## Facts

- The Secretary of Health and Human Services issued Medicaid regulations governing when one spouse’s income could be “deemed” available to the other spouse for eligibility determinations, including for institutionalized applicants.
- The challenged rules applied in “§ 209(b) States,” which elected more restrictive eligibility rules than Supplemental Security Income-linked states.
- Gray Panthers, an organization representing elderly persons, brought a facial challenge alleging the regulations improperly imputed spousal income without individualized proof of actual contribution.
- The District Court invalidated the regulations as inconsistent with the Medicaid requirement that eligibility be based on income “available” to the applicant.
- The D.C. Circuit affirmed on the ground that the Secretary acted arbitrarily and capriciously by failing to consider the unfairness and disruption of treating separated spouses as a single economic unit and requiring support.
- The Supreme Court granted certiorari.

## Issues

1. Whether Medicaid permits the Secretary to treat a spouse’s income as “available” to an institutionalized applicant through deeming rules without case-by-case proof of actual contribution, consistent with 42 U.S.C. § 1396a(a)(17)(B)–(D).
2. Whether the deeming regulations were arbitrary and capricious because the Secretary allegedly failed to weigh fairness concerns and disruptive effects on separated spouses.
3. Whether Gray Panthers had standing to challenge the regulations on behalf of its members.

## Decision

- The Supreme Court reversed and upheld the Secretary’s deeming regulations in most respects.
- The Court held that, under the statute, one spouse’s income may be imputed to an institutionalized spouse for Medicaid eligibility calculations without individualized findings of actual contribution.
- The Court rejected the claim that formula-based eligibility standards are inherently arbitrary in welfare programs administered under limited resources.
- The Court concluded the regulations were not arbitrary or capricious where they were rationally connected to the statutory scheme and reflected policy judgments entrusted to the agency.
- The Court recognized organizational standing where the regulations adversely affected some members and the suit was germane to the organization’s purpose.

## Legal Principles

- When Congress expressly delegates broad authority to an agency to prescribe standards for applying a complex benefits statute, the agency’s reasonable interpretations and implementing regulations receive substantial judicial deference.
- Medicaid’s “available” income requirement does not categorically require individualized proof of actual financial transfers when the statute and its structure permit the use of presumptions and standardized rules.
- Section 1396a(a)(17)(D) permits considering spousal financial responsibility (while generally barring attribution from other relatives), supporting deeming approaches within the Secretary’s regulatory authority.
- Under arbitrary-and-capricious review, courts do not invalidate regulations merely because alternative fairness judgments could be made; the question is whether the agency stayed within statutory bounds and adopted a rational policy choice.
- An organization may sue on behalf of its members when members would have standing, the interests are germane to the organization’s purpose, and the claim does not require individual member participation.

## Conclusion

The Court sustained HHS’s Medicaid deeming regulations, holding that Congress’s broad delegation allowed the Secretary to use presumptions imputing spousal income to an institutionalized applicant and that the rules were neither contrary to the “available income” requirement nor arbitrary and capricious; the organizational plaintiff also had standing to sue on behalf of affected members.


Schweiker v. Gray Panthers, 453 U.S. 34 (1981)