NO. COA95-123


Filed: 2 January 1996




C. ROBIN BRITT, Secretary,

North Carolina Department of Human Resources,

and MARY DEYAMPERT, Director, Division

of Social Services, North Carolina

Department of Human Resources, in their

Official Capacities,


     Appeal by petitioner from order entered 14 November 1994 by Judge W. Osmond Smith, III, in McDowell County Superior Court. Heard in the Court of Appeals 26 October 1995.

    Legal Services of the Blue Ridge, Inc., by Samuel F. Furgiuele, Jr., for petitioner appellant.

    Attorney General Michael F. Easley, by Assistant Attorney General Belinda A. Smith, for the State.

    SMITH, Judge.

    This pauper appeal involves Medicaid law and regulations which pertain to persons who are institutionalized, receiving Medicaid benefits, and have spouses still residing in the community (community spouse). An institutionalized spouse, at his discretion, may provide some amount of income for the support of his community spouse, instead of having all of his income applied to the cost of the institutionalized care. 42 U.S.C. § 1396r-5(d)(1)(B) (1995).

    In this case, Sandra English, petitioner, is the community spouse of Herdie English, an institutionalized Medicaid recipient. Mr. English entered McDowell Nursing Center in May 1992. At that

time, Mrs. English filed an application with the McDowell County Department of Social Services (DSS) for medical assistance for Mr. English. Based upon his income, Mr. English qualified for Medicaid. Except for a "personal needs allowance" of $30.00 per month for Mr. English's personal use, the rest of his income, $508.00 per month Veterans Administration benefits and $404.80 per month social security benefits, was established as Mrs. English's community spouse allowance. Mr. English was, therefore, not required to pay any of the cost of his nursing care. In January 1993 Mr. English received a cost of living increase in his income. As a result, his personal patient liability was assessed to be $20.00 per month.

    In the spring of 1993, Mr. English complained to nursing center personnel that he was not receiving any money. The complaint was reported to the McDowell County DSS on 1 April 1993. Medicaid caseworker, Leah Robertson, visited Mr. English in the nursing center. After discussing with Mr. English the failure of his wife to provide him his personal needs allowance, Ms. Robertson directed nursing center personnel to prepare two letters for Mr. English's signature. The letters redirected his Veterans Administration check and his social security check, previously mailed to Mrs. English, to the nursing center. On 10 September 1993, the McDowell County DSS was appointed guardian over Mr. English and his estate, after he was determined to be incompetent.

    Ms. Robertson interpreted Mr. English's request for money as an instruction to cut off Mrs. English's spousal allowance and took the necessary steps to ensure that the spousal allowance was

terminated. As a result, Mr. English's patient liability of $20.00 per month was increased to $834.00 per month which was all of his remaining income, except his personal needs allowance. The increase was effective in May 1993.

    On 14 July 1993, Mrs. English filed an administrative appeal, contesting termination of her spousal allowance. After a 19 July 1993 hearing a decision upholding termination of the spousal allowance was issued. Mrs. English appealed that decision to the North Carolina Department of Human Resources (DHR). A hearing was conducted on 17 September 1993 before hearing officer Clarissa Brady. Officer Brady upheld termination of the spousal allowance by decision dated 1 November 1993. Mrs. English appealed Officer Brady's decision to Ms. M. Vicki Thaxton, Interim Chief Hearing Officer of the DHR, Division of Social Services, who by decision dated 3 January 1994, upheld the allowance termination. Mrs. English then appealed to the Superior Court of McDowell County. The case was heard on 17 October 1994. The superior court issued an order dated 14 November 1994 upholding the allowance termination. From that order, petitioner, Mrs. English, appeals. She contends that the final decision of the DHR, Department of Social Services, upholding termination of spousal allowance was not supported by substantial competent evidence in the record, in that there was no substantial evidence of intention by Mr. English to terminate such support.

    Our review, as well as that of the superior court, is governed by N.C. Gen. Stat. § 150B-51. That section provides that the court reviewing an agency decision may affirm or remand the case. It may

also reverse or modify the agency's decision if the substantial rights of petitioner may have been prejudiced if, among other reasons, the agency's decision was unsupported by substantial evidence in the record. N.C. Gen. Stat. § 150B-51(b)(5) (1991). See Dockery v. N.C. Dept. of Human Resources, 120 N.C. App. 827, 463 S.E.2d 580 (1995); In re: Appeal of Ramseur, 120 N.C. App. 521, 463 S.E.2d 256 (1995); Brooks v. Rebarco, Inc., 91 N.C. App. 459, 372 S.E.2d 342 (1988).

    The appropriate standard of review depends upon the basis of the petitioner's challenge. Allegations that the agency decision is affected by errors of law require de novo review. Id. When petitioner alleges that a final agency decision is not supported by substantial evidence in the record, the reviewing court must apply the whole record test. Walker v. North Carolina Dept. of Human Resources, 100 N.C. App. 498, 502, 397 S.E.2d 350, 354 (1990). Petitioner's contention in this case that the DHR decision is unsupported by substantial competent evidence requires application of the whole record test. The whole record test dictates that the reviewing court "examine all competent evidence to determine if there is substantial evidence to support the administrative agency's findings and conclusions." Henderson v. N.C. Dept. of Human Resources, 91 N.C. App. 527, 530, 372 S.E.2d 887, 889 (1988). "Substantial evidence is that which a reasonable mind would regard as adequately supporting a particular conclusion." Walker, 100 N.C. App. at 503, 397 S.E.2d at 354.

    At the hearing, Officer Brady made the following pertinent finding of fact and conclusion of law, which were adopted and

upheld by Interim Chief Hearing Officer Thaxton: