









2015 VT 6










 
In re Bernice Landry (2013-452)
 
2015 VT 6
 
[Filed 09-Jan-2015]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by
mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont
05609-0801, of any errors in order that corrections may be made before this
opinion goes to press.
 
 



2015 VT 6



 



No. 2013-452



 



In re Bernice Landry


Supreme Court




 


 




 


On Appeal from




 


Secretary,
  Agency of Human Services




 


 




 


September Term, 2014




 


 




 


 




Douglas
  A. Racine, Secretary




 



William R. Dysart, Vermont Legal Aid, Inc., Burlington, for
Appellant.
 
William H. Sorrell, Attorney General, Montpelier, and
Kristin L. Clouser and Benjamin D. Battles,
   Assistant Attorneys General, Waterbury, for
Appellee. 
 
 
PRESENT:    Reiber, C.J., Dooley, Skoglund
and Robinson, JJ., and Durkin, Supr. J.,
                    
Specially Assigned
 
 
¶ 1.            
DURKIN, Supr. J., Specially Assigned.   Petitioner
Bernice Landry appeals from a decision of the Secretary of the Agency of Human
Services reversing a Human Services Board order awarding her long-term care
Medicaid benefits.  The Secretary determined that the Board erred in
applying the doctrine of equitable estoppel to allow for the award of benefits
retroactive to thirteen months preceding petitioner’s fifth and final
application; the Board had reasoned that each notice of decision denying
petitioner’s four prior applications were misleading because the notices
informed petitioner of her rights to appeal or reapply “at any time,” but
failed to explain that if she chose only to reapply, her benefits would be
retroactive only from the date of the new application.  As explained
below, we affirm the Secretary’s reversal of the Board’s ruling, albeit on a
different basis.    
¶ 2.            
Following an evidentiary hearing in this matter, a hearing officer
issued findings which the Board adopted in their entirety, together with
rendering the Board’s own legal conclusions in a written decision issued in
October 2013.  The findings and record evidence may be summarized as
follows.  Petitioner was admitted to a nursing home in September
2010.  She was eighty-seven years old at the time, and had a diagnosis of
dementia and Alzheimer’s disease.  Petitioner’s adult daughter, who had
the authority to act on petitioner’s behalf by virtue of a power of attorney,
submitted an application for long-term care Medicaid benefits in January
2011.  The application sought coverage for petitioner, retroactive to
October 1, 2010, pursuant to a Medicaid rule authorizing benefits for up to
three months preceding the month of application.    
¶ 3.            
A long-term care benefits specialist with the Department for Children
and Families testified that, in response to the application, she sent two
separate verification requests to petitioner’s daughter and an administrator at
petitioner’s nursing home.  Each request sought information necessary to
confirm petitioner’s financial eligibility, including bank, income, and tax
records.  The benefits specialist also attempted to schedule a telephone
interview with the petitioner or her daughter, all in an effort to obtain the
requested information in support of petitioner’s application.  
¶ 4.            
The Department received no response to these requests. 
Accordingly, in March 2011, the Department issued a Notice of Decision
(“Notice”) denying the application.  The Notice cited petitioner’s failure
to provide the Department with “all the information we need” to determine her
eligibility, and explained more specifically that “[t]here was no response to
Department requests for verification and the required telephone
interview.”      
¶ 5.            
Apart from denying the application, the Notice informed petitioner that
she had the right to appeal the Department decision or “may reapply at any
time.”  Under a caption labeled “IMPORTANT,” the Notice stated that
information concerning petitioner’s “right to appeal this action” could be
found on the back of the Notice.  The information explained that petitioner
had the right to appeal the Department’s decision by requesting a fair hearing
within ninety days from the date the Notice was mailed.  No appeal of this
initial denial was filed by petitioner or a person acting on her behalf within
the ninety-day limit. 
¶ 6.            
Petitioner’s daughter submitted a second application for long-term care
Medicaid benefits in June 2011, three months after the Department’s denial of
the initial application.  Again, the benefits specialist sent verification
requests to petitioner’s daughter and nursing home administrator seeking the
same information that was missing from the original application.  Again,
the Department received no response.  Accordingly, in August 2011, the
Department issued a second Notice denying the application for the same reasons
as stated in response to the first application.  This second Notice again
informed petitioner of her right to “reapply at any time” or to appeal within
ninety days.  No appeal or request for a fair hearing was filed from this
second denial.     
¶ 7.            
In September 2011, petitioner’s daughter contacted the benefits
specialist by email, expressing her frustration with the Department’s decisions
and seeking further assistance.  In response, the benefits specialist
