Arkansas Dep't of Human Servs. v. Estate of Lewis

ARKANSAS DEPARTMENT OF HUMAN SERVICES v.
ESTATE OF Ruby LEWIS, Deceased

96-131                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered June 3, 1996


1.   Estoppel -- elements necessary for finding of. -- Four
     elements are necessary for a finding of estoppel: (1) the
     party to be estopped must know the facts; (2) the party to be
     estopped must intend that the conduct be acted on or must act
     so that the party asserting the estoppel had a right to
     believe it was so intended; (3) the party asserting the
     estoppel must be ignorant of the facts; and (4) the party
     asserting the estoppel must rely on the other's conduct and be
     injured by that reliance.

2.   Estoppel -- availability of defense against State. -- In
     Foote's Dixie Dandy v. McHenry, 270 Ark. 816, 607 S.W.2d 323
     (1980), the supreme court abandoned the principle that the
     State can never be estopped by the actions of its agents;
     estoppel is not a defense that should be readily available
     against the State, but neither is it a defense that should
     never be available.

3.   Estoppel -- application of doctrine against State -- clear
     proof of affirmative misrepresentation required. -- The
     appellate courts have only applied the doctrine of estoppel
     against the State where an affirmative misrepresentation by an
     agent or agency of the State has transpired; estoppel should
     not be applied where there is no clear proof of an affirmative
     misrepresentation by the agency; there must be substantial
     evidence of a citizen's reliance upon the actions or
     statements of an agent of the State.

4.   Estoppel -- no affirmative misrepresentation by State -- no
     evidence of reliance upon State's silence. -- In the present
     case, there was no affirmative misrepresentation by the State
     but only silence on the part of appellant agency regarding its
     statutory right under Act 415 of 1993, Ark. Code Ann.  20-76-
     436 (Supp. 1995), to recoup Medicaid benefits after the
     decedent's death; under those conditions, there could be no
     evidence that the decedent in any way relied on the State's
     silence regarding Act 415 to her detriment.

5.   Statutes -- act did not impose duty on state agency to inform
     Medicaid recipients of its right to file claims for benefits
     paid. -- The supreme court noted that neither Act 415 of 1993
     nor the federal Medicaid statutes and regulations impose a
     duty on appellant agency to inform Medicaid recipients of its
     right to file claims against their estates for benefits paid.

6.   Estoppel -- doctrine not expanded with respect to State --
     case reversed and remanded. -- The supreme court declined to
     expand the estoppel doctrine to encompass incidents devoid of
     affirmative misrepresentation by the State and further
     declined to impose a duty on state agencies to inform
     recipients of state benefits of changes in state programs
     absent a clear directive by the General Assembly to do so; the
     case was reversed and remanded for a determination of the
     precise amount of appellant agency's claim.


     Appeal from Columbia Probate Court; Edward P. Jones, Probate
Judge; reversed and remanded.
     C. Norton Bray, for appellant.
     Paul C. Crumpler, for appellee.

     Robert L. Brown, Justice.Associate Justice Robert L. Brown
June 3, 1996   *ADVREP*SC5*






ARKANSAS DEPARTMENT OF HUMAN
SERVICES,
                    APPELLANT,

V.

ESTATE OF RUBY LEWIS, DECEASED,
                     APPELLEE,

96-131




APPEAL FROM THE COLUMBIA COUNTY
PROBATE COURT,
NO. P-94-158,
HON. EDWARD P. JONES, JUDGE,




REVERSED AND REMANDED.






