No. 00-952 

In the Supreme Court of the United States 

WISCONSIN DEPARTMENT OF HEALTH AND FAMILY 
SERVICES, PETITIONER 

v. 

IRENE BLUMER 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE COURT OF APPEALS OF WISCONSIN, DISTRICT IV 

BRIEF FOR THE UNITED STATES 
AS AMICUS CURIAE 

BARBARA D. UNDERWOOD 

Acting Solicitor General 

Counsel of Record 
STUART E. SCHIFFER 

Acting Assistant Attorney 

General 
WILLIAM KANTER 
BRUCE G. FORREST 

Attorneys 
Department of Justice 
Washington, D.C. 20530-0001 
(202) 514-2217 

QUESTION PRESENTED 

Through the Medicaid program, 42 U.S.C. 1396 et seq., the 
federal government provides partial funding to the States 
for the provision of medical services to eligible needy per- 
sons. This case arises out of the Medicaid program’s 
“spousal impoverishment” provisions, 42 U.S.C. 1396r-5 
(1994 & Supp. IV 1998), which establish special rules for 
determining the eligibility of a married individual who is 
institutionalized (in a nursing home or otherwise), but has a 
spouse (the “community spouse”) who is not. In particular, 
those provisions govern the allocation of income and re- 
sources between such spouses for purposes of determining 
Medicaid eligibility. The question presented is: 

Whether, in a “fair hearing” proceeding to consider 
whether to raise the community spouse’s resource allowance 
pursuant to 42 U.S.C. 1396r-5(e), Wisconsin’s “income first” 
requirement, Wis. Stat. Ann. § 49.455(8)(d) (West 1997), 
which treats income otherwise attributable to the institu- 
tionalized spouse as available to the community spouse to 
meet that spouse’s minimum monthly maintenance needs, is 
consistent with the federal statute, 42 U.S.C. 1396r- 
5(e)(2)(C). 

(I) 

TABLE OF CONTENTS 

Page 

Statement ........................................................................................ 1 

Discussion ........................................................................................ 9 

Conclusion ....................................................................................... 20 

Appendix ......................................................................................... 1a 

TABLE OF AUTHORITIES 

Cases: 

Aluminum Co. of Am. v. Central Lincoln Peoples’ 

Util. Dist., 467 U.S. 380 (1984) ........................................... 
15 

Atkins v. Rivera, 477 U.S. 154 (1986) ................................ 
1 

Batterton v. Francis, 432 U.S. 416 (1977) ..................... 
10, 16, 

18, 19, 20 

Chambers v. Ohio Dep’ t of Human Servs., 145 F.3d 
793 (6th Cir.), cert. denied, 525 U.S. 964 (1998) ............... 
3, 7, 
11, 12, 14 

Chevron U.S.A. Inc. v. Natural Res. Def. Council, 
Inc., 467 U.S. 837 (1984) .................................................. 

13, 16 

Christensen v. Harris County, 529 U.S. 576 (2000) ........ 
17 

Cleary v. Waldman, 167 F.3d 801 (3d Cir.), cert. 
denied, 528 U.S. 870 (1999) ................................................ 
7, 11 

Davidson v. Francis, 409 U.S. 904 (1972) ......................... 
19 

Friedman v. Berger, 547 F.2d 724 (2d Cir. 1976), 
cert. denied, 430 U.S. 984 (1977) ......................................... 
15 

Golf v. New York State Dep’t of Soc. Servs., 
697 N.E.2d 555 (N.Y. 1998) .................................................. 
11 

Harris v. McRae, 448 U.S. 297 (1980) ................................ 
1 

Heckler v. Chaney, 470 U.S. 821 (1985) ............................. 
18 

Lincoln v. Vigil, 508 U.S. 182 (1993) .................................. 
18 

Schweiker v. Gray Panthers, 453 U.S. 34 (1981) ........... 
1, 16 

Skidmore v. Swift & Co., 323 U.S. 134 (1944) ............... 
17, 18 

Thomas v. Commissioner of the Div. of Med. 

Assistance, 682 N.E.2d 874 (Mass. 1997) ......................... 11 

(III) 

IV 

Statutes and regulation: 

Page 

Medicare Catastrophic Coverage Act of 1988, 

Pub. L. No. 100-360, 102 Stat. 683: 
42 U.S.C. 1396r-5 (1994 & Supp. IV 1998) .................... 

2, 10 
42 U.S.C. 1396r-5(a)(1) ..................................................... 
3 

42 U.S.C. 1396r-5(b) .......................................................... 
4 

42 U.S.C. 1396r-5(b)(1) ..................................................... 
3, 12 

42 U.S.C. 1396r-5(b)(2) ..................................................... 
4 

42 U.S.C. 1396r-5(d) .......................................................... 
4 

42 U.S.C. 1396r-5(d)(1)(B) ............................................... 
17 

42 U.S.C. 1396r-5(d)(2) ..................................................... 
4, 13 

42 U.S.C. 1396r-5(d)(3) ..................................................... 
4 

42 U.S.C. 1396r-5(d)(4) ..................................................... 
4 

42 U.S.C. 1396r-5(e)(2)(C) ................................ 
6, 7, 8, 12, 17 

42 U.S.C. 1396r-5(f)(2)(A) ................................................ 
5 

Social Security Act, Pub. L. No. 89-97, Tit. XIX, 79 Stat. 
343 (42 U.S.C. 1396 et seq.) ................................................... 
1 

42 U.S.C. 1396a(a)(17) ............................. 
1, 2, 13, 15, 16, 19 

42 U.S.C. 1396a(a)(17)(B) ................................................. 
16 

42 U.S.C. 607(a) (1994) ............................................................. 
16 

Wis. Stat. Ann. § 49.455(8)(d) (West 1997) ........................... 
7 

42 C.F.R. 435.700 et seq. (1980) ............................................... 
2 

Miscellaneous: 

H.R. Conf. Rep. No. 661, 100th Cong., 2d Sess. (1988) ...... 

