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decided: November 17, 1972.


Appeal from order of Commonwealth Court, No. 39 C.D. 1971, reversing order of Secretary of Public Welfare in case of Edna F. Crammer v. Department of Public Welfare, Commonwealth of Pennsylvania.


Eugene F. Zenobi, with him Louis M. Shucker, for appellant.

Marx S. Leopold, Assistant Attorney General, with him J. Shane Creamer, Attorney General, for Department of Welfare, appellee.

Jones, C. J., Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Justice Roberts.

Author: Roberts

[ 449 Pa. Page 529]

Appellant, Mrs. Edna F. Crammer, challenges the action of the Secretary of the Department of Public

[ 449 Pa. Page 530]

Welfare in excluding her from the "categorically needy" program of medical assistance under Title XIX of the Social Security Act.*fn1 We conclude that appellant has erroneously been denied benefits. We reverse.


Mrs. Crammer is sixty-two years of age and has been determined to be, by the Social Security Administration, totally and permanently disabled. Prior to March of 1970, appellant was receiving a $95.00 per month Department of Public Welfare (hereinafter the Department) public assistance payment.*fn2 In addition to this $95.00 per month cash payment, Mrs. Crammer was classed as "categorically needy" under the Pennsylvania Medicaid program,*fn3 thus entitling her to receive, among other medical services, free prescribed medications. As determined by the Department, appellant has necessary and recurring drug expenses of approximately $60.00 per month.

In March of 1970, appellant's cash assistance benefits (derived exclusively from Old Age Survivors Disability Insurance) were increased to the present $115.00 per month. Under Department regulations appellant

[ 449 Pa. Page 531]

    was required to accept*fn4 this additional $20.00 per month.*fn5 Because of this increase appellant was removed from the "categorically needy" Medicaid program. The Department thereafter transferred appellant to the "medically needy" program,*fn6 which, under applicable Pennsylvania statutes,*fn7 does not, and did not, afford appellant free prescription medicines.*fn8 As a result of

[ 449 Pa. Page 532]

    the Department's determination, Mrs. Crammer's medicinal needs must now be met by expending $60.00 per month from her Social Security allotment. The end economic result of this reclassification is that appellant now is left with only $55.00 per month to meet her "common needs" of food, shelter, clothing and incidentals. Before her Social Security increase, appellant was allowed $40.00 more per month to meet these identical "common needs".

After exhausting all administrative remedies,*fn9 appellant appealed to the Commonwealth Court which, after an initial argument before a three-judge panel, ordered reargument before the court en banc. On November 19, 1971, the Commonwealth Court affirmed,*fn10 by an equally divided court, the Department's action denying appellant "categorically needy" benefits. We granted allocatur.


Our determination of appellant's claim is primarily controlled by Title XIX of the Federal Social Security Act and the Pennsylvania Statutes which implement it.

Title XIX of the Social Security Act, 42 U.S.C. § 1396 ff, creates a comprehensive scheme for providing medical assistance to the needy. Under this program, if the state elects to participate, the costs are shared

[ 449 Pa. Page 533]

    by the federal government. The state further has the option of deciding to what extent it will participate and the extent of coverage to be offered. The Commonwealth has decided to provide coverage for both the "categorically needy" and the "medically needy".*fn11

Under the "categorically needy" program, full medical benefits*fn12 are afforded those actually receiving or eligible to receive cash assistance grants under one of the Commonwealth's federally funded public assistance programs for the blind, aged, disabled or families with dependent children. Pennsylvania's program in this respect fully comports with the federal requirements set out in 42 U.S.C. § 1396a(a)(10)(A).*fn13

Additionally, the Commonwealth has chosen to participate in the optional program of providing medical assistance, although of a more limited nature, to those classed as "medically needy". 42 U.S.C. § 1396a(a)(10)(B). This classification encompasses those people who are blind, aged, disabled or families with dependent children, but whose income, although allegedly

[ 449 Pa. Page 534]

    sufficient to cover daily living expenses (more than that allowable under public assistance guidelines), is insufficient to pay for required medical care.*fn14 Thus, this class embraces the same category of recipients as does section 1396a(a)(10)(A), with the difference being that the "medically needy" have additional available income.