     This case involves the issue of whether the probate court
erred in ruling that the appellant, Arkansas Department of Human
Services (DHS), was estopped from recouping Medicaid benefits paid
to Ruby Lewis from her Estate.  We agree with DHS that the probate
court did err in this regard, and we reverse and remand.
     Ruby L. Lewis died intestate on December 14, 1994, at the age
of 73.  She was survived by two daughters and two granddaughters,
and her estate at the time of her death was valued at approximately
$25,000.  A petition to open her estate was filed on December 20,
1994.  On February 10, 1995, DHS filed a claim against the Estate
for Medicaid benefits paid on Ruby Lewis's behalf for medication
and home health care during her lifetime pursuant to Act 415 of
1993, now codified at Ark. Code Ann.  20-76-436 (Supp. 1995).  Act
415 provides in part that DHS may make a claim against the estate
of a deceased recipient of Medicaid benefits for the amount of the
benefits paid.  The amount claimed by DHS was $9,977.36.  The claim
was denied by the administratrix of the Estate.
     On March 20, 1995, DHS filed an amended claim against the
estate for $9,488.01.  The amended claim subtracted those charges
paid prior to August 13, 1993, which DHS believed to be the
effective date of Act 415.  The actual effective date of Act 415 of
1993 was August 15, 1993.  This claim was also denied by the
administratrix.
     On May 17, 1995, and August 23, 1995, hearings were held
before the probate court on the various claims by DHS.  At the
first hearing, William Freevern, a program administrator in the
medical assistance unit of DHS, testified as to the Medicaid
payments made on behalf of Ruby Lewis for medication and home
health care since August 15, 1993.  Neva Braswell, one of the
daughters of the decedent and the administratrix of her estate,
also testified that her mother applied for services provided by the
Elder Choice Program in 1992.  She added that her mother was never
informed that DHS would be able to recoup the Medicaid benefits
after her death.
     On August 23, 1995, the second hearing was held before the
probate court to allow further testimony by the Estate.  At that
hearing, DHS stipulated that Ruby Lewis never received any notice
or information from DHS about its ability to recover Medicaid
payments from her Estate.  This point was corroborated by the
testimony of other DHS employees, one of whom added that she was
never told by DHS to advise recipients of the change worked in the
law by Act 415.  Neva Braswell expanded her testimony to say that
after her mother was denied Medicaid eligibility in 1992, she hired
an attorney and appealed.  She was eventually granted eligibility
in June of 1993.  Braswell testified that her mother had personal
insurance that would have paid over 80 percent of her medication
bills.  She added that Medicaid paid approximately $1,800 for her
medication, which it is now seeking to recoup.
     On September 26, 1995, the probate court issued a letter
opinion which stated in part:
     Ruby Lewis as a part of her agreement with DHS was
     required to inform DHS of any change in her financial
     circumstance which could then disqualify her from
     receiving the medicaid benefits.  It seems reasonable
     that the same responsibility could be expected of DHS to
     inform Ruby Lewis of any changed circumstances which
     would affect her.  The Supreme Court of Arkansas in the
     Wood case, supra, [Estate of Wood v. Department of Human
     Services, 319 Ark. 697, 894 S.W.2d 573 (1995)], described
     the result of Act 415 of 1993 as changing the benefit
     received from an entitlement or gift to a loan.  Surely
     this important change in the status of the relationship
     between benefit recipient and provider of the benefit is
     of such significance that DHS should have concluded that
     its medicaid recipients should be advised of this change. 
     Such was not done and in fact local DHS employees
     testified that they were not even aware of the change
     brought about by Act 415 so that they could in turn
     advise their clients.
          It is the conclusion of this Court that DHS had an
     obligation to advise its benefit recipients such as Ruby
     Lewis of the change in nature of the benefits which would
     occur as a result of Act 415 of 1993.  Failing to do so
     DHS should be and in this case is estopped from then
     making a claim against this decedent's estate for such
     benefits.
          The equitable doctrine of estoppel is an affirmative
     defense and as such should be pled.  This is to allow the
     opposing party to present evidence in opposition.  In
     this case it is hard to imagine evidence DHS might offer
     since the facts are not in dispute.  The pleadings here
     are deemed amended to conform to the evidence.
A formal order by the probate court was entered on October 3, 1995.