2, 14 

H.R. Rep. No. 105, 100th Cong., 1st Sess. Pt. 2 (1987) ...... 
2 

65 Fed. Reg. (Nov. 30, 2000): 

p. 73,838 ................................................................................... 

9 

p. 73,839 ................................................................................... 
9 

Peter L. Strauss, One Hundred Fifth Cases Per Year, 
87 Colum. L. Rev. 1093 (1987) ............................................. 18 

In the Supreme Court of the United States 

No. 00-952 

WISCONSIN DEPARTMENT OF HEALTH AND FAMILY 
SERVICES, PETITIONER 

v. 
IRENE BLUMER 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE COURT OF APPEALS OF WISCONSIN, DISTRICT IV 

BRIEF FOR THE UNITED STATES 
AS AMICUS CURIAE 

This brief is submitted in response to the Court’s order 
inviting the Solicitor General to express the views of the 
United States. 

STATEMENT 

1. The Medicaid program, established by Title XIX of 
the Social Security Act, Pub. L. No. 89-97, 79 Stat. 343 (42 
U.S.C. 1396 et seq.) “provid[es] federal financial assistance to 
States that choose to reimburse certain costs of medical 
treatment for needy persons.” Harris v. McRae, 448 U.S. 
297, 301 (1980). States that participate in the Medicaid pro- 
gram agree to provide coverage and benefits in conformity 
with federal guidelines. Atkins v. Rivera, 477 U.S. 154, 156 
(1986). “Each participating State develops a plan containing 
‘reasonable standards . . . for determining eligibility 
for and the extent of medical assistance.’ ” Schweiker v. 
Gray Panthers, 453 U.S. 34, 36 (1981) (quoting 42 U.S.C. 
1396a(a)(17)). The state standards must “provide for taking 
into account only such income and resources as are, as de- 
termined in accordance with standards prescribed by the 

(1) 

2 

Secretary, available to the applicant or recipient.” 
42 U.S.C. 

1396a(a)(17). 

Income and resource calculations for married persons 
have proved to be a matter of great complexity, particularly 
when one of the spouses (referred to as the “institutionalized 
spouse”) is cared for in an institutional setting, such as a 
nursing home, but the other spouse (referred to as the 
“community spouse”) is not. Until 1989, the rules governing 
the Medicaid eligibility of institutionalized individuals did 
not offer much protection for the needs of their community 
spouses. Instead, Medicaid eligibility was calculated as if 
most or all of the couple’s income and resources could be 
dedicated exclusively to the cost of caring for the institu- 
tionalized spouse. With respect to income, Medicaid regula- 
tions initially permitted some income to be protected for the 
needs of a community spouse and dependents, but the 
amount of income that could be so protected was very small. 
See 42 C.F.R. 435.700 et seq. (1980). As a result, the spouse 
in the community was sometimes left with income below the 
poverty level. See H.R. Conf. Rep. No. 661, 100th Cong., 2d 
Sess. 258 (1988). With respect to resources, a similar rule 
prevailed. The couple’s joint assets (subject to a quite 
limited exclusion) and any property owned solely by the 
institutionalized spouse were considered available for the 
care of the institutionalized spouse. Almost all of a married 
couple’s assets therefore had to be depleted before the 
institutionalized spouse would qualify for Medicaid. The net 
effect of those requirements in some cases was the “pau- 
perization” of the community spouse. H.R. Rep. No. 105, 
100th Cong., 1st Sess. Pt. 2, at 65 (1987). 

Congress attempted to alleviate that “spousal impov- 
erishment” hardship in the Medicare Catastrophic Coverage 
Act of 1988, 42 U.S.C. 1396r-5 (1994 & Supp. IV 1998). In 
particular, Congress “attempted to strike a balance between 
preventing impoverishment of the community spouse by 
excluding minimum amounts of resources and income for 

3 

that spouse from eligibility considerations, and preventing a 
financially solvent institutionalized spouse from receiving 
Medicaid benefits by ensuring that income was not com- 
pletely transferred to the community spouse.” Chambers v. 
Ohio Dep’t of Human Servs., 145 F.3d 793, 798 (6th Cir.), 
cert. denied, 525 U.S. 964 (1998). That balance is achieved 
through a complex set of requirements and exclusions that a 
State must employ when allocating income and resources 
between community and institutionalized spouses, both 
when the initial eligibility determination is made, and later 
in post-eligibility determinations. The spousal impoverish- 
ment provisions “supersede any other provision” of the 
Medicaid statute “which is inconsistent with them.” 
42 U.S.C. 1396r-5(a)(1). 

With respect to the allocation of income, the spousal im- 
poverishment provisions impose only a single rule applicable 
to initial eligibility determinations. “During any month in 
which an institutionalized spouse is in the institution,” the 
statute provides, “no income of the community spouse shall 
be deemed available to the institutionalized spouse” (subject 
to certain exceptions). 42 U.S.C. 1396r-5(b)(1). Thus, sub- 
section (b)(1) establishes a special rule that protects the 
income of the community spouse by excluding that income 
from consideration when determining whether the institu- 
tionalized spouse is eligible for Medicaid. That prohibition 
represents a departure from prior practice, under which 
many state Medicaid plans, consistent with the Secretary’s 
regulations, treated the assets and income of either spouse as 
available to the other. Subsection (b)(1), however, does not 
address the extent to which the institutionalized spouse’s 
income may be considered available to meet the needs of the 
community spouse. 