Section 1396a(a)(17) of Title 42*fn15 imposes additional requirements upon the state plans implementing the

[ 449 Pa. Page 535]

Medicaid program; paramount among these requirements is that all state plans adopt "reasonable standards" for determining Medicaid eligibility. Under subsection (17), "reasonable standards" include: (1) standards which consider only actually available income,*fn16 42 U.S.C. § 1396a(a)(17)(B); (2) standards

[ 449 Pa. Page 536]

    which provide for the reasonable evaluation of resources, 42 U.S.C. § 1396a(a)(17)(C) and; (3) standards which are flexible insofar as they take into account, "except to the extent prescribed by the Secretary, the costs (whether in the form of insurance premiums or otherwise) incurred for medical care or for any other type of remedial care recognized under State law." 42 U.S.C. § 1396a(a)(17)(D) (emphasis added).

In view of the requirements of subsection (17), we conclude that appellant is eligible for inclusion in the Medicaid "categorically needy" program because her medical expenses are so large that her available income, as computed in accordance with the flexible income (spend-down) provision of subsection (17)(D), places her within the ambit of the Pennsylvania statute which implements the federal directives of 42 U.S.C. § 1396a(a)(10)(A).*fn17

"The following persons shall be eligible for medical assistance: (1) Persons who receive or are eligible to receive cash assistance grants under this article." Act of June 13, 1967, P. L. 31, art. IV, § 441.1, as amended, 62 P.S. § 441.1 (Supp. 1972) (emphasis added).

For Medicaid purposes only, not only are those people who actually receive welfare cash payments entitled to benefits as "categorically needy",*fn18 but also those who, under the spend-down provision of subsection

[ 449 Pa. Page 537]

(17)(D), establish eligibility for cash payments, thereby meeting the income requirements of the Pennsylvania "categorically needy" program.*fn19

Hence appellant must be afforded "categorically needy" benefits since her available income, when computed in accordance with the spend-down provision of subsection (17)(D), places her below the amount determined by the Department to be her minimum standard of need. Appellant's $115.00 per month, derived exclusively from Social Security, less $60.00 per month for drug expenses, leaves appellant only $55.00 per month to meet her minimum maintenance needs, which the Department concedes to be $95.00 per month.


The federal legislative history of the Medicaid Act clearly supports the conclusion that appellant is entitled

[ 449 Pa. Page 538]

    to receive "categorically needy" benefits. The Finance Committee, in its report on the bill to the Senate, stated:

"The committee bill would make more specific a provision now in the law that in determining eligibility for and the extent of aid under the plan, States must use reasonable standards consistent with the objectives of the titles.

"The bill also contains a provision designed to correct one of the weaknesses identified in the medical assistance for the aged program. Under the current provisions of Federal law, some States have enacted programs which contain a cut-off point on income which determines the financial eligibility of the individual. Thus, an individual with an income just under the specified limit may qualify for all of the aid provided under the State plan. Individuals, however, whose income exceeds the limitation adopted by the State are found ineligible for the medical assistance provided under the State plan even though the excess of the individual's income may be small when compared with the cost of the medical care needed. In order that all States shall be flexible in the consideration of an individual's income, the committee bill requires that the State's standards for determining eligibility for and extent of medical assistance shall take into account, except to the extent prescribed by the Secretary, the cost -- whether in the form of insurance premiums or otherwise -- incurred for medical care or any other type of remedial care recognized under State law. Thus, before an individual is found ineligible for all or part of the cost of his medical needs, the State must be sure that the income of the individual has been measured in terms of both the State's allowance for basic maintenance needs and the cost of the medical care he requires.

[ 449 Pa. Page 539]

"The State may require the use of all the excess income of the individual toward his medical expenses, or some proportion of that amount. In no event, however, with respect to either this provision or that described below with reference to the use of deductibles for certain items of medical service, may a State require the use of income or resources which would bring the individual's income below the amount established as the test of eligibility under the State plan. Such action would reduce the individual below the level determined by the State as necessary for his maintenance." U. S. Code Cong. and Adm. News, 89 Cong., 1st Sess., 1965, pp. 2018-19 (emphasis added).*fn20

Senator Ribicoff, whose comments appear in the Congressional Record, most succinctly articulated the Congressional intent when he stated:

"Finally, the bill would require States to apply means tests on a flexible basis, so as to take into account not only the individual's income, but also the cost and extent of the medical care he requires.

