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Child support garnishment included in man’s Medicaid liability, COA says

January 17, 2019

A man who previously won his argument that the money garnished for his child support should not be included in determining his Medicaid liability was reversed Wednesday, when an appellate panel determined the Indiana Family and Social Services Administration’s interpretation of Medicaid statutes and regulations were reasonable.

Lance Patterson lives in a Middletown nursing home as a result of his chronic heart failure, diabetes, and various other medical issues. Due to his failure to pay child support while his adult daughter was a minor, Patterson accumulated a child support arrearage of more than $56,000, for which he was issued a garnishment order.

The Social Security Administration withholds $730.80 from each of Patterson’s monthly SSDI checks, deducting $2.60 from his benefit check for monthly health plan premiums – leaving $502.60 each month deposited in Patterson’s bank account from what could have been about $1,236 per month.

When the Indiana Family and Social Services Administration determined Patterson was eligible for Medicaid in Oct. 2016, it did not consider the actual amount of money deposited into Patterson’s personal account each month. Thus, the FSSA notified Patterson that he would be responsible for paying $1,181 per month to his nursing home, to which he already owed $8,890.

Patterson administratively appealed the FSSA’s determination, arguing that the $730.80 garnished for his child support arrearage should not have been included in determining his Medicaid liability, but an administrative law judge found favor with the FSSA.

After Patterson sought judicial review in March 2017, the Henry Circuit Court reversed the FSSA’s determination. However, the Indiana Court of Appeals reversed the trial court decision in Indiana Family and Social Services Administration v. Lance Patterson,18A-PL-925, finding the court erred because the FSSA’s decision was consistent with federal and state law and was neither arbitrary nor capricious.

Before the appellate court, Patterson argued that the portion of his income that is subject to garnishment should not be counted toward his income because subsection (e) of the federal regulation regarding the post-eligibility determination of income refers to “total income received.” Specifically, he does not “receive” the portion of his income that is subject to the garnishment order.

But the appellate court found the reference to “total income” ambiguous, choosing to defer to the FSSA’s interpretation that the total income would include the amount subjected to Patterson’s garnishment order.
“In short, the FSSA’s interpretation of the applicable statutes and regulations is reasonable. Because the FSSA’s interpretation of the regulations is reasonable, ‘we must stop our analysis and need not move forward with any other proposed interpretation,’” Judge Paul D. Mathias wrote for the court. “Accordingly, the trial court erred in determining that the FSSA’s interpretation was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.”

Judge L. Mark Bailey reluctantly concurred in a separate opinion, noting that while he does not condone voluntary decisions not to pay child support, ironically, Patterson would be provided with the care he needed if he had been imprisoned for felony non-support.

“I understand the trial court’s attempt to exercise compassion,” Bailey wrote.  “However, because the trial court found invalidity of agency action where there was none, I concur in the reversal.”

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