit court with Betty as the named plaintiff.   On administra-

tive review, the circuit court reversed and remanded with direc-

tions "to exclude from each of the monthly transfer calcula-

tions[] all transfers of income made by [Betty] during that same

calendar month."   The court appeared to be persuaded by Brian's

estoppel argument, which consisted of two subarguments, the first

of which can also be understood as a separate argument based on a

straight application of law.

          First, Brian argued the plain meaning of a section from

the Medical Policy Manual regarding "income mixed with an asset"

demonstrates a gift of income made in the month when the income

is received does not constitute a nonallowable transfer.   The

section provides, in similar language to sections in other

portions of the policy manual, "Money considered as income for a

month is not an asset for the same month.   Any income added to a

bank account is income for that month, and not a part of the

account's asset value for the month."   Department of Human

Services, Medical Policy Manual, PM 07-02-06-a (eff. March 1,

1997) (hereinafter Medical Policy Manual); see also Medical

                               - 6 -
Policy Manual, PM 07-04-09-a (eff. October 1, 2010).   According

to Brian, this means the funds comprising the gifts Brian made to

himself and his siblings from Betty's social-security benefits

never became an asset.   Because the money was not an asset,

according to Brian, it cannot be subject to the departments'

"asset-transfer" or "transfer-of-asset" policy.

           Second, Brian argued the departments were estopped from

deviating from the interpretation of policy expressed in a letter

written by the chief of the bureau of policy development of the

Department of Public Aid.   The letter was written by then-chief

John Rupcich in January 2001 in response to an inquiry by Joe

Oettel, who appears not to be related in any way to this case or

the parties.   Oettel inquired, relying on the above-quoted

language from the policy manual, "Does this mean that income

given away to another person during the same month it is received

is NOT subject to the asset transfer policy and therefore is NOT

used in calculating a penalty period as explained in [the policy

manual section]?"   Rupcich responded, without reference to any

discrete facts or circumstances, "Income given away during the

same month it is received is not subject to the transfer of asset

policy."   According to Brian, this statement by the chief of the

bureau of policy was a general interpretation of Illinois's

                               - 7 -
Medicaid/medical-assistance law, made by the agency charged with

implementing it, that bound the departments in future medical-

assistance cases and on which applicants can rely.   Thus, accord-

ing to Brian, the departments' departure from this interpretation

in Betty's case was arbitrary and capricious.

          In October 2009, the circuit court, having accepted

Brian's estoppel argument, reversed the administrative decision

and remanded to the departments to rescind Betty's penalty period

insofar as it resulted from their inclusion of Brian's gifts of

Betty's income in the calculation of nonallowable transfers.    In

November 2009, the departments filed a motion to reconsider the

court's judgment.   Later that month, the court allowed Brian to

substitute himself, as independent administrator of Betty's

estate, for Betty, who had died in September 2009, as plaintiff

in this action.   In March 2010, the court denied defendants'

motion to reconsider.

          This appeal followed.

                           II. ANALYSIS

          On appeal, defendants maintain the circuit court erred

because both Brian's interpretation of the policy manual and the

interpretation expressed in the January 2001 letter were contrary

to federal and state statutes governing medical-assistance

                               - 8 -
eligibility and benefits.   According to defendants, certain

provisions of the federal medical-assistance laws are binding on

any states participating in the Medicaid program.     Among these

provisions are the asset-transfer policy and the corresponding

penalties at issue in this case.   Defendants point to state

legislation designed to keep the state in compliance with the

federal asset-transfer policy and penalty provisions and a rule

from the Illinois Administrative Code governing state asset-

transfer policy.   Based on these authorities, which defendants

insist control over any internal, unpromulgated department

policies, defendants maintain the policy manual as interpreted by

Brian cannot be given force to disallow Betty's full penalty

period.   Alternately, defendants maintain the departments were

required to depart from the interpretation contained in the

January 2001 letter.

           In response, Brian argues the federal and state stat-

utes are irrelevant because his argument from the beginning of

the proceedings has been that the departments misapplied their

own rules and policies.   According to Brian, the departments are

bound to follow both the policy manual and the letter interpret-

ing it consistently in every case.     Because the departments

failed to adhere to these authorities in Betty's case, Brian

                               - 9 -
maintains, the penalty period attributable to his gifts of

Betty's income should be vacated under either of his two theo-

ries.   Those theories are (1) the departments misinterpreted

their rules and policies, and (2) even if legally correct, the

departments were estopped from applying their interpretation

because it marked a departure from their previous interpretation

evidenced by the January 2001 letter.