     DHS's sole point on appeal is that the probate court erred in
finding that DHS was estopped from asserting its claim against the
Estate.  There are four elements necessary for a finding of
estoppel:  (1) the party to be estopped must know the facts; (2)
the party to be estopped must intend that the conduct be acted on
or must act so that the party asserting the estoppel had a right to
believe it was so intended; (3) the party asserting the estoppel
must be ignorant of the facts; and (4) the party asserting the
estoppel must rely on the other's conduct and be injured by that
reliance.  Miller v. City of Lake City, 302 Ark. 267, 789 S.W.2d 440 (1990); Foote's Dixie Dandy v. McHenry, 270 Ark. 816, 607 S.W.2d 323 (1980).  In Foote's Dixie Dandy v. McHenry, supra, this
court abandoned the principle that the State can never be estopped
by the actions of its agents.  We stated in Foote's Dixie Dandy,
however, that "[e]stoppel is not a defense that should be readily
available against the state, but neither is it a defense that
should never be available."  270 Ark. at 822, 607 S.W.2d  at 325.
     Since Foote's Dixie Dandy v. McHenry, supra, this court and
the Arkansas Court of Appeals have only applied the doctrine of
estoppel against the State where an affirmative misrepresentation
by an agent or agency of the State has transpired.  See, e.g.,
Foote's Dixie Dandy v. McHenry, supra (state auditor's
misrepresentation that further documentation need not be filed may
estop the State from collecting unemployment insurance
contributions); Wells v. Everett, 5 Ark. App. 303, 635 S.W.2d 294
(1982) (Employment Security Agency informed recipient that amount
disbursed was correct amount and was estopped from collecting the
overpayment);  Fountain v. Everett, 3 Ark. App. 214, 623 S.W.2d 861
(1981) (misinformation supplied by an Employment Security Agency of
a sister state may estop Arkansas's agency from denying benefits);
Rainbolt v. Everett, 3 Ark. App. 48, 621 S.W.2d 877 (1981)
(Employment Security Agency informed applicant that she need not
seek employment until after she viewed a training film and was
estopped from using the delay to deny benefits).
     Indeed, in Everett v. Jones, 277 Ark. 162, 639 S.W.2d 739
(1982), this court held that estoppel should not be applied where
there was no clear proof of an affirmative misrepresentation by the
agency.  In Jones, the only evidence that was presented was that
the State agency had failed to advise the claimant of the procedure
to be followed.  This court stated:
          Certainly, we do not intend that the Foote's
     doctrine be extended to a nebulous and indefinite
     situation where the agent of the State has not clearly
     caused the claimant to believe that nothing more is
     necessary other than to return on the assigned date ....
     Before the State is estopped from applying this law there
     must be substantial evidence that the citizen relied upon
     actions or statements by an agent of the State.
Jones, 277 Ark. at 167, 639 S.W.2d  at 742.  (Emphasis added.)  The
specific reference to actions or statements by a State agent
underscores the need for some affirmative act as a prerequisite to
a judicial finding of estoppel.  See also AP&L v. Arkansas Pub.
Serv. Comm'n, 275 Ark. 164, 169, 628 S.W.2d 555, 559 (1982), where
this court referred to the "necessary reliance upon misleading
action by the Commission" for estoppel to pertain.
     In the case at hand, there was no affirmative
misrepresentation by the State but only silence on the part of DHS
of its right to recoup Medicaid benefits after Ruby Lewis's death. 
It necessarily follows that under these conditions, there can be no
evidence that Ruby Lewis in any way relied on the State's silence
regarding Act 415 to her detriment.  For us to conclude otherwise
would be to engage in guesswork and rank speculation which we will
not do.
     We take particular note of the fact that Act 415 does not
impose a duty on DHS to inform Medicaid recipients of its right to
file claims against their estates for benefits paid; nor do the
federal Medicaid statutes or regulations.  See, e.g., 42 U.S.C.
1396 p(b) and 42 C.F.R.  433.36.  In fact, the Federal
Regulations only provide that notice to a recipient be given if the
agency is placing a lien on the property of that recipient while he
or she is in a nursing facility and not reasonably expected to be
discharged.  42 C.F.R.  433.36(d). 
     In sum, we decline to expand the Foote's Dixie Dandy doctrine
to encompass incidents devoid of affirmative misrepresentation by
the State.  We further decline to impose a duty on State agencies
to inform recipients of state benefits of changes in state
programs, such as occurred in Act 415, absent a clear directive by
the General Assembly to do so.  This case, accordingly, is reversed
and remanded for a determination of the precise amount of DHS's
claim.
     Reversed and remanded.
     Dudley, J., not participating.