IN THE COMMONWEALTH COURT OF PENNSYLVANIA Debra Galanoudis, : Petitioner : : No. 1438 C.D. 2008 v. : : Submitted: April 24, 2009 Department of Public Welfare, : Respondent : BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE SIMPSON FILED: June 18, 2009 Debra Galanoudis (Galanoudis), representing herself, petitions for review of an order of the Secretary of the Department of Public Welfare (Department) upholding a decision of an Administrative Law Judge (ALJ) denying Galanoudis appeal of a decision of the Westmoreland County Assistance Office (CAO), Office of Inspector General (OIG). The OIG sought repayment of $32,434.43 in medical benefits Galanoudis received for the period of April 19, 2005 through November 9, 2006. Discerning no error, we affirm. In November 2000, the Department approved Galanoudis application for medical assistance. In her application, Galanoudis acknowledged her duty to report changes in her financial condition to the CAO and that the failure to report a change could result in the reduction of benefits or a penalty.
Beginning April 2005, Galanoudis received the proceeds of several life insurance policies. The proceeds totaled $32,434.43. 1 Galanoudis invested the proceeds and also established a college fund for her son. Galanoudis later filed a January 2006 Medical Assistance Financial Review Long Term Care, Supports, and Services statement with the CAO. Galanoudis failed to include in her statement any information regarding the life insurance proceeds and the resulting investments. Galanoudis also submitted an August 4, 2006 Resource Assessment without disclosing the proceeds of the life insurance policies or her investments. Sometime thereafter, CAO caseworker Renee Queer (Caseworker) learned of Galanoudis receipt of the life insurance proceeds. She referred the matter to the OIG, which confirmed Galanoudis receipt of the life insurance proceeds and her investments. Because the life insurance proceeds exceeded the allowable resources for Galanoudis receipt of medical assistance benefits, the OIG sought reimbursement of $32,434.43. This sum represents the amount of medical benefits Galanoudis received from April 19, 2005 (the date Galanoudis first received any life insurance proceeds) through November 9, 2006 (the date Caseworker learned Galanoudis failed to report her change in financial circumstances). 1 Specifically, Galanoudis received $2,557.83 from Hartford Life Annuity; $15,280.98 from All America Financial Life Insurance and Annuity Company; $4,083.72 from Prudential; and, $10,511.90 from SunAmerica Securities, Inc. 2
Galanoudis appealed to the Bureau of Hearings and Appeals (BHA). The ALJ conducted a telephone hearing, during which the OIG presented the testimony of its claims investigation agent and the CAO s income maintenance caseworker supervisor. Their unchallenged testimony provides the above factual background. Galanoudis husband testified on his wife s behalf. He stated Caseworker knew of Galanoudis receipt of the insurance proceeds but told her to continue using the medical assistance benefits. Caseworker, according to husband, also stated the Department would not seek restitution. Finally, husband testified he gave $10,000 of the $32,434.43 to his wife. Galanoudis did not testify. After reviewing the applicable Department regulations, the ALJ denied Galanoudis appeal. The ALJ found Galanoudis did not report the income to the CAO as required by the regulations. The ALJ rejected husband s testimony that Caseworker told Galanoudis the Department would not seek restitution, finding it unbelievable that a caseworker would tell a client the Department would overlook a $32,434.43 overpayment. The BHA affirmed the ALJ s decision. Galanoudis filed a petition for reconsideration with the Department Secretary, which was granted. Ultimately, the Secretary issued an order upholding the BHA s decision. This appeal followed. 3
On appeal, 2 Galanoudis requests the Court reverse the Secretary s order so as to reduce or eliminate the restitution payment. Urging she did not intentionally fail to report the insurance proceeds, she argues less restitution would be due if Caseworker had not told her to continue using the medical benefits. Under the Department s regulations, Galanoudis receives medical assistance as a disabled person. See 55 Pa. Code 178.11(2) (designating PJ as a category for persons who meet eligibility conditions as a disabled person); Original Record (O.R.) at Ex. C-1 (medical assistance application designating category of benefits as PJ). In order to receive medical assistance, an individual must meet certain requirements, including resource limitations. 55 Pa. Code 141.71(a)(6). The Department s regulations define resource in relevant part as [r]eal or personal property which a person has or can make available for partial or total support, including equitable interests and partial interests. 55 Pa. Code 178.2. Personal property includes cash, bank accounts, stocks, bonds, mortgages, cash value of life insurance policies, household furnishings, personal effects, motor vehicles, boats and Federal, State and local tax refunds. Id. The resource limit for receipt of medical assistance depends on the category of assistance. 55 Pa. Code 178.1(a). In Galanoudis case, the resource 2 Our review is limited to determining whether constitutional rights were violated, whether the adjudication is in accordance with the law and whether necessary findings of fact weree supported by substantial evidence. McBride v. Dep t of Pub. Welfare, 960 A.2d 203 (Pa. Cmwlth. 2008). Factual findings supported by substantial evidence are conclusive on appeal; however, legal conclusions are subject to judicial review. Lycoming County v. Pa. Labor Relations Bd., 943 A.2d 333 (Pa. Cmwlth. 2007). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Id. 4