           We agree with defendants.

                       A. Standard of Review

           On appeal in an administrative-review action, we review

the departments' decision, not the circuit court's, in the sense

that we give the circuit court's decision no deference.    See

Cinkus v. Village of Stickney Municipal Officers Electoral Board,

228 Ill. 2d 200, 212, 886 N.E.2d 1011, 1019 (2008).    The scope of

judicial review of administrative decisions "extend[s] to all

questions of law and fact presented by the entire record before

the court."   735 ILCS 5/3-110 (West 2008).    Neither party chal-

lenges the departments' findings of fact; rather, they dispute

the interpretation of the relevant statutes, regulations, and

provisions of the departments' policy manual and the extent to

which the departments are bound by the January 2001 letter and

Brian's alleged reliance on it.   These are legal questions, which

                              - 10 -
we review de novo.    Cinkus, 200 Ill. 2d at 211, 886 N.E.2d at

1018.    However, the departments' interpretation of their own

rules and regulations " 'enjoys a presumption of validity.' "

Montalbano v. Department of Children & Family Services, 343 Ill.

App. 3d 471, 479, 797 N.E.2d 1078, 1084 (2003), quoting Nolan v.

Hillard, 309 Ill. App. 3d 129, 143, 722 N.E.2d 736, 747 (1999).

            B. Gifts of Income and Asset-Transfer Policy

            Federal and state statutes, state administrative rules,

and Human Services' departmental Medical Policy Manual all

support defendants' conclusion that gifts of income are subject

to asset-transfer policy and the corresponding penalties at issue

in this case.    Consequently, defendants' imposition of a 17-month

penalty period on Betty's eligibility for medical assistance was

proper.

            Medicaid is "a cooperative program in which the federal

government reimburses state governments for a portion of the

costs to provide medical assistance" to, among others, medically

needy persons with low income and low assets who contribute a

mandatory amount of any excess assets to their own healthcare

costs.    Gillmore v. Illinois Department of Human Services, 218

Ill. 2d 302, 304-05, 843 N.E.2d 336, 338 (2006).    States that opt

into Medicaid "must comply with certain broad requirements

                               - 11 -
imposed by federal statutes and regulations."   Gillmore, 218 Ill.

2d at 305, 843 N.E.2d at 338.    Among these requirements is that

the state implement and enforce the asset-transfer policies

defined by the federal Medicaid statute (see 42 U.S.C. §1396p

(2006)).   See Gillmore, 218 Ill. 2d at 306, 843 N.E.2d at 339.

In turn, the federal asset-transfer policy mandates a penalty

period of noncoverage for medical-assistance applicants who

divest their property in order to qualify for benefits by trans-

ferring it for less than fair market value.   Gillmore, 218 Ill.

2d at 306, 843 N.E.2d at 338-39.

           Asset transfers are defined consistently in the federal

and state medical-assistance statutes, state regulations promul-

gated by Human Services, and Human Services' Medical Policy

Manual.    The federal statute imposes a penalty when an applicant

or his or her spouse "disposes of assets for less than fair

market value" within a certain period leading up to the appli-

cant's request of benefits.   42 U.S.C. §1396p(c)(1)(A) (2006).

In turn, the statute defines "assets" in terms of income and

resources.   "The term 'assets', with respect to an individual,

includes all income and resources of the individual and of the

individual's spouse, including any income or resources which the

individual or such individual's spouse is entitled to but does

                                - 12 -
not receive because of action."   42 U.S.C. §1396p(h)(1) (2006).

Thus, under the federal statute, a transfer of a medical-assis-

tance applicant's income for less than fair market value would

subject the applicant to penalties.     This result is mandated on

all states that participate in the Medicaid program.     42 U.S.C.

§1396p(c) (2006).

          State policies on transfers of assets comply with the

federal requirement.   The Illinois Public Aid Code (Code) prohib-

its transfers of a medical-assistance applicant's interest in

personal property for less than fair market value.     Section 5-

2.1(a) of the Code provides, in pertinent part,

               "To the extent required under federal

          law, a person shall not make or have made a

          *** transfer of any legal or equitable inter-

          ests in *** personal property, whether

          vested, contingent[,] or inchoate, for less

          than fair market value.    A person's interest

          in *** personal property includes all income

          and assets to which the person is entitled or

          to which the person would be entitled if the

          person had not taken action to avoid

          receiving the interest."     305 ILCS 5/5-2.1(a)

                              - 13 -
            (West 2008).

