FILED Jul 17 2024, 9:23 am
CLERK Indiana Supreme Court Court of Appeals and Tax Court
IN THE
Court of Appeals of Indiana In Re the Guardianship of: Anthony Adducci, Incapacitated Person Indiana Family and Social Services Administration, Appellant-Intervenor
v.
Cheryl Adducci, Guardian for Anthony Adducci, Appellee-Petitioner
July 17, 2024 Court of Appeals Case No. 23A-GU-2433 Appeal from the Lake Superior Court The Honorable Calvin D. Hawkins, Judge Trial Court Cause No. 45D02-1905-GU-132
Opinion by Judge Bradford Judges Crone and Tavitas concur.
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 1 of 15 Bradford, Judge.
Case Summary [1] In 2019, Cheryl Adducci was appointed guardian of her institutionalized
husband Anthony, applied for Medicaid coverage on his behalf, and (before
Anthony’s Medicaid application had been approved) petitioned to divert some
of his income for her support (“the Petition”), which petition the trial court
granted (in “the Support Order”). The Indiana Family and Social Services
Administration (“FSSA”) provisionally granted Anthony’s Medicaid
application and eventually moved to intervene in the case and for relief from
judgment, also arguing that the Support Order, which had the effect of
increasing the amount FSSA must pay for Anthony’s care, was unlawful. The
trial court denied FSSA’s motions to intervene and for relief from judgment and
reiterated that the Support Order was lawful.
[2] FSSA argues that it had a right to intervene in the action because the Support
Order diverted money to Cheryl that would have otherwise gone to pay
Anthony’s medical bills and it had no other way to challenge it. FSSA also
argues that it was entitled to relief from judgment because it was a necessary
party to the action who had not been served, rendering the Support Order void.
Finally, FSSA argues that the Support Order is without legal basis. Because we
agree with all of FSSA’s contentions, we reverse the trial court’s denials of
FSSA’s motions to intervene and for relief from judgment and remand with
instructions.
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 2 of 15 Facts and Procedural History [3] On May 31, 2019, Cheryl was appointed guardian of her husband Anthony,
who had suffered a traumatic brain injury resulting in dementia and a brain
aneurysm, leaving him unable to care for himself or his assets. On June 17,
2019, Cheryl filed, inter alia, the Petition. On July 2, 2019, Cheryl applied for
Medicaid coverage on Anthony’s behalf. On July 16, 2019, the trial court
issued the Support Order, which allowed Cheryl to transfer up to $3275.00 of
Anthony’s income per month for her care, maintenance, and support. In
August of 2019, the Adduccis notified FSSA of the Support Order. On August
30, 2019, FSSA approved Anthony’s application for Medicaid coverage while
also noting that, prior to the Support Order, he had not been eligible for
Medicaid coverage because his income, as well as his and Cheryl’s resources,
exceeded applicable limits.
[4] On July 14, 2020, FSSA moved to intervene in the guardianship case and for
relief from judgment, arguing that it was a necessary party because the Support
Order meant that Indiana’s Medicaid program (which is administered by
FSSA) would have to pay for Anthony’s care and that it was entitled to relief
from judgment because it had not been served. During the litigation of FSSA’s
motions, FSSA also argued that the Support Order was unlawful because the
mandatory fair hearing in the FSSA had never occurred, the doctrine of
necessaries did not entitle Cheryl to spousal support, and Cheryl had violated
her fiduciary duty to Anthony. The Adduccis argued that FSSA (1) had not
moved for relief from judgment within a reasonable time, (2) had not been a
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 3 of 15 necessary party to the guardianship proceedings, (3) and lacked standing to
claim that Cheryl had violated her fiduciary duty. The Adduccis also argued
that Indiana Code section 12-15-2-25 (“the State Medicaid Statute”) and the
doctrine of necessaries supported the Support Order.
[5] On September 14, 2023, the trial court denied FSSA’s motions to intervene and
for relief from judgment and, alternatively, concluded that FSSA was barred
from taking advantage of the equitable remedy of relief from judgment because
it had not engaged in mandatory rulemaking pursuant to Indiana Code section
12-15-2-25(d) and, therefore, had unclean hands. The trial court also concluded
that Cheryl’s allowance was supported by the State Medicaid Statute and the
doctrine of necessaries.
Discussion and Decision I. Background [6] In the Medicaid program, the federal government provides funding to states,
which in turn reimburse qualifying individuals for the cost of medical care.