With respect to income attribution after the initial eligibil- 
ity determination is made, the spousal impoverishment pro- 
visions provide more extensive guidance and requirements. 
For example, subsection (b)(2) provides that, if payment of 

4 

income is made solely in the name of one spouse, that income 
is generally treated as available only to that spouse. See 
42 U.S.C. 1396r-5(b)(2). Subsection (d) provides a number of 
exceptions to that rule, which are generally designed to 
ensure that the community spouse has sufficient income to 
meet his or her basic monthly needs. In particular, it pro- 
vides for the establishment of “minimum monthly main- 
tenance needs allowance” or “MMMNA” for each community 
spouse. 42 U.S.C. 1396r-5(d). The community spouse’s 
minimum monthly maintenance needs allowance is set at a 
level that is much higher than the official federal poverty 
level.1 Once income is allocated between the spouses 
according to the general rules in subsection (b), the income 
allocated to the community spouse is compared to the 
community spouse’s minimum monthly maintenance needs 
allowance. If the community spouse’s income is less than the 
minimum monthly maintenance needs allowance, the amount 
of the shortfall is deducted from the income of the institu- 
tionalized spouse that would otherwise be considered avail- 
able for the care of the institutionalized spouse. 42 U.S.C. 
1396r-5(d)(2). The amount of that deduction is referred to as 
the “community spouse monthly income allowance.” Ibid. 

The deduction of the community spouse monthly income 
allowance, in effect, prevents money the community spouse 
requires to meet basic needs from being considered available 
for the care of the institutionalized spouse. The deduction in 
some cases permits individuals to remain Medicaid eligible 
and in others permits Medicaid to defray a greater portion of 
the costs of institutionalized care than it otherwise would; 
the greater Medicaid payments for care of the institutional- 
ized spouse free up income to meet the minimum needs of 

1 The minimum monthly maintenance needs allowance for the 
community spouse is set at 150% of the poverty line for a couple, plus an 
“excess shelter allowance” reflecting certain expenses to the extent that 
those expenses consume more than 30% of that figure. 42 U.S.C. 1396r- 
5(d)(3) and (4). 

5 

the community spouse. The community spouse monthly 
income allowance thus ensures that the community spouse’s 
basic monthly maintenance needs can be met before income 
is considered available for the care of the institutionalized 
spouse. 

With respect to the attribution of resources (i.e., assets) 
between spouses, the statute provides extensive rules for 
both initial and post-eligibility decisions. For initial eligibil- 
ity determinations, each spouse’s share of resources is 
calculated as of the beginning of the period of institution- 
alization. At that time, all of the couple’s resources are 
tallied together, and one half of the total value is allocated to 
each spouse. Often, most of the resources allocated to the 
institutionalized spouse must be exhausted before the 
institutionalized spouse is eligible for Medicaid. In contrast, 
the community spouse’s share is protected from complete 
exhaustion. In particular, the community spouse’s resources 
are not considered available for the care of the institu- 
tionalized spouse—and the institutionalized spouse, once 
Medicaid eligible, remains eligible—so long as the com- 
munity spouse’s share does not exceed the “community 
spouse resource allowance” or “CSRA.” The CSRA thus 
limits the extent to which the community spouse must ex- 
haust resources before the institutionalized spouse becomes 
eligible for Medicaid. The CSRA is the greatest of (i) $12,000 
or a State standard up to $60,000 (indexed for inflation); 
(ii) the lesser of the spouse’s resource share (approximately 
one-half of the spouses’ pooled resources) or $60,000 (indexed 
for inflation); (iii) the amount set at a “fair hearing” under 
42 U.S.C. 1396r-5(e)(2); or (iv) the amount transferred 
pursuant to a court order. 42 U.S.C. 1396r-5(f )(2)(A). 

This case concerns the provisions of the Medicaid statute 
which permit the CSRA to be increased, through the “fair 
hearing” procedure, when the community spouse’s income is 
less than that spouse’s minimum monthly maintenance needs 
allowance. Permitting the community spouse to obtain a 

6 

larger CSRA can give the community spouse additional 
income-generating resources to meet minimum monthly 
needs; absent an increase in the CSRA, the resources would 
be considered available to the institutionalized spouse and 
might have to be exhausted before the institutionalized 
spouse would be Medicaid eligible. The key provision is 
Section 1396r-5(e)(2)(C), entitled “Revision of community 
spouse resource allowance.” It provides: 

If either such spouse establishes that the community 
spouse resource allowance (in relation to the amount of 
income generated by such an allowance) is inadequate to 
raise the community spouse’s income to the minimum 
monthly maintenance needs allowance, there shall be 
substituted, for the community spouse resource allow- 
ance * * * , an amount adequate to provide such a 
minimum monthly maintenance needs allowance. 

The question in this case concerns what sources of income 
may be considered when determining whether to adjust, or 
the extent of any adjustment to, the CSRA under that 
provision. 

2. After enactment of the 1988 spousal impoverishment 
provisions, a divergence in practice arose among the States 
with respect to the adjustment of the CSRA under subsec- 
tion (e)(2)(C). Under the so-called “income-first” method, 
income of an institutionalized spouse is allocated to the 
community spouse for purposes of determining the extent to 
which the community spouse has sufficient income to meet 
minimum monthly maintenance needs. Under that method, 
the CSRA is not increased unless the community spouse’s 
income will not reach his or her minimum monthly 
maintenance needs allowance after taking into account any 
income available from the institutionalized spouse. In 
contrast, under the “resource-first” approach, the couple’s 
resources can be protected for the benefit of the community 
spouse to the extent necessary to ensure that the community 

7 

spouse’s total income, including income generated by the 
CSRA, meets the community spouse’s minimum monthly 
maintenance needs allowance; the fact that additional income 
from the institutionalized spouse may be or could be made 
available for the community spouse is not considered. 

The Department of Health and Human Services (HHS) 
has stated in policy memoranda and letters that 42 U.S.C. 
1396r-5(e)(2)(C) authorizes consideration of potential income 
transfers from the institutionalized spouse to the community 
spouse, so that States may adopt the income-first method or 
apply some other reasonable interpretation of the law until 
HHS issues final regulations addressing the issue. Pet. App. 
78a-90a. Cf. Cleary v. Waldman, 167 F.3d 801, 806-807 (3d 
Cir.) (upholding income-first methodology), cert. denied, 528 
U.S. 870 (1999); Chambers v. Ohio Dep’t of Human Servs., 
supra (same). By statute, the State of Wisconsin has 
adopted the income-first method, consistent with HHS’s 
interim policy guidance. Wis. Stat. Ann. § 49.455(8)(d) (West 
1997); Pet. App. 76a. 