As it includes income in a person's interest in personal

property, the state statute, like the federal statute, would

prohibit the transfer of an applicant's income for less than fair

market value.

            The relevant section of the Illinois Administrative

Code (Administrative Code) is consistent with these federal and

state statutes, though less explicit in its operation.      Rather,

section 120.387(d) of Title 89 of the Administrative Code merely

defines a transfer of assets in terms of transfers of personal

property.    Specifically, in the case of a person in long-term

care, it provides,

                 "A transfer of assets occurs when an

            institutionalized person[] *** buys, sells[,]

            or gives away real or personal property or

            changes *** the way property is held. *** A

            transfer occurs when an action or actions are

            taken which would cause an asset or assets

            not to be received (for example, waiving the

            right to receive an inheritance)."   89 Ill.

            Adm. Code §120.387(d), as amended by 23 Ill.

            Reg. 11301, 11310 (eff. August 27, 1999).

                               - 14 -
Sections 120.387(e) and (f) define the circumstances under which

a transfer is allowable or nonallowable.    89 Ill. Adm. Code

§§120.387(e), (f), as amended by 23 Ill. Reg. 11301, 11310-11312

(eff. August 27, 1999).    Nonallowable transfers incur penalty

periods of ineligibility.    89 Ill. Adm. Code §120.387(f), as

amended by 23 Ill. Reg. 11301, 11312 (eff. August 27, 1999).      By

defining asset transfers in relation to transfers of personal

property rather than assets, the Administrative Code does not

distinguish between transfers of assets and transfers of income.

That is, if a transfer of income is made under circumstances that

would render any other transfer nonallowable, the transfer of

income is itself nonallowable.    This result is consistent with

the federal and state statutes on asset-transfer policy and the

corresponding penalties.

          These provisions and federal and state law are

extrapolated in Human Services's Medical Policy Manual.    The

Medical Policy Manual is comprised of a policy manual, which

describes the Medicaid laws and provides general guidance on

Medicaid issues, and a Worker's Action Guide, which gives more

specific guidance to agency caseworkers in determining

eligibility and notifies them of common difficulties.    The entire

Medical Policy Manual is available to the public online, although

                               - 15 -
it appears to be primarily an internal manual to guide employees

of the departments in navigating Medicaid issues.

          The Medical Policy Manual is consistent with the

federal and state statutory and administrative laws on transfers

of assets and related penalties.    Like the Administrative Code,

the manual defines "transfer of assets" in terms of personal

property without distinguishing between income and assets.

Section PM 07-02-20 of the Medical Policy Manual states, in

pertinent part,

          "An asset transfer occurs when a client or

          their spouse *** buys, sells, [or] gives away

          real or personal property or changes the way

          property is held.   ***   A transfer *** occurs

          when an action is taken that causes an asset

          not to be received (for example, waiving the

          right to receive an inheritance)."    Medical

          Policy Manual, PM 07-02-20 (eff. April 17,

          1998).

Compare Medical Policy Manual, PM 07-02-20 (1998), with 89 Ill.

Adm. Code §120.387(d), as amended by 23 Ill. Reg. 11301, 11310

(eff. August 27, 1999) (quoted above).    In turn, section PM 07-

02-06 of the policy manual defines "personal property" as

                              - 16 -
"anything owned by a person that is not land or permanently

affixed to land," including checking-account funds.   Medical

Policy Manual, PM 07-02-06 (eff. March 1, 1997).   The policy

manual goes on to define allowable and nonallowable transfers but

both relate back to the definition of "asset transfer" that would

include transfers of income as well as transfers of assets.     See

Medical Policy Manual, PM 07-02-20-b, 07-02-20-c, 07-02-20-d

(1998) (eff. April 17, 1998, March 1, 1997, and April 17, 1998,

respectively).

          These authorities support defendants' determination

that the gifts of Betty's income were nonallowable transfers of

assets for less than fair market value that must be penalized.

The federal statute mandates penalties for nonallowable transfers

of a medical-assistance applicant's assets, where assets include

that person's income.   The Code prohibits nonallowable transfers

of an applicant's interest in personal property, where that

person's interest in property includes his or her income.    The

Administrative Code and the Medical Policy Manual penalize

nonallowable transfers of personal property without excluding

income from personal property.   As they were made for less than

fair market value in the months leading up to her application for

medical assistance, Brian's gifts of Betty's social-security

                              - 17 -
benefits would result in a penalty period under any of these

federal and state authorities.