Wis. Dep’t of Health & Fam. Servs. v. Blumer, 534 U.S. 473, 479 (2002) (citing
Schweiker v. Gray Panthers, 453 U.S. 34, 36–37 (1981)). For institutionalized
individuals, Medicaid starts with the presumption that the individual must pay
all of his income, minus certain permitted deductions, to the institutions caring
for him before he can qualify for assistance. See Lowes v. Lowes, 650 N.E.2d
1171, 1175 (Ind. Ct. App. 1995) (“Congress intended that all third party sources
of income to which an applicant is entitled be exhausted before resort to the
social welfare system.”). Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 4 of 15 [7] It was eventually realized that this exhaustion requirement, at times, left the
community spouse1 with insufficient resources, which prompted Congress to
pass the Medicare Catastrophic Coverage Act of 1988 (“the MCCA”). 42
U.S.C. § 1396r-5. The stated purpose of the MCCA was to “end th[e]
pauperization of the community spouse by assuring that the community spouse
has a sufficient—but not excessive—amount of income and resources
available[.]” Blumer, 534 U.S. at 480. In some cases, an institutionalized
spouse is permitted to transfer a “community spouse monthly income
allowance” without that amount being counted against him for eligibility-
determination purposes. 42 U.S.C. § 1396r-5(d)(3). The exact amount of the
monthly income allowance is determined by subtracting a community spouse’s
actual monthly earnings from a “minimum monthly maintenance needs
allowance” (“the Allowance”), which is set by the State. 42 U.S.C. § 1396r-
5(d)(2)–(3). If this calculation results in a shortfall between the community
spouse’s monthly income and the Allowance, the community spouse’s monthly
income allowance becomes the difference between the two amounts. 42 U.S.C.
§ 1396r-5(d)(2).
[8] Either spouse may petition for a “fair hearing before the State agency[,]” i.e.,
FSSA, to argue that the Allowance should be increased. 42 U.S.C. § 1396r-
5(e)(2)(B); see also 42 U.S.C. § 1396a(a)(3) (defining “fair hearing”). Pursuant to
1 In the Medicaid context, “[t]he term ‘community spouse’ means the spouse of an institutionalized spouse.” 42 U.S.C. § 1396r-5(h)(2).
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 5 of 15 this provision, the Allowance may be increased if the spouses establish “that the
community spouse needs income, above the level otherwise provided by the
[Allowance], due to exceptional circumstances resulting in significant financial
duress.” 42 U.SC. § 1396r-5(e)(2)(B). In some cases, such as this one, the
Allowance would have to be increased for the institutionalized spouse to be
eligible for Medicaid benefits at all.
[9] At the state level, the State Medicaid Statute provides that institutionalized
Medicaid recipients who have a community spouse may “retain an income
allowance for the purpose of supporting a community spouse” if “(1) the
community spouse’s income is less than the [Allowance]” established under
federal law; and “(2) an increased amount is necessary to increase the
community spouse’s income to the [Allowance].” Ind. Code § 12-15-2-25(b).
The State Medicaid Statute provides that “[i]f either spouse establishes that a
higher allowance is needed due to exceptional circumstances resulting in
significant financial duress, the [Allowance] may be increased after an
administrative hearing or by a court order.” Ind. Code § 12-15-2-25(c) (emphasis
added).
II. Intervention [10] FSSA contends that, because it was a necessary party to the guardianship
action, the trial court abused its discretion in denying its motion to intervene.
Motions to intervene in an action involve a mixed question of law and fact, and
trial courts have discretion to determine whether a movant has met its burden
of showing that it is entitled to intervene. Citimortgage, Inc. v. Barabas, 975
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 6 of 15 N.E.2d 805, 812 (Ind. 2012). A trial court’s ruling on a motion to intervene is
reviewed for an abuse of discretion, and the facts alleged in the motion are
taken as true. JPMorgan Chase Bank, N.A. v. Claybridge Homeowners Ass’n, Inc., 39
N.E.3d 666, 669 (Ind. 2015). An order denying a motion to intervene will be
reversed if the decision is “clearly against the logic and effect of the facts and
circumstances before the court or if the court has misinterpreted the law.”
Abbott v. State, 183 N.E.3d 1074, 1083 (Ind. 2022).