3. Two years after respondent Irene Blumer was admit- 
ted to a nursing facility in 1994, she applied for Medicaid 
through her husband, Burnett Blumer. The Green County 
Department of Human Resources concluded that, as of 
respondent’s institutionalization in 1994, the couple had 
$145,644 in assets; accordingly, it calculated a community 
spouse resource allowance for Mr. Blumer of $72,822, which 
was half the couple’s total assets. Respondent, as the 
institutionalized spouse, was permitted to retain only $2000 
in assets. The County determined that, as of the date of 
respondent’s 1996 application, the couple’s assets totaled 
$89,335. That was approximately $14,500 above the eligibil- 
ity threshold of $74,822 ($72,822 for Burnett Blumer under 
his CSRA, and $2000 for respondent). Pet. App. 24a-25a; see 
also id. at 2a. 

Respondent sought a fair hearing from the Division of 
Hearings and Appeals of the Wisconsin Department of 

8 

Health and Family Services pursuant to 42 U.S.C. 1396r- 
5(e)(2)(C). The hearing examiner concluded that, if income of 
the institutionalized spouse (respondent) were excluded 
from consideration, Mr. Blumer’s total monthly income 
would be $1702.45, approximately $25 below the minimum 
monthly maintenance needs allowance of $1727. Pet. App. 
25a, 30a; see also id. at 2a-3a. Accordingly, respondent 
argued that, under 42 U.S.C. 1396r-5(e)(2)(C), the CSRA 
should be raised to generate the $25 per month in additional 
income for Mr. Blumer. Increasing the CSRA would permit 
the couple to retain additional assets without rendering 
respondent ineligible for Medicaid. Pet. App. 3a. 

Consistent with Wisconsin law and HHS’s interim guid- 
ance, however, the hearing examiner determined whether 
there was other income available to support Mr. Blumer and 
thus to meet his minimum monthly maintenance needs. He 
concluded that respondent had income of $1262.71, and that 
the couple’s combined income therefore exceeded $2900. 
Pet. App. 30a-31a. Using the income-first method required 
by Wisconsin law, the hearing officer found that Mr. 
Blumer’s income could be raised to the minimum monthly 
needs level by allocating $25 per month to him from his 
institutionalized spouse, respondent. Id. at 31a; see also id. 
at 3a. Accordingly, the hearing examiner declined to in- 
crease the CSRA. Id. at 31a-32a. The effect of the decision 
was to defer respondent’s eligibility for Medicaid until the 
$14,500 in excess resources were exhausted (on respondent’s 
care, on meeting Mr. Blumer’s needs, or otherwise). 

Respondent appealed, and the Green County Circuit 
Court affirmed the decision of the State agency, rejecting re- 
spondent’s contention that Wisconsin’s income-first method 
conflicted with the federal statute. Pet. App. 19a-22a. 

4. The Wisconsin Court of Appeals reversed. Pet. App. 
1a-17a. In its view, Section 1396r-5(e)(2)(C) unambiguously 
mandates the resource-first method, i.e., that the community 
spouse’s resource allowance must be adjusted upward to 

9 

generate sufficient income to meet the minimum monthly 
maintenance needs allowance, without considering whether 
or to what extent income is available or could be allocated 
from the institutionalized spouse. Id. at 11a. The court 
found support for its reading of the statute in the provisions 
indicating that the CSRA adjustment occurs as a pre- 
eligibility determination, id. at 12a-14a, and from the overall 
policy of the spousal impoverishment provisions, id. at 14a- 
16a. The Wisconsin Supreme Court denied the State’s peti- 
tion for discretionary review. Id. at 18a. 

DISCUSSION 

In the decision below, the Wisconsin Court of Appeals 
invalidated a Wisconsin state statute, holding that the 
spousal impoverishment provisions of the Medicaid program 
unambiguously preclude the use of an “income-first” 
methodology. We agree with the State that the decision of 
that intermediate state appellate court is incorrect; that it 
conflicts with the decisions of two federal courts of appeals 
and the decisions of the highest courts of two other States, 
all of which have upheld methodologies like the one chosen 
by Wisconsin; and that the case concerns a matter of sub- 
stantial importance. 

Nonetheless, we do not believe that review of the issue by 
this Court is warranted at this time. The United States 
Department of Health and Human Services has informed us 
that, in light of the Wisconsin Court of Appeals’ invalidation 
of the income-first rule on a state-wide basis, it plans 
promptly to promulgate regulations addressing the question 
presented here. See also Uniform Agenda, 65 Fed. Reg. 
73,838, 73,839 (Nov. 30, 2000). Given the traditional defer- 
ence this Court accords to agency regulations implementing 
a statutory scheme entrusted to the agency for administra- 
tion, HHS’s regulations will be of substantial assistance in 
the interpretation of this complex statutory scheme. Indeed, 
because Congress has expressly delegated standards-pre- 

10 

scribing authority—i.e., it has delegated not merely inter- 
pretive but legislative rulemaking authority—to the Secre- 
tary in this area, the Secretary’s regulations may prove to be 
central to the full consideration and dispositive resolution of 
the issue. Finally, the new regulations could altogether 
eliminate any need for review by this Court: If those 
regulations continue to authorize the income-first approach, 
the State may ask the Wisconsin Court of Appeals to revisit 
the issue; if that court declines to do so, the Wisconsin 
Supreme Court may choose to review the issue at that time, 
and then bring the law of that State in line with the 
Secretary’s regulations and the decisions of the other 
appellate courts that have considered the matter. In analo- 
gous circumstances in the past, the Court has deferred 
review pending the issuance of agency regulations. See, e.g., 
Batterton v. Francis, 432 U.S. 416, 421 (1977). We urge the 
Court to take the same course here. 

