CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.
We granted a writ of certiorari, 449 U.S. 951 (1980), to review a decision of the United States Court of Appeals for the Ninth Circuit, holding that California's "transfer-of-assets"
statute applicable to "medically needy" recipients of Medicaid benefits does not conflict with governing federal law. Dawson v. Myers, 622 F.2d 1304 (1980). Petitioner is an individual considered "medically needy" under California's Medicaid plan,*fn1 who represents the class of all such persons who have been denied Medicaid benefits because of previous transfers of assets for less than full consideration.*fn2 She argues that this exclusion is impermissible because it is based on a rule applicable only to "medically needy" recipients, and could not apply under federal law to "categorically needy" recipients.*fn3
After our grant of certiorari on November 3, 1980, Congress passed § 5 of Pub. L. 96-611, 94 Stat. 3567 (Dec. 28, 1980)
(the "Boren-Long Amendment"), which made material changes in the law in this area. This section creates a presumption that assets disposed of for less than full consideration within the preceding 24 months should be included in the resources of an applicant for SSI benefits. The applicant can overcome this presumption with "convincing evidence to establish that the transaction was exclusively for some . . . purpose" other than establishing eligibility. § 5 (a) (amending § 1613 of the Social Security Act, 42 U. S. C. § 1382b). This section goes on to allow state Medicaid plans to apply similar rules to Medicaid recipients -- including both the categorically needy and the medically needy. Pub. L. 96-611, § 5 (b), 94 Stat. 3568 (amending § 1902 of the Social Security Act, 42 U. S. C. § 1396a). It states that if the state plan includes a transfer-of-assets rule, it shall specify a procedure for implementing the denial of benefits "which, except as provided in paragraph (2), is not more restrictive than the procedure specified" for SSI. Paragraph (2) provides that where the uncompensated value of the disposed-of resources exceeds $12,000, the States may impose a period of ineligibility exceeding 24 months, as long as this period bears "a reasonable relationship to such uncompensated value."
In sum, it would appear that in the future the States will be permitted to impose transfer-of-assets restrictions generally similar to that of California. This change will take effect on July 1, 1981, Pub. L. 96-611, § 2, 94 Stat. 3567 -- a matter of weeks from now. This raises the question whether it is appropriate for the Court to decide the merits of the underlying dispute as considered by the Court of Appeals.
We have determined that the change caused by the recent statutory amendment requires reconsideration of the decision below by the Court of Appeals. Because of the statutory change, the federal standards governing state plans with respect to transfer-of-asset rules have been altered significantly. Although it is fair to say that Congress generally
endorsed rules like California's, the detailed provisions recently enacted may require some changes in the California rule. We note in particular that California seems to include the residence of the claimant among the assets that may not be given away without a corresponding loss in Medicaid coverage.*fn4 Under the Boren-Long Amendment, however, arguably such an asset must be excluded.*fn5 Petitioner should have the opportunity to argue the validity of the California law under the new federal law -- an issue that was not addressed by the parties in this Court.
We vacate the decision below, and remand this ...