[11] Intervention is the procedure through which nonparties may assert their rights
in an ongoing lawsuit. See Citimortgage, 975 N.E.2d at 812. Indiana’s
intervention procedures are governed by Indiana Trial Rule 24, which
“expressly recognizes the right of a party to intervene after judgment for the
purposes of presenting a motion under Trial Rule 60.” Id. Mandatory
intervention is governed by Subsection (A)(2), which provides that a trial court
must permit a third party to intervene in an action
when the applicant claims an interest relating to a property, fund or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect his interest in the property […] unless the applicant’s interest is adequately represented by existing parties. Ind. Trial Rule 24(A)(2).
[12] Keeping in mind that facts alleged in FSSA’s motion to intervene must be
accepted as true, FSSA has established a clear interest in this proceeding,
specifically that
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 7 of 15 [t]he FSSA is harmed by the Court’s Order because […] the community spouse’s income allowance is deducted from the amount of income that a Medicaid member must pay to his or her long-term care institution post-eligibility. Therefore, if the community spouse’s income is artificially and unlawfully inflated above the limits established by statute, the institutionalized spouse will pay a lower proportion of his or her income to the institution, and the Medicaid Program will have to pay a higher amount to cover the remainder of the medical costs. Appellant’s App. Vol. II p. 51. Moreover, FSSA’s ability to protect this interest
is clearly impeded by this proceeding. As FSSA notes, it cannot adjust Cheryl’s
allowance on its own because it is bound by court orders on spousal support,
even if erroneous.2 Finally, it is undisputed that no party to the guardianship
action, one result of which was the Support Order, adequately represented
FSSA’s interests. In summary, we have little hesitation in concluding that
FSSA has a right to intervene in this action and that the trial court abused its
discretion in denying its motion to do so. See In re Guardianship of Weber, 201
N.E.3d 220, 225–27 (Ind. Ct. App. 2022) (affirming the trial court’s grant of
FSSA’s motion to intervene post-judgment where the court had ordered spousal
support from an incapacitated spouse).
III. Motion for Relief from Judgment [13] FSSA also contends that the trial court also abused its discretion in denying its
motion for relief from judgment. Indiana Trial Rule 60(B) is an equitable form
2 “If a court has entered an order against an institutionalized spouse for monthly income for the support of the community spouse, the community spouse monthly income allowance for the spouse shall be not less than the amount of the monthly income so ordered.” 42 U.S.C. § 1396r-5(d)(5).
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 8 of 15 of relief that authorizes courts to reopen a previously-issued judgment for any of
one of eight enumerated grounds, one of which is that the judgment is void.
Ind. Trial Rule 60(B)(6); In re Paternity of P.S.S., 934 N.E.2d 737, 740–41 (Ind.
2010). When a party moves for relief from judgment pursuant to Trial Rule
60(B)(6), the sole issue before the court is whether the judgment in question is
void or valid. Anderson v. Wayne Post 64, Am. Legion Corp., 4 N.E.3d 1200, 1205
(Ind. Ct. App. 2014), trans. denied.
[14] “[A] judgment entered where there has been no service of process is void for
want of personal jurisdiction.” Front Row Motors, LLC v. Jones, 5 N.E.3d 753,
759 (Ind. 2014). Moreover, “a judgment that is void for lack of personal
jurisdiction may be collaterally attacked at any time and […] the ‘reasonable
time’ limitation under Rule 60(B)(6) means no time limit.” Stidham v. Whelchel,
698 N.E.2d 1152, 1156 (Ind. 1998). FSSA, a necessary party below, was never
served, thereby depriving the trial court of personal jurisdiction over it, and the
fact that it waited many months to act makes no difference. Consequently, the
trial court abused its discretion in denying FSSA’s motion for relief from the
judgment pursuant to Trial Rule 60(B)(6).3
[15] FSSA contends that the trial court also abused its discretion by concluding that
FSSA was not entitled to Rule 60(B) relief because it had failed to “adopt rules
3 FSSA also argues that it is entitled to relief from judgment pursuant to Trial Rule 60(B)(2) (allowing for relief on “any ground for a motion to correct error”) and 60(B)(8) (allowing for relief for “any reason justifying relief from judgment”). Because we have concluded that FSSA is entitled to relief from judgment pursuant to Trial Rule 60(B)(6), we need not address these other alleged grounds.