1. This case concerns the legality of Wisconsin’s meth- 
odology for determining Medicaid eligibility under that pro- 
gram’s spousal impoverishment provisions, 42 U.S.C. 1396r-5 
(1994 & Supp. IV 1998). Under Section 1396r-5(e), States 
must increase a community spouse’s resource allowance 
(CSRA) if such an adjustment is necessary to ensure that 
the community spouse’s total monthly income meets the 
minimum monthly maintenance allowance. Adjusting the 
CSRA, in effect, increases the total amount of resources the 
couple can retain without rendering the institutionalized 
spouse ineligible for Medicaid; the additional income gener- 
ated by those extra resources can then be used to meet the 
community spouse’s monthly needs. Like many other 
States, Wisconsin has decided that, when determining 
whether the income available to the community spouse falls 
short of the minimum monthly maintenance needs allowance, 
the community spouse’s income should include any excess 
income from the institutionalized spouse that could be made 
available to the community spouse. Two federal courts of 

11 

appeals have upheld that methodology, which is known as 
“income first,” as permissible,2 as have the highest courts of 
two other States.3 Disagreeing with those decisions, Pet. 
App. 10a, the Wisconsin Court of Appeals in this case held 
that the income-first methodology is foreclosed by the 
statute. Id. at 11a-12a. 

In so holding, the Wisconsin Court of Appeals created a 
conflict on a matter of substantial importance. From the 
State’s perspective, the fiscal impact is potentially large. 
Respondents do not dispute that the cost to the State of 
Wisconsin is more than $2 million per year (Br. in Opp. 3), 
and Wisconsin estimates that the annual cost is approxi- 
mately $10 million per year (Pet. 20); because the federal 
government reimburses certain Medicaid expenses, much of 
that cost will be borne by the national government. More- 
over, consistent with the Secretary’s informal guidance, a 
majority of States currently use the income-first method the 
Wisconsin Court of Appeals invalidated.4 Finally, for 
individual Medicaid claimants and their families, the method 
under which income (and thus Medicaid eligibility) is deter- 
mined can have a profound impact on their financial deci- 
sions. 

The decision of the court of appeals, holding that the 
statute unambiguously forbids the use of the income-first 
methodology, is also incorrect. The court of appeals rested 

2 Cleary v. Waldman, 167 F.3d 801 (3d Cir.), cert. denied, 528 U.S. 870 
(1999); Chambers v. Ohio Dep’t of Human Servs., 145 F.3d 793, 799 (6th 
Cir.), cert. denied, 525 U.S. 964 (1998). 

3 Golf v. New York State Dep’t of Soc. Servs., 697 N.E.2d 555 (N.Y. 
1998); Thomas v. Commissioner of the Div. of Med. Assistance, 682 
N.E.2d 874 (Mass. 1997). 

4 We have been informed by the Health Care Financing Administra- 
tion that its own informal survey suggests that some States that currently 
use the income-first methodology were omitted from the list provided at 
Pet. 9 n.8, and that some States listed may not use that methodology. In 
all events, however, a majority of States currently use the income-first 
method. 

12 

its decision on the fact that Section 1396r-5(e)(2)(C) “very 
specifically directs the increase” of the community spouse’s 
resource allowance “to an amount sufficient to generate 
additional income to meet” the community spouse’s minimum 
monthly maintenance needs allowance. Pet. App. 11a. It is 
true that subsection (e)(2)(C) directs the agency to deter- 
mine whether the community spouse’s income meets his or 
her minimum monthly maintenance needs. And that pro- 
vision also declares that, if the community spouse’s income 
falls short of meeting those needs, the CSRA should be 
increased by an amount that will generate sufficient income 
to bring the community spouse’s income to the minimum 
monthly maintenance needs level. But those evident 
features of the subsection do not resolve what may be con- 
sidered income of the community spouse in the first place, 
when deciding whether or not the community spouse has 
sufficient income to meet his or her minimum monthly main- 
tenance needs. As one court has explained, the view adopted 
by the Wisconsin Court of Appeals fails to confront the ques- 
tion whether “a community spouse’s ‘income’ includes—or 
does not include—any transfer of income from the institu- 
tionalized spouse.” Chambers v. Ohio Dep’t of Human 
Servs., 145 F.3d 793, 799 (6th Cir.), cert. denied, 525 U.S. 964 
(1998). “Whether this transferred income is included distin- 
guishes the two possible approaches used to implement 
subsection (e)(2)(C).” Ibid. 

On that issue—what constitutes income available to the 
community spouse for purposes of initial eligibility deter- 
minations—the spousal impoverishment provisions are 
silent. Indeed, while those provisions very specifically pro- 
hibit the community spouse’s income from being “deemed” 
available for the care of the institutionalized spouse, 
42 U.S.C. 1395r-5(b)(1), they nowhere preclude the Secre- 
tary or the States from considering the institutionalized 
spouse’s income from being considered available to the 
community spouse. In light of that omission, the most 

13 

natural inference is not that Congress intended to prohibit 
the community spouse’s income from including excess 
income of the institutionalized spouse; instead, it is that 
Congress intended to allow that practice, or at least left the 
propriety of that practice to be determined “in accordance 
with standards prescribed by the Secretary,” 42 U.S.C. 
1396a(a)(17). Cf. Chevron U.S.A. Inc. v. Natural Res. Def. 
Council, Inc., 467 U.S. 837, 842 (1984). 