recalled the Department’s letters and telephone messages, which had gone
unanswered, outlined the forms and documents required for verification of
petitioner’s eligibility, and offered to meet petitioner’s daughter in person
to discuss the case.  Petitioner’s daughter explained that the telephone
messages may have been “lost,” and acknowledged: “I dropped the ball.  I
should have been more vigilant in being on top of this.”    
¶ 8.            
In mid-September 2011, the benefits specialist and petitioner’s daughter
met in person to discuss the case.  The benefits specialist could not
recall exactly what she said at the meeting regarding retroactive benefits, but
testified that she routinely tells applicants that they may be able to receive
benefits for the three months prior to the date of the “current
application.”  Also on the day of the meeting, petitioner’s daughter
submitted a third application for benefits, and in response she received a
letter from the Department outlining the additional documentation required for
verification of petitioner’s financial eligibility.  The Department did
not receive any further documentation from petitioner after the meeting or the
letter.  Accordingly, in October 2011, the application was denied for “failure
to provide all the information we need.”  As before, the Notice informed
applicant of her right to “reapply at any time” or appeal.  No appeal was
filed from this third Notice.    
¶ 9.            
With her daughter’s assistance, petitioner submitted a fourth application
in December 2011.  Two verification requests from the Department for
additional information went unanswered, and the application was denied in
January 2012.  Once again, the Notice stated that petitioner could
“reapply at any time” or appeal from the decision.  No appeal was
filed from this fourth Notice.    
¶ 10.        
With the assistance of her son, petitioner filed a fifth application for
benefits in February 2012.  This time, additional information verifying
petitioner’s financial eligibility was provided, and the application was
approved by the Department in May 2012 with benefits retroactive to November
2011, which was three months prior to the date of the fifth and final
application.  Petitioner appealed that decision, seeking coverage retroactive
to October 2010, which would have been three months prior to her first
application from January 2011.  
¶ 11.        
An evidentiary hearing was held in July 2013 before a Department hearing
officer.  The Board adopted the hearing officer’s findings and issued a
decision reversing the Department’s decision to limit retroactive benefits to
November 2011.  The Board concluded that, for reasons of equitable
estoppel, petitioner may be awarded benefits retroactive to October 1, 2010
based on the date of the initial application.[1]  See 3 V.S.A. § 3091(c) (providing
that Board may approve hearing officer’s findings and “adopt them as the
findings of the board”); id. § 3091(d) (providing that after a fair
hearing, “the board may affirm, modify or reverse the decisions of the agency”
or Department).  The Board found that petitioner’s daughter “credibly” and
“reasonabl[y]” believed that the proviso in the Notices informing her of the
right to “reapply at any time” meant that she could resubmit the same
application and retain retroactive coverage from the date of the original
application without the need to appeal.   “[A]t best,” the Board
concluded, the Notices were “confusing” in stating that petitioner could
“reapply at any time” while omitting “essential information” about the effect
of a reapplication on the period of retroactive coverage.  This conclusion
was further supported, in the Board’s view, by the Department’s “variable”
approach to granting retroactive coverage beyond the three-month period
established in the proviso.[2] 
The Board concluded that these findings supported application of the doctrine
of equitable estoppel to toll the ninety-day period for appeal from the first
denial of coverage, and thus permitted a retroactive award for the preceding
three months, to October 1, 2010.  
¶ 12.        
The Department sought review by the Secretary, who reversed the Board’s
decision.  The Secretary observed that each of the Notices received by
petitioner fully complied with Medicaid rules by providing a statement of the
Department’s decision, the reasons therefore, the right to appeal, and the
right to reapply “at any time.”  Nothing further—in the Secretary’s
view—was required.   Moreover, nothing in the Notices, the Secretary
concluded, “indicate[d] that petitioner could maintain the same period of
retroactive coverage in subsequent applications that was operative in her
initial application that was denied and not appealed.”  Finally, the
Secretary observed that nothing in the record would have supported an
application to extend the time for submitting the requested verification for
“good cause,” as allowed under standard Medicaid procedure.[3]  Petitioner did not respond to the
Department’s multiple requests for verification, did not advise the Department
of any valid reasons for failing to respond, and indeed informed the
Department’s benefits specialist that the failure to respond was her
responsibility, that she had “dropped the ball.”  Accordingly, the
Secretary found no justification to invoke the doctrine of equitable estoppel,
and reversed the Board’s decision.  This appeal by petitioner followed.   