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 9 of 15 […] setting forth the manner in which the office will determine the existence of
exceptional circumstances resulting in significant financial duress[.]” Indiana
Code Section 12-15-2-25(d). (Appellant’s App. Vol. II p. 200). The trial court’s
identification of FSSA’s failure to make rules for determining the existence of
exceptional circumstances appears to invoke the equitable doctrine of “unclean
hands”:
The principle of unclean hands is that he who comes into equity must come with clean hands. The doctrine of unclean hands is not favored and must be applied with reluctance and scrutiny. For the doctrine of unclean hands to apply, the misconduct must be intentional, and the wrong that is ordinarily invoked to defeat a claimant by using the unclean hands doctrine must have an immediate and necessary relation to the matter before the court. Wedgewood Cmty. Ass’n, Inc. v. Nash, 781 N.E.2d 1172, 1178 (Ind. Ct. App.
2003), trans. denied.
[16] Under the circumstances, we fail to see why FSSA should be barred from
pressing its claims by unclean hands. First, there is nothing in the record to
suggest that FSSA’s failure to make rules can fairly be characterized either as
misconduct or intentional. Moreover, there is no immediate and necessary
relation of FSSA’s deferred rulemaking to the matter before the court, which
had nothing to do with whether FSSA had incorrectly found that exceptional
circumstances had not existed because of a lack of rules, but, rather, whether
the Adduccis had followed the proper procedure to obtain the Support Order.
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 10 of 15 IV. The Support Order [17] Having concluded that the Support Order is void, we deem it necessary to
provide guidance for the trial court regarding further proceedings by addressing
the grounds the trial court cited to sustain the Support Order.
A. The State Medicaid Statute
[18] The trial court concluded that the State Medicaid Statute supports the Support
Order, i.e., the Support Order is justified by the trial court’s finding of
exceptional circumstances that would result in significant financial duress to
Cheryl in the absence of support. FSSA contends that the Allowance cannot be
increased without an administrative hearing, while the Adduccis contend that
the trial court’s finding of exceptional circumstances renders an administrative
hearing unnecessary. We agree with FSSA. As mentioned, the MCCA requires
a “fair hearing before the State agency” to determine if the Allowance should be
increased, 42 U.S.C. § 1396r-5(e)(2)(B), and it is well-settled that “under the
Supremacy Clause of the United States Constitution, federal law is the supreme
law of the land.” Kuehne v. United Parcel Serv., Inc., 868 N.E.2d 870, 873–74
(Ind. Ct. App. 2007) (citing U.S. Const. art. VI, cl. 2; Bondex Int’l v. Ott, 774
N.E.2d 82, 85 (Ind. Ct. App. 2002)). “The preemption doctrine invalidates
those state laws that interfere with or are contrary to federal law.” Id. (citing
Cmty. Action Program of Evansville v. Veeck, 756 N.E.2d 1079, 1084 (Ind. Ct. App.
2001). “[S]tate law is […] preempted to the extent it actually conflicts with
federal law, that is, when it is impossible to comply with both state and federal
law, or where the state law stands as an obstacle to the accomplishment of the
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 11 of 15 full purposes and objectives of Congress[.]” Silkwood v. Kerr-McGee Corp., 464
U.S. 238, 248 (1984). “The question, at bottom, is one of statutory intent, and
we accordingly begin with the language employed by Congress and the
assumption that the ordinary meaning of that language accurately expresses the
legislative purpose.” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383
(1992).
[19] To the extent that the State Medical Statute may be read to allow for the
Allowance to be increased without an FSSA hearing, it is in conflict with the
MCCA’s requirement of a “fair hearing before the State agency” and is
therefore preempted. See Blumer, 534 U.S. at 478 (“The MCCA allows an
increase in the standard allowance if either spouse shows, at a state-administered
hearing, that the community spouse will not be able to maintain the statutorily
defined minimum level of income on which to live after the institutionalized
spouse gains Medicaid eligibility.”) (emphasis added). Should the Adduccis
wish to have the Allowance increased, they must first avail themselves of
FSSA’s administrative processes.
B. The Doctrine of Necessaries
[20] The trial court also concluded that the doctrine of necessaries justified Cheryl’s
increased allowance. In Indiana, the doctrine operates as follows:
Each spouse is primarily liable for his or her independent debts. Typically, a creditor may look to a non-contracting spouse for satisfaction of the debts of the other only if the non-contracting spouse has otherwise agreed to contractual liability or can be said to have authorized the debt by implication under the laws of
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 12 of 15 agency. When, however, there is a shortfall between a dependent spouse’s necessary expenses and separate funds, the law will impose limited secondary liability upon the financially superior spouse by means of the doctrine of necessaries. We characterize the liability as “limited” because its outer boundaries are marked by the financially superior spouse’s ability to pay at the time the debt was incurred. It is “secondary” in the sense that it exists only to the extent that the debtor spouse is unable to satisfy his or her own personal needs or obligations. Bartrom v. Adjustment Bureau, Inc., 618 N.E.2d 1, 8 (Ind. 1993). “Agency
requires some indicia that the principal intended or authorized the agent to
conduct business on his or her behalf.” Hickory Creek at Connersville v. Estate of
Combs, 992 N.E.2d 209, 212 (Ind. Ct. App. 2013) (citing Quality Foods, Inc. v.
