Johnson v. Lodge

Eighty-three-year-old Benjamin Johnson (plaintiff) lived in a nursing home. Benjamin and his wife, Wilma Johnson (plaintiff), applied to the Tennessee Department of Human Services (department) for Medicaid benefits to cover Benjamin’s nursing-home costs. The department used the formula from the Medicare Catastrophic Coverage Act (MCCA) to determine eligibility. The department determined that the couple’s combined monthly income was $1,358, which was $432 below the minimum-monthly-maintenance-needs allowance (MMMNA). It also determined that the couple had combined nonexempt assets of $164,694 and that Wilma’s community-spouse-resource allowance (CSRA), meaning the amount she was entitled to retain, was $82,347. The department concluded that the Johnsons had not yet sufficiently spent down their assets to qualify for Medicaid. The Johnsons appealed, arguing that Wilma’s CSRA should be increased because it must generate enough income to make up the $432 shortfall in the monthly maintenance allowance. They claimed that Wilma’s CSRA should be $172,800, essentially entitling her to retain all the couple’s assets, because investing that amount would provide a return covering the shortfall. If Wilma were entitled to retain all the assets, then the non-CSRA assets would be below the asset threshold, and Benjamin would be Medicaid eligible. The hearing officer denied the appeal, refusing to increase Wilma’s CSRA. The Johnsons sued department secretary Gina Lodge (defendant), arguing that the MCCA required the department to increase Wilma’s CSRA to make up for the income shortfall. The department argued that it did not need to increase Wilma’s CSRA because the default CSRA would provide Wilma sufficient funds to purchase a $37,073 annuity that would pay her $432 per month. The district court consolidated the case with one brought by John and Julia Crips (plaintiffs), who asserted the same argument against the department.