[ 449 Pa. Page 540]

"I think there is no question that these changes which H.R. 6675 will make in the way that means tests are applied by the States are sound. They strike a sensible balance.

"It is reasonable to allow States to make determinations of need and eligibility for public assistance programs; but it is unreasonable to allow the standards of eligibility to be applied in such a way that they prevent assistance from reaching those who may need it most." Cong. Rec., 89th Cong., 1st Sess., July 7, 1965, p. 15804 (emphasis added).

A more lucid pronouncement of legislative intent can hardly be conceived. Yet the Secretary of the Department of Public Welfare, in denying appellant "categorically needy" benefits, has done that which is explicitly forbidden by the federal statute; the Secretary has required appellant to utilize so much of her Social Security income for medical purposes, that her actual available income has been reduced "below the level determined by the State as necessary for [her] maintenance."


The Department relies almost exclusively on the case of Fullington v. Shea,*fn21 320 F. Supp. 500 (D. Colo. 1970), aff'd, 404 U.S. 963, 92 S. Ct. 345 (1971) (per curiam),*fn22 to support the proposition that the flexible income provision of 42 U.S.C. § 1396a(a)(17)(D) does not apply in determining eligibility under the "categorically needy" program set out in 42 U.S.C. § 1396a(a)(10)(A). It argues that Fullington precludes any

[ 449 Pa. Page 541]

    interpretation of subsection (17) other than that the flexible income provision can only be applicable to those who fall within the ambit of the "medically needy" program of 42 U.S.C. § 1396a(a)(10)(B). We find such an assertion to be untenable.

A careful reading of Fullington reveals that only two issues were raised and decided, neither of which is applicable to, or even suggested by, the instant appeal: "There are two fundamental questions presented for consideration: (1) Whether Colorado has failed to follow out the federal statutory scheme -- this reduces to whether the federal laws relative to the 'medically indigent' are mandatory or optional; (2) whether the failure of Colorado to extend Medicaid to the 'medically indigent' while at the same time extending it to the 'categorical' recipients constitutes an invalid discrimination violative of the Equal Protection Clause of the Fourteenth Amendment to the Constitution of the United States." Fullington, supra at 503 (emphasis added).

In addition to denying the appellant's constitutional claim, the court in Fullington also disposed of the statutory question by holding: "We cannot, of course, ignore the clear thrust of Section (10). Hence, based on the analysis and the evidence [of Congressional and Department intent] we are constrained to hold that Congress has not required Colorado or any other state to include the medically indigent in a Medicaid program, and that the state's adoption or failure to adopt such a program was optional." Id. at 505 (emphasis added).

Obviously, since Pennsylvania, unlike Colorado, has decided to exercise its option to participate in both the "categorically needy" and "medically needy" programs, the holding in Fullington is irrelevant, as well as inapplicable, to the instant case.

Further, as the Fullington court noted: "Colorado has elected to cover only those who receive aid under

[ 449 Pa. Page 542]

    one of its public assistance programs. Colo. Rev. Stat. §§ 119-12-3(10) and 119-12-4." Id. at 503 (emphasis added). Thus, the Colorado "categorically needy" statute extends coverage to only those who actually receive public assistance payments under that state's programs. As already pointed out,*fn23 our statute (62 P.S. § 441.1(1) (Supp. 1972)) is more comprehensive, providing "categorically needy" services to not only those actually receiving cash payments, but also to those eligible to receive such funds. Therefore, Fullington, based on a more restrictive Colorado statute, is inapposite, since under the Pennsylvania statute, appellant, Mrs. Crammer, is " eligible to receive cash assistance grants", for Medicaid purposes, thus entitling her to "categorically needy" Medicaid benefits.*fn24


It must be concluded that the determination of the Secretary of the Department of Public Welfare denying appellant benefits under the Pennsylvania "categorically needy" Medicaid program is contrary to the controlling federal and Pennsylvania statutes. Accordingly, the order of the Commonwealth Court is reversed, and the Secretary of the Department of Public Welfare is directed to afford appellant appropriate relief consistent with this opinion.*fn25


Order reversed.

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