¶ 13.        
The Secretary is authorized by statute to review all Board decisions
governing Medicaid benefits, and may reverse or modify a decision where the
Board’s “findings of fact lack any support in the record” or the decision
“implicates the validity or applicability of any agency policy or rule.” 
3 V.S.A. § 3091(h)(1)(A)(i), (ii).  As we have previously explained, under
this provision the Secretary essentially “acts as an appellate body, reviewing
the Board’s findings and conclusions to ensure that it applied the appropriate
legal standards under the relevant agency rules and policies, and that there is
some factual support for its decision.”  In re D’Antonio, 2007 VT
100, ¶ 8, 182 Vt. 599, 939 A.2d 493 (mem.).  Thus, the Secretary must
uphold the Board’s factual findings “if the record contains any credible
evidence that fairly and reasonably” supports those findings.  Jacobus
v. Dep’t of PATH, 2004 VT 70, ¶ 7, 177 Vt. 496, 857 A.2d 785 (mem.). 
However, “[i]n matters of state law, this Court generally defers to the
Secretary regarding interpretations of the governing statutes . . . absent
compelling indication of error.”  In re Brett, 2011 VT 28, ¶ 13,
189 Vt. 345, 19 A.3d 15.  Further relevant to the standard of review is
the premise of petitioner’s legal claim: that her constitutionally protected
right to due process includes a right to a clear notice of the impact of her
failure to appeal the Department’s decision.  This Court has previously
made clear that rulings which implicate the right to due process or other
issues of constitutional dimension require no deference, “for agencies are in
no better position to resolve constitutional questions than the courts.”  In
re Vt. Ry., 171 Vt. 496, 500, 769 A.2d 648, 653 (2001).  
¶ 14.        
Petitioner asserts that the Secretary exceeded his authority in
rejecting the Board’s factual finding that petitioner believed her
reapplications would maintain the original three-month retroactive coverage
period.  There is some merit to the claim.  As noted, the Secretary
must defer to the Board’s factual findings “unless they are completely
unsupported by the record.”  In re Ryan, 2008 VT 93, ¶ 17, 184 Vt.
597, 958 A.2d 678 (mem.).  Here, the uncontradicted testimony by
petitioner’s daughter concerning her understanding that coverage would remain
retroactive from the date of the initial application appears to provide
sufficient support for the Board’s factual finding. 
            