limit is $2,000. 55 Pa. Code Ch. 178, Appendix A. A recipient is ineligible for medical assistance on the date her resources exceed the resource limit and remains ineligible until her resources are equal to, or less than, the resource limit. 55 Pa. Code 178.1(c); see also DeBone v. Dep t of Pub. Welfare, 929 A.2d 1219 (Pa. Cmwlth. 2007); Filoon v. Dep t of Pub. Welfare, 819 A.2d 188 (Pa. Cmwlth. 2003). The failure to report resources may result in an overpayment of medical assistance if the equity value of resources causes the recipient to be ineligible for benefits. 55 Pa. Code 178.3. Thus, the Department s regulations place an affirmative duty on recipients to verify the valuation and disposition of resources, and to report changes in circumstances. 55 Pa. Code 178.3; 255.1(b)(4). In the event of an overpayment of benefits, the regulations provide procedures for securing restitution. 55 Pa. Code 255.1 255.4. The Department is entitled to restitution equaling the total net resource or the total amount of assistance received during the period of overpayment, whichever is less. 55 Pa. Code 255.4(d)(iv). In this case, Galanoudis first received insurance proceeds exceeding her allowable resource limit of $2,000 in April 2005. O.R. at Exs. C-4 C-9. Over the next several months, Galanoudis received additional insurance proceeds, totaling $32,434.43. Id. Although she had available resources, Galanoudis received medical benefits totaling $109,480.58 starting in April 2005 and continuing for the next 17 months. O.R. at Ex. C-10. Because she failed to report a change in circumstances, Galanoudis received medical benefits to which she was 5
not entitled. This resulted in an overpayment of benefits. Cf. Filoon. Accordingly, the Department s regulations require restitution in the amount of $32,434.43, representing the lesser of Galanoudis resources or the amount of assistance received. 55 Pa. Code 255.1 255.4. Further, we reject Galanoudis assertions Caseworker led her to believe the Department would not seek restitution, for two reasons. First, the ALJ found husband not credible. The ALJ rejected husband s testimony Caseworker told Galanoudis that Caseworker was too busy to look into the change of circumstances. The ALJ also rejected husband s testimony Caseworker represented the Department would not seek restitution. Credibility determinations are solely within the discretion of the ALJ, which we will not disturb on appeal. Pinnacle Health Sys. v. Dep t of Pub. Welfare, 942 A.2d 189 (Pa. Cmwlth. 2008). In addition, Galanoudis claim fails to the extent it raises an equitable estoppel argument. The essential elements of estoppel are: an inducement of a party to believe that certain facts exist, an act of justifiable reliance upon that belief and a detriment to the actor. Finnegan v. Pub. Sch. Employees Ret. Bd., 560 A.2d 848 (Pa. Cmwlth. 1989). In Finnegan, we affirmed a decision of the Public School Employees Retirement Board (PSERB) disallowing a former teacher to purchase nine years of out-of-state teaching service and six years of government service in order to qualify for early retirement. Before retiring, the teacher spoke to a PSERB representative who stated she could purchase up to 15 years of service credit. 6
Relying on the representative s statements, the teacher retired. It was later determined the teacher could only purchase up to 12 years of these types of service credits. As a result, the teacher was not eligible for early retirement. A hearing examiner subsequently recommended the teacher be permitted to purchase additional years of service credit. However, PSERB rejected the hearing examiner s recommendation and denied the teacher s appeal. It concluded the Public School Employees Retirement Code 3 limits the purchase of out-of-state and U.S. Government service to 12 years. On appeal, this Court affirmed. Recognizing the doctrine of equitable estoppel is applicable to government agencies, we nevertheless noted there are limited circumstances in which estoppel cannot be raised against the Commonwealth or its instrumentalities. Id. Such instances occur when Commonwealth agents act outside their powers or in violation of positive law. Ervin v. City of Pittsburgh, 339 Pa. 241, 14 A.2d 297 (1940); Finnegan. Significantly, we further noted estoppel may not be invoked when the Commonwealth is performing a governmental, as opposed to a proprietary, function. Finnegan. Applying the above principles here, the disbursement of medical assistance benefits is clearly a governmental function, and the Department has the duty to seek restitution of erroneously paid benefits. 55 Pa. Code 255.4. Caseworker s alleged statement does not preclude the Department from pursuing 3 24 Pa. C.S. 8101-8535. 7
restitution. Otherwise, employee errors would effectively amend the substance of the Department s regulations. Finnegan. Accordingly, we affirm. ROBERT SIMPSON, Judge 8
IN THE COMMONWEALTH COURT OF PENNSYLVANIA Debra Galanoudis, : Petitioner : : No. 1438 C.D. 2008 v. : : Department of Public Welfare, : Respondent : O R D E R AND NOW, this 18 th day of June, 2009, the order of the Department of Public Welfare is AFFIRMED. ROBERT SIMPSON, Judge