           Notwithstanding the plain meaning of section PM 07-02-

20 of the policy manual, let alone the controlling statutes and

regulations, Brian has maintained the departments overlooked a

critical distinction in the Medical Policy Manual between income

and assets.   Brian cites section PM 07-02-06-a of the policy

manual, which guides agency employees in calculating a person's

assets.   It states, in pertinent part, as follows:

                "Money considered as income for a month

           is not an asset for the same month.    Any

           income added to a bank account is income for

           that month, and not a part of the account's

           asset value for the month.    To figure the

           asset value of the account, subtract the

           income from the bank balance.    For the

           following month(s) any remaining income in

           the account is an asset."    Medical Policy

           Manual, PM 07-02-06-a (eff. March 1, 1997).

Brian asserts this section requires the departments to exclude

transferred amounts of income in calculating nonallowable

transfers because, essentially, he maintains "asset transfer"

                              - 18 -
policy can apply only to transfers of assets.

           Brian misunderstands the significance of this

distinction between income and assets in determining medical-

assistance eligibility.   The distinction is necessary to

determine whether and to what extent an applicant must "spend

down" his or her excess assets or income in order to be eligible

for medical assistance.   See 305 ILCS 5/5-2.07 (West 2008).

Though equally essential to the operation of the medical-

assistance program, the spend-down provisions are wholly separate

from those defining eligibility penalties for nonallowable

transfers.   We find the manual's provisions regarding "income

mixed with an asset," such as section PM 07-02-06-a, are

irrelevant to the calculation of nonallowable transfers of

personal property.   Transfers of personal property for purposes

of determining any penalty period include transfers of income and

assets.   When determining eligibility in the first instance,

income which is consumed in a month on legitimate living expenses

would not be counted as an asset.   Accordingly, the departments

did not err in their application of the law they are charged with

implementing and enforcing or the Medical Policy Manual in

Betty's case.

           In addition, the State Medicaid Manual, a federal

                              - 19 -
manual that provides guidance to state employees in making

penalty determinations, provides as follows:

          "Treatment Of Income As Asset.--Under OBRA

          1993, income, in addition to resources, is

          considered to be an asset for transfer (and

          trust) purposes.   Thus, when an individual's

          income is given or assigned in some manner to

          another person, such a gift or assignment can

          be considered a transfer of assets for less

          than fair market value.

                                * * *

               When you find that income or the right

          to income has been transferred, a penalty for

          that transfer must be imposed for

          institutionalized individuals (if no

          exceptions apply)."    (Emphasis in original.)

          State Medicaid Manual, Health Care Financing

          Administration Publication No. 45-3,

          Transmittal 64, §3258.6 (November 1994).

          Even if a medical-assistance applicant's income were

distinct from his or her assets for purposes of calculating

nonallowable transfers for a month, we note we would reach the

                                - 20 -
same conclusion in Betty's case because a transfer of income

would be a transfer of a future asset.   Under the provision of

the policy manual Brian relies on, income becomes an asset by

remaining in the account where it is deposited until the

following calendar month.   Federal and state asset-transfer

policy extends to transfers of a person's future interest in an

asset, including actions that "would cause an asset or assets not

to be received (for example, waiving the right to receive an

inheritance)."   89 Ill. Adm. Code §120.387(d), as amended by 23

Ill. Reg. 11301, 11310 (eff. August 27, 1999).   The social-

security benefits deposited in Betty's account would have become

an asset if Brian had not given them away in the month they were

received.   Under his interpretation of section PM 07-02-06-a of

the policy manual, Brian's transfer of Betty's social-security

benefits caused an asset not to be received the following month.

Thus, even if we considered section PM 07-02-06-a and similar

provisions to be relevant to the calculation of nonallowable

transfers, the transfers of income involved in this case would

still be subject to the departments' scrutiny.   Accordingly, we

reject Brian's argument that Betty's ineligibility period

resulted from the departments' misapplication of their own

policies regarding asset transfers, and we further find the


                              - 21 -
departments' imposition of a penalty period for Brian's

nonallowable transfers of Betty's social-security income complied

with the Medicaid laws that the departments are charged with

implementing.

                       C. Equitable Estoppel

          Defendants argue, next, the circuit court erred in

reversing on the basis of Brian's argument that his and Betty's

reliance on the January 2001 letter estopped the departments from

subjecting transfers of income to asset-transfer policy.   We

agree with defendants equitable estoppel is inapplicable to this

case.