Nor was the Wisconsin Court of Appeals correct to rely on 
the statute’s provisions concerning certain resource and 
income allocation procedures at particular stages of the 
administrative process. That court held that, because the 
CSRA is calculated before eligibility is determined (it is a 
“pre-eligibility” determination), income from the institution- 
alized spouse should not be treated as income of the com- 
munity spouse at that stage. In that regard, the court noted 
that the statute addresses the question of allocation of the 
institutionalized spouse’s income to the community spouse in 
connection with the State’s determination—post-eligibility 
—of how much of the institutionalized spouse’s income can 
be applied to the monthly cost of care, see 42 U.S.C. 1396r- 
5(d)(2), and the court inferred from that provision that any 
similar allocation at the pre-eligibility stage is prohibited. 
Pet. App. 12a-14a. That inference is hardly ineluctable. It is 
just as plausible to read the pre- and post-eligibility 
methodologies in harmony with each other, such that the 
institutionalized spouse’s excess income may be treated as 
income available to the community spouse pre-eligibility to 
the extent permitted under standards promulgated by the 
Secretary, in the same manner that such income must be 
allocated to the community spouse post-eligibility as 
provided in Section 1396r-5(d)(2). In other words, the fact 
that the statute expressly provides for an income allowance 
from the institutionalized spouse post-eligibility does not bar 
the Secretary from permitting a parallel allowance to be 
considered in calculating the community spouse’s income 

14 

pre-eligibility. As one court of appeals explained, the “dis- 
tinction between the resource allowance and the income 
allowance does not * * * address—or limit—the issue of 
whether a transfer of income may be considered when a com- 
munity spouse resource allowance adjustment is contem- 
plated under § 1396r-5(e)(2)(C).” Chambers, 145 F.3d at 802. 

Finally, the Wisconsin Court of Appeals’ decision is 
inconsistent with the legislative history of the 1988 amend- 
ments. Addressing the very provision at issue here, the 
Conference Report declared: 

If the State, after such a hearing, determines that the 
community spouse resource allowance is inadequate, the 
State must allow the community spouse to retain an 
adequate amount of resources to provide the minimum 
monthly maintenance needs allowance (taking into 
account any other income attributable to the community 
spouse), notwithstanding the amount of the State- 
established resource allowance. 

H.R. Conf. Rep. No. 661, 100th Cong., 2d Sess. 265 (1988) 
(emphasis added). Thus, in contradiction with the inference 
drawn by the Wisconsin Court of Appeals, the Conference 
Report demonstrates that Congress understood that there 
might be “other income attributable to the community 
spouse” that can be considered when determining whether 
to raise the CSRA. 

2. Notwithstanding the foregoing, the Court should not 
grant the petition for a writ of certiorari. At the time the 
court of appeals decided this case, the Department of Health 
and Human Services had issued—and the States were 
operating under—the Secretary’s interim guidance. Under 
that guidance, States had “the option to use the ‘income first’ 
rule or to apply some other reasonable interpretation of 
the law until [the Health Care Financing Administration 
(HCFA)] issue[s] final regulations which specifically address 
this issue.” Pet. App. 86a (emphasis added). We have been 

15 

informed that, in light of the state court of appeals’ con- 
struction of the statute, and its invalidation of the income- 
first rule on a state-wide basis, HCFA has determined to 
issue regulations addressing the issue presented by this case 
on an expedited schedule. In particular, HCFA intends to 
issue a notice of proposed rulemaking within 90 days. 

Those new regulations could significantly affect not only 
the nature of the question before the Court—and inform this 
Court’s resolution of that question—but also whether the 
Court’s resolution of that issue is necessary at all. Because 
the statute is technical and complex, the agency’s views, as 
embodied in final regulations, are of considerable importance 
here. Aluminum Co. of Am. v. Central Lincoln Peoples’ 
Util. Dist., 467 U.S. 380, 390 (1984). Indeed, this case 
concerns the Social Security Act, notorious for being “almost 
unintelligible to the uninitiated.” Friedman v. Berger, 547 
F.2d 724, 727 n.7 (2d Cir. 1976) (Friendly, J.), cert. denied, 
430 U.S. 984 (1977). Even when compared to the rest of the 
Social Security Act, the spousal impoverishment provisions 
of the Medicaid program are particularly intricate; the 
officials who must oversee their implementation on a daily 
basis consider them to be “extremely complicated” and, “in 
places[,] ambiguous and incomplete.” Pet. App. 84a. The 
Court should not undertake the difficult task of interpreting 
this inordinately complex statutory scheme without the 
benefit of the Secretary’s final views. 

In this context, moreover, the Secretary’s regulations 
could prove not merely helpful or important, but rather 
central to determining the validity of state implementing 
legislation. The Social Security Act at various points accords 
the Secretary quasi-legislative standards-setting authority 
on income-attribution issues. Section 1396a(a)(17), for exam- 
ple, provides that state plans must “provide for taking into 
account only such income and resources as are, as deter- 
mined in accordance with standards prescribed by the 

16 

Secretary, available to the applicant or recipient.” 42 U.S.C. 
1396a(a)(17)(B) (emphasis added). This Court has recognized 
that Congress, by using such language, “expressly dele- 
gate[s] to the Secretary the power to prescribe standards” 
for purposes of determining eligibility, and thus to adopt 
“regulations with legislative effect.” Batterton v. Francis, 
432 U.S. at 425. “In a situation of this kind, Congress 
entrusts * * * the primary responsibility for” providing 
content to the statute “to the Secretary, rather than to the 
courts,” ibid., and the regulations are “entitled to more than 
mere deference or weight,” id. at 426.5 See also Schweiker v. 
Gray Panthers, 453 U.S. 34, 43-44 (1981) (Secretary’s regula- 
tions under Section 1396a(a)(17) are entitled to “legislative 
effect”); Chevron, 467 U.S. at 843-844 (explaining that, where 
“Congress has explicitly left a gap for the agency to fill, 
there is an express delegation of authority to the agency to 
elucidate a specific provision” and the resulting “legislative 
regulations are given controlling weight unless they are 
arbitrary, capricious, or manifestly contrary to the statute,” 
but that, where the delegation is merely implicit, the 
agency’s construction controls if it is “reasonable”). 