Holloway Assocs. Prof’l Eng’rs & Land Surveyors, Inc., 852 N.E.2d 27, 31–32 (Ind.
Ct. App. 2006). “Marriage alone is insufficient.” Id.
[21] We conclude that the Support Order also cannot be sustained by operation of
the doctrine of necessaries. First, Cheryl has failed to establish that Anthony
has the ability to pay her expenses or is the financially-superior spouse. As
mentioned, the limits of liability pursuant to the doctrine of necessaries are
marked by the financially-superior spouse’s ability to pay. See Bartrom, 618
N.E.2d at 8. The Support Order’s findings indicate that, as of July of 2019,
Anthony’s monthly income from Social Security and a pension was $4960.50.4
Anthony’s obligations, however, have exceeded his income at all relevant
4 In its Brief of Appellant and in several filings below, FSSA puts Anthony’s income at $3275.00 per month. The Adduccis, however, claimed in the Petition that Anthony’s income was $4960.50 per month (as of July of 2019), and the record does not appear to contain any more recent information on the subject. Either way, Anthony’s income is exceeded by his obligations.
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 13 of 15 times, starting at $5597.05 per month in July of 2019 and rising to $6919.51 per
month by the end of 2021. Because Anthony’s income does not even cover his
own obligations (which, again, are his primary responsibility), id., the Adduccis
cannot establish that he has the ability to cover Cheryl’s expenses or is
financially superior to her. Moreover, the Adduccis point to nothing in the
record that could support a finding that Anthony agreed to contractual liability
to pay Cheryl’s expenses or could be said to have authorized them by
implication under the laws of agency. The Adduccis have failed to establish
that the Support Order may be justified by the doctrine of necessaries.
[22] The Adduccis do not actually claim that they have satisfied the elements of the
doctrine of necessaries, arguing only that our decision in Matter of Guardianship
of Hall, 694 N.E.2d 1168 (Ind. Ct. App. 1998), supports a spousal-support order
in cases where one spouse’s living expenses exceed that spouse’s income.
While this may be true in some situations, Hall is easily distinguished. In Hall,
the guardianship estate of the institutionalized husband had assets of
$176,705.45 and monthly income of $1789.00, while the wife had assets of
$7055.52 and monthly income of $638.50. Id. at 1169. In short, the record
supported a determination that the institutionalized spouse was financially-
superior and able to cover wife’s expenses, which is not the case here. In Hall,
the record also supported an inference that the husband had impliedly agreed to
cover the Wife’s expenses before his incapacitation, as he had paid them after
insisting that she cease her gainful employment. Id. at 1170. Again, there is
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 14 of 15 nothing similar in the record before us here. The Adduccis’ reliance on Hall is
unavailing.
Conclusion [23] We conclude that the trial court abused its discretion in denying FSSA’s motion
to intervene and in denying FSSA’s motion for relief from judgment. Because
we also conclude that neither the State Medicaid Statute nor the doctrine of
necessaries sustains the Support Order, we remand with instructions to grant
FSSA’s motion to intervene, grant FSSA’s motion for relief from judgment, and
vacate the Support Order.5
[24] We reverse the judgment of the trial court and remand with instructions.
Crone, J., and Tavitas, J., concur.
ATTORNEYS FOR APPELLANT Theodore E. Rokita Indiana Attorney General Evan Matthew Comer Supervising Deputy Attorney General Indianapolis, Indiana ATTORNEY FOR APPELLEE Michael T. Foster Greensburg, Indiana
5 We are aware that a probable consequence of our disposition is FSSA’s withdrawal of Anthony’s Medicaid coverage because, as mentioned, without the Support Order in place, the Adducci’s income and assets are too large to qualify for Medicaid coverage. Nothing in this opinion, however, should be understood as preventing the Adduccis from again applying for Medicaid and/or attempting to increase the Allowance through FSSA’s administrative processes.
Court of Appeals of Indiana | Opinion 23A-GU-2433 | July 17, 2024 Page 15 of 15