          "Generally, the doctrine of equitable estoppel may be

invoked when a party reasonably and detrimentally relies on the

words or conduct of another."    Brown's Furniture, Inc. v. Wagner,

171 Ill. 2d 410, 431, 665 N.E.2d 795, 806 (1996).   However,

public policy disfavors application of equitable estoppel to bar

state action.   Deford-Goff v. Department of Public Aid, 281 Ill.

App. 3d 888, 893, 667 N.E.2d 701, 705 (1996).   Thus, equitable

estoppel will not apply unless (1) doing so would be necessary to

prevent fraud and injustice and (2) the state itself induced a

private actor's reliance.   "When equitable estoppel is invoked

against the State, it will be applied only to prevent fraud and


                                - 22 -
injustice."   Deford-Goff, 281 Ill. App. 3d at 893, 667 N.E.2d at

705.   Otherwise, estoppel would "impair the functioning of the

[s]tate in the discharge of its government functions" because

"valuable public interests may be jeopardized or lost by the

negligence, mistakes[,] or inattention of public officials."

Hickey v. Illinois Central R.R. Co., 35 Ill. 2d 427, 447-48, 220

N.E.2d 415, 426 (1966).   This is particularly true when, as here,

public revenues are concerned.   Deford-Goff, 281 Ill. App. 3d at

893, 667 N.E.2d at 705.   Further, when estoppel is sought to bar

state action, the acts inducing detrimental reliance "generally

must be the acts of the [s]tate itself, such as legislation,

rather than the unauthorized acts of a ministerial officer."

Deford-Goff, 281 Ill. App. 3d at 893, 667 N.E.2d at 705.

           The January 2001 letter, in which the chief of the

bureau of policy of the predecessor to Healthcare and Family

Services wrote, "Income given away during the same month it is

received is not subject to the transfer[-]of[-]asset policy,"

cannot estop the departments from relying on contrary legal

authority in imposing a penalty period of ineligibility on

Brian's gifts of Betty's social-security benefits to himself and

his siblings.   Estoppel cannot apply against the defendants in

this case because no fraud or injustice resulted from the penalty


                              - 23 -
period.   Penalties for nonallowable transfers help ensure those

applicants who can afford to contribute to their own medical

needs do so.   Betty, who made gifts of income totaling nearly

$20,000 in the year preceding her application for medical

assistance, could clearly have contributed to her own long-term-

care expenses.   It was neither fraudulent nor unjust for the

departments to impose penalties for these gifts when the purpose

of the penalties was solely to account for money that should have

been available to offset the government's contributions to

Betty's long-term care.

           Further, Brian's reliance on the letter does not

support application of equitable estoppel because the letter does

not constitute an act by the state itself.   The chief of the

bureau of policy of the predecessor agency of Healthcare and

Family Services is a ministerial officer whose erroneous acts

should not bind the state through equitable estoppel.    See

Deford-Goff, 281 Ill. App. 3d at 893, 667 N.E.2d at 705.    The

policy expressed in the letter is irreconcilable with federal and

state laws, and it would be absurd for us to require the

departments to adhere to erroneous interpretations of the

statutes and rules they enforce, made by officers of a

predecessor agency some years earlier for the benefit of an


                              - 24 -
unrelated third party.    Accordingly, we reverse the circuit

court's determination that Brian's reliance on the January 2001

letter estopped the departments from applying relevant law that

contradicted the letter's statement of policy.

          Even if we were to look past the compelling precedent

that warns against application of equitable estoppel in these

circumstances, we are troubled by several questions regarding the

merits of Brian's claim that were not satisfactorily addressed by

either the departments or the circuit court and on which we are

not convinced Brian carried his burden of proof at either level

of proceedings below.    These questions include whether Brian

actually relied on the January 2001 letter; whether such

reliance, if actual, was also reasonable; and whether such

reliance, if actual and reasonable, was also detrimental.

However, we find it unnecessary to reach these questions as we

conclude equitable estoppel should not be applied in the first

place.

          Lastly, we note the State of Illinois departments

involved in this litigation owe it to the citizens of this state

to adopt clear, understandable rules which assist applicants in

navigating the complicated eligibility and transfer of assets

requirements of the Medicaid laws.      If the participants can know


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and understand the rules, they can avoid the minefield that

erupted in this case.

                          III. CONCLUSION

          For the reasons stated, we reverse the circuit court's

judgment and affirm the administrative decision imposing the full

17-month penalty period as a condition of Betty's medical-

assistance eligibility.

          Reversed.

          MYERSCOUGH and APPLETON, JJ., concur.




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