In addition, although HHS’s interim guidance allows the 
States the option of using income-first or other reasonable 
methodologies, the Secretary’s final regulations could differ 
from the interim guidance. They could require the use of 
income first. But they also could mandate resource first, or 
continue the Secretary’s policy of giving the States a choice 
among reasonable options. See Batterton v. Francis, 432 
U.S. at 421-422, 429-432 (holding that, where the statute 

5 Batterton v. Francis concerned a (now repealed) provision of the 
Social Security Act, 42 U.S.C. 607(a) (1994), with nearly identical lan- 
guage. Section 607(a) provided benefits for dependent children who 
(among other things) have “been deprived of parental support or care by 
reason of the unemployment (as determined in accordance with standards 
prescribed by the Secretary) of [their] father.” See 432 U.S. at 418 n.2, 419 
(emphasis added). 

17 

permits the Secretary to “prescribe standards,” the Secre- 
tary may accord States a reasonable range of options). Until 
the Secretary issues the final regulations, inquiry into 
whether any particular implementation of the spousal 
impoverishment provisions is consistent with statutory text 
would seem premature and potentially advisory. 

Finally, the Secretary’s issuance of new regulations could 
render this Court’s review unnecessary. It is possible that 
the Wisconsin Court of Appeals will, even after the Secre- 
tary’s issuance of regulations, decline to reconsider its deci- 
sion. That court, after all, rejected the State’s plea for 
deference to the Secretary’s interim policy in part on the 
ground that Wisconsin courts “do not look to other sources 
to interpret a statute if its language is clear on its face.” Pet. 
App. 16a.6 

The Wisconsin Court of Appeals, however, is not 
6 The Secretary’s regulations, of course, cannot create ambiguity 
where there is none. Nonetheless, the Wisconsin Court of Appeals also 
declined deference on the ground that HHS “has not interpreted the 
statute consistently.” Pet. App. 16a. Presumably, the Wisconsin Court of 
Appeals was alluding to Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944), 
which indicates that the weight federal courts give to a statutory inter- 
pretation issued by the administering agency “will depend upon the 
thoroughness evident in its consideration, the validity of its reasoning, its 
consistency with earlier and later pronouncements, and all those factors 
which give it power to persuade, if lacking power to control.” Cf. 
Christensen v. Harris County, 529 U.S. 576, 587 (2000). The Wisconsin 
Court of Appeals’ claim of inconsistency, however, is without merit. The 
agency’s initial policy statement regarding 42 U.S.C. 1396r-5(e)(2)(C), 
issued in November 1993, indicated that it was “requiring that the institu- 
tionalized spouse must first make available the maximum amount of 
income he or she can as a community spouse monthly income allowance 
under [42 U.S.C. 1396r-5(d)(1)(B)] before being allowed to raise the 
[CSRA].” Pet. App. 81a. Later, on March 3, 1994, HCFA’s Director 
issued a memorandum, stating that the November 1993 memorandum 
should not be read as requiring the income-first method. Id. at 85a, 88a. 
Rather, the agency sought to give the States “the option to use the 
‘income first’ rule or to apply some other reasonable interpretation of the 
law until we have issued final regulations which specifically address this 
issue.” Id. at 86a. Thus, HHS has never departed from its view that 
Congress intended that the States should be permitted to use an income- 

18 

that State’s highest court; the Wisconsin Supreme Court is. 
That court may well choose to review this issue if, following 
the Secretary’s issuance of regulations, the state court of 
appeals adheres to its current position; the policies gov- 
erning that court’s exercise of its power of discretionary 
review strongly suggest such a result.7 In any event, if the 
Wisconsin state courts do not bring the law of that State into 
conformity with the decisions of the federal courts of appeals 
and the highest courts of other States—or if the Wisconsin 
courts invalidate the Secretary’s regulations—this Court 
will have ample opportunity to resolve the resulting conflict, 
and to do so with the benefit of the Secretary’s regulations. 

The Court followed a similar course in Batterton v. 
Francis, supra. In that case, the Court initially declined to 
review, on the merits, a decision of a three-judge panel that 

first method. Rather, the agency has merely indicated that, in view of the 
ambiguity in the statute, the federal government would pay the resulting 
federal share of Medicaid benefits to States using either the resource-first 
method or the income-first method, without challenging those States’ 
practices, in the absence of agency regulations. Cf. Lincoln v. Vigil, 508 
U.S. 182 (1993); Heckler v. Chaney, 470 U.S. 821 (1985). Besides, even 
inconsistency is no basis for stripping the agency’s view of its “power to 
persuade.” Skidmore, 323 U.S. at 140. Unduly weakened deference 
creates a risk of chaotic, inconsistent rulings in programs governing fed- 
eral health, safety, and welfare programs that could overtax this Court’s 
supervisory capacity. See, Peter L. Strauss, One Hundred Fifty Cases 
Per Year, 87 Colum. L. Rev. 1093 (1987). This consideration becomes 
especially important with respect to federal statutes that are administered 
by the States. Skidmore and Christensen require more respectful analysis 
of the agency’s views than the peremptory treatment accorded by the 
Wisconsin Court of Appeals. 

7 Under those policies, the Wisconsin Supreme Court will review 
cases presenting substantial and novel legal issues, particularly where 
there is a conflict among courts of appeals or, where the decision is con- 
sistent with earlier precedent, “changing circumstances” make the 
opinions “ripe for reexamination.” See App., infra, 2a. The Secretary’s 
issuance of comprehensive final regulations construing the federal statute, 
if they are inconsistent with the state appellate court’s view of that 
statute’s meaning, should qualify as a change in circumstances warranting 
re-examination of the court of appeals’ holding. 