¶ 15.        
The question remains, however, whether the Board properly applied the doctrine
of equitable estoppel based upon these facts.  To recall, the Board
applied the equitable estoppel doctrine to prohibit the Department from
limiting petitioner’s ability to seek retroactive benefits back to October
2010, some thirteen months prior to the date of her final benefits application.
¶ 16.        
The doctrine of equitable estoppel, when the facts justify its
application, forecloses a party “from asserting rights which may have existed
against another party who in good faith has changed . . . her position in
reliance upon [the first party’s] earlier representations.”  Fisher v.
Poole, 142 Vt. 162, 168, 453 A.2d 408, 411 (1982).  We have previously
concluded that the Human Service Board has the authority to apply the equitable
estoppel doctrine when reviewing challenges to benefits determinations, both
because of its authority to reverse or modify agency decisions, pursuant to
3 V.S.A. § 3091(d), and because of the Board’s inherent authority to
allow an appealing applicant to assert an equitable defense.  Stevens
v. Dep’t of Soc. Welfare, 159 Vt. 408, 416-17, 620 A.2d 737, 741-42 (1992)
(concluding that “the Board’s statutory authorization to determine whether
[benefit] decisions are in conflict with state of federal law is [not] limited
in any respect, much less that it excludes consideration of equitable estoppel
as a defense”).  Therefore, since the Board was authorized to consider
petitioner’s equitable estoppel defense, we consider that legal determination
anew in this appeal.
¶ 17.        
The Board, citing to our Stevens decision, correctly summarized
the four criteria for the proper application of the equitable estoppel
doctrine, which we summarize as follows: “(1) the party to be estopped must
know the facts; (2) the party to be estopped must intend that its conduct shall
be acted upon [by the party asserting estoppel] . . .; (3) the party asserting
estoppel must be ignorant of the true facts; and (4) the party asserting
estoppel must detrimentally rely on the conduct of the party to be estopped.” 
Id. at 421, 620 A.2d at 744 (citing Burlington Fire Fighters’ Ass’n
v. City of Burlington, 149 Vt. 293, 299, 543 A.2d 686, 690-91
(1988)).  We further note that when equitable estoppel is being asserted
against a governmental entity, there is a fifth criterion that must be
considered: “the party seeking to estop the government must demonstrate that
‘the injustice that would ensue from a failure to find an estoppel sufficiently
outweighs any effect upon public interest or policy that would result from
estopping the government in a particular case.’ ”  Vt. N. Props. v.
Village of Derby Ctr., 2014 VT 73, ¶ 27, ___ Vt. ___, 102 A.3d 1084,
(quoting In re Lyon, 2005 VT 63, ¶ 17, 178 Vt. 232, 882 A.2d 1143).
¶ 18.        
The Board and the Secretary both focused their analysis upon a hybrid of
the legal questions raised by elements three and four, specifically focusing
upon a legal determination of whether it was “reasonable” for petitioner’s
daughter to conclude that she need not file an appeal from the earlier denials
of retroactive benefits and that she could “simply” reapply and her mother
would be awarded benefits retroactive to the first application.  For
several reasons, we cannot agree with the legal conclusion that her reliance on
this mistaken assumption was reasonable.  First, the daughter’s assumption
ignores that the denial notices specifically advised of petitioner’s right to
appeal the denial.  That denial, and each of the three subsequent denials,
were all based upon the daughter’s failure to provide the requested
verifications needed to determine whether petitioner was eligible for
retroactive coverage.
¶ 19.        
Indeed, petitioner’s daughter acknowledged that the failure to respond
to the Department’s repeated verification requests was her responsibility and
that she simply “dropped the ball.”  For this court to adopt the Board’s
legal conclusion that the daughter’s reliance on her mistaken understanding was
“reasonable,” we must ignore her own admissions of failure to respond in any
manner, and must assign legal insignificance to the explicit notice that if she
disagreed with the Department’s determination, she must appeal that
determination.  By failing to appeal, petitioner’s daughter foreclosed her
mother’s right to seek retroactive benefits, based upon her first
application.  
¶ 20.        
The circumstances here are distinguishable from those in Stevens,
where the claimant’s reliance was based upon representations made directly to
the claimant by a Department of Social Welfare (DSW) eligibility specialist,
who specifically advised the claimant to not pay certain medical
bills.  Because claimant then had excess funds at her disposal (since she
followed the eligibility specialist’s advice and delayed payment of her
outstanding medical bills), DSW denied her retroactive benefits, based upon her
availability of excess funds.  Here, petitioner’s daughter’s detrimental
reliance was not upon advice from a Department official; she simply assumed
that by ignoring the notice of the right to appeal, she could not only reapply
“at any time” on her mother’s behalf, but that even without appealing, her
subsequent application could seek benefits back to a time prior to the
application that had been denied and not appealed. Accordingly, we find no basis
to apply the equitable estoppel doctrine on these facts.
¶ 21.        
Petitioner further asserts that the Board’s decision merely allows for a
remand to the Department, so that a determination may be made of whether petitioner
was in fact eligible for benefits, retroactive to three months prior to her
first application.  However, the record before us is barren of any
evidence of “good cause” on petitioner’s behalf that would have supported an
application to extend the time for providing the requested verification. 
Further, although the Board suggested that the Department’s actual practice of
granting retroactive coverage was “variable,” there was no evidence in the
record before us that the Board had, in similar circumstances, permitted
retroactive coverage beyond the three-month period from the last pending
application.  Accordingly, we find no ground to disturb the judgment
rendered by the Secretary.  
Affirmed.



 


 


FOR THE COURT:




 


 


 




 


 


 




 


 


 




 


 


Superior
  Judge, Specially Assigned



 







[1]  The Board remanded petitioner’s application
to the Department, with a directive that the Department “consider her
application retroactive to October 1, 2010.”  


[2]  The record before us does not include
references to specific applications that resulted in retroactive benefits being
awarded for a period greater than three months prior to the pending
application.  However, the Department appears to concede that such awards
may have occurred in the past.
 


[3] 
Medicaid procedure directs that an application is to be denied after thirty
days if there is no response to a request for verification, but allows a
thirty-day extension if the applicant “indicates that he or she is having
difficulty in obtaining any or all of the information” and provides “good
cause” for the delay, defined to include illness, the refusal of a third party
to provide the necessary documentation, or lost or stolen mail.  Medicaid
Procedure P-2401    