19 

had invalidated a state Social Security regulation as incon- 
sistent with federal regulations. “Although [the federal 
agency] did not agree” that the state policy was inconsistent 
with its regulations, “the Solicitor General, in his memoran- 
dum for the United States as amicus curiae, filed * * * at 
this Court’s invitation, 408 U.S. 920 (1972), suggested a 
summary affirmance * * * in light of the then-forthcoming 
revision of the [agency] regulation,” 432 U.S. at 421, and this 
Court in fact summarily affirmed that decision, Davidson v. 
Francis, 409 U.S. 904 (1972). Later, after the district court 
declined to reconsider its decision in light of the new regula- 
tions and was affirmed by the court of appeals, this Court 
granted certiorari and resolved the dispute, which by then 
was substantially altered. Indeed, it seems fair to say that, 
under the Court’s analysis, see 432 U.S. at 426-427, the 
Secretary’s regulations proved central to the resulting deci- 
sion. Similar considerations here counsel a similar course 
—i.e., deferring review of the issue pending the Secretary’s 
issuance of final regulations.8 

We recognize, of course, that deferring review of this 
issue even temporarily imposes a financial burden on the 
State of Wisconsin and on the federal government, which 
reimburses the States for a portion of their costs. In 

8 The analogy to Batterton v. Francis, of course, is not perfect. In this 
case, the Wisconsin Court of Appeals held that the Medicaid statute 
unambiguously precludes the use of an income-first methodology; the 
decision this Court summarily affirmed in Francis held that a federal 
regulation precluded the state policy at issue. Nonetheless, the Secre- 
tary’s forthcoming regulations are likely to prove as important to the 
Court’s resolution of the issue here as they did in Francis. First, to the 
extent Congress delegates standards-setting authority to the Secretary, 
as under 42 U.S.C. 1396a(a)(17), the Secretary’s regulations setting forth 
those standards are critical if not indispensable to the meaningful judicial 
review of state statutes. Second, because the Wisconsin Supreme Court 
has not reviewed this issue on the merits, the Secretary’s new regulations, 
if they continue to authorize the income-first rule, may persuade that 
court to review the matter and uphold the state statute; such a decision, 
by eliminating the conflict, might make review by this Court unnecessary. 

20 

addition, pending the Secretary’s issuance of regulations and 
the completion of further judicial review, some beneficiaries 
in the State of Wisconsin will receive benefits under a court- 
mandated resource-first rule, while similarly situated indi- 
viduals in other States are denied benefits under the income- 
first methodology. The Secretary’s interim policy guidance, 
however, expressly contemplates the possibility that States 
will use different methodologies—it permits the use of 
income-first or any other reasonable methodology—pending 
the Secretary’s issuance of final regulations. Moreover, in 
view of Congress’s delegation of standards-setting authority 
to the Secretary in portions of the Social Security Act, this 
Court has upheld regulations that authorize States to choose 
among reasonable methodological options. See, e.g., Batter- 
ton v. Francis, 432 U.S. at 430 (holding that the power to 
“determine” particular issues “remains with the States,” and 
that “the power to prescribe ‘standards’ gives the Secretary 
sufficient flexibility to recognize some local options in 
determining * * * eligibility”). In any event, because the 
Secretary’s regulations may greatly influence the nature of 
the question eventually presented to this Court and prove 
important in its resolution, we believe that the better course 
is to decline consideration of this issue, for now, pending the 
Secretary’s issuance of regulations. 

CONCLUSION 

The petition for a writ of certiorari should be denied. 

Respectfully submitted. 

BARBARA D. UNDERWOOD 

Acting Solicitor General 
STUART E. SCHIFFER 

Acting Assistant Attorney 

General 
WILLIAM KANTER 
BRUCE G. FORREST 

Attorneys 
JUNE 2001 

APPENDIX 

WEST’S WISCONSIN STATUTES ANNOTATED 

CIVIL PROCEDURE 

CHAPTER 808. APPEALS AND WRITS OF ERROR 

808.10. Review by the supreme court 

A decision of the court of appeals is reviewable by the 
supreme court only upon a petition for review granted by 
the supreme court. The petition for review shall be filed 
in the supreme court within 30 days of the date of the 
decision of the court of appeals. 

* * * * * 

The [Wisconsin] Supreme Court Order of Nov. 15, 1978 
provides: 

“This court, having deemed it appropriate for the 
guidance of the Bar and the general public to set forth 
the standards it will apply in reviewing petitions to 
appeal from an adverse decision of the Court of Appeals 
filed pursuant to sec. 808.10 and Rule 809.62, Stats., and 
this court noting that granting such petitions is a matter 
within its sound judicial discretion, hereby adopts the 
following guidelines, which are neither controlling nor 
limiting measures of such discretion: 

“This court will grant a petition to appeal whenever 
three or more justices of this court vote to grant such 
petition and when any one of the following criteria are 
met: 

“A) A real and significant question of federal or state 
constitutional law is presented. 

(1a) 

2a 

“B) The petition demonstrates a need for this court to 
consider establishing, implementing or changing a policy 
within this court’s authority. 

“C) A decision by this court will help develop, clarify 
or harmonize the law and 

“1) The case calls for the application of a new doc- 
trine rather than merely the application of well-settled 
principles to the factual situation; or 

“2) The question presented is a novel one, the resolu- 
tion of which will have state-wide impact; or 

“3) The question presented is not factual in nature 
but rather is a question of law of the type that is likely to 
recur unless resolved by this court. 

“D) The Court of Appeals’ decision is in conflict with 
controlling opinions of the United States Supreme Court 
or this court or other Court of Appeals’ decisions. 

“E) The Court of Appeals’ decision is in accord with 
opinions of this court or the Court of Appeals but due to 
the passage of time or changing circumstances, such 
opinions are ripe for reexamination. 

“The above stated guidelines are set forth to indicate 
what this court considers in reviewing petitions to 
appeal. It must be emphasized, however, that the 
presence in a case of any one or any combination of these 
factors is not an assurance that the petition to appeal will 
be granted. Nor is the apparent absence of such factors 
an assurance that the petition will be denied.”