Justia Public Benefits Opinion Summaries

Articles Posted in Trusts & Estates
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The Court of Appeal affirmed the probate court's order denying plaintiffs' request, following the death of their daughter, that the remainder of their daughter's special needs trust be distributed to them rather than to the Department of Health Care Services as reimbursement for Medi-Cal payments for their daughter's medical care.The court held that the mandatory recovery rules for special needs trusts apply to the trust remainder; plaintiffs' interpretation of Probate Code section 3605 conflicts with federal law; the Centers for Medicare & Medicaid Services' opinion letter supports the Department's position that section 3605 permits the Department to recover for the daughter's Medi-Cal expenses; public policy considerations weigh in favor of permitting reimbursement to the Department; and the trust itself requires reimbursement to the Department. The court also held that plaintiffs failed to show that the Department's claim impermissibly included services under the Individuals with Disabilities Education Act and Lanterman Act. View "Gonzalez v. City National Bank" on Justia Law

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Three plaintiffs' cases were consolidated for review; the plaintiffs were elderly women receiving long-term care in nursing homes. In each case, the “institutionalized spouse,” began receiving long-term care at a nursing home at her own expense. One to two months later, each plaintiff’s husband, a “community spouse,” created an irrevocable trust that was solely for his own benefit (a “solely for the benefit of,” or “SBO,” trust). The couples then transferred a majority of their individual and marital property to each SBO trust or its trustee, giving up any claim of title to that property. Distributions or payments from each SBO trust were to be made on an actuarially sound basis and solely to or for the benefit of the community spouse. The distribution schedule required that each trustee distribute the income and resources held by the trust to each community spouse at a rate that would deplete the trust within the community spouse’s expected lifetime. A short time after each SBO trust was formed, each institutionalized spouse applied for Medicaid benefits. The Department of Health and Human Services and its director (collectively, the Department) determined that each institutionalized spouse did not show the requisite financial need because the value of the trust assets put their countable resources above the monetary threshold, and it denied each application. In each case, the plaintiff unsuccessfully contested the Department’s decision in an administrative appeal, but each decision was then reversed on appeal at the circuit court. On appeal in the Court of Appeals, all three cases were consolidated, and the Department’s denial decisions were reinstated. The Michigan Supreme Court concluded that the Court of Appeals erred in its interpretation of the controlling federal statutes, which caused the Court of Appeals to improperly reinstate the Department’s denial decisions. Because the administrative hearing decision in each case suffered from "the same faulty reasoning" used by the Court of Appeals, the Court surmised that legal error may have caused the administrative law judges (ALJs) to forgo a more thorough review of the Medicaid applications at issue or to disregard other avenues of legal analysis. Therefore, rather than order that the Medicaid applications be approved at this time, the Court vacated the hearing decision of the ALJ in each case and remanded these cases to the appropriate administrative tribunal for any additional proceedings necessary to determine the validity of the Department’s decision to deny plaintiffs’ Medicaid applications. View "Hegadorn v. Dept. of Human Services" on Justia Law

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Jerilyn Braaten, the personal representative of the Frederick Ardell Krueger Estate, appealed an order holding the Department of Human Services could recover 100 percent of the net proceeds from the sale of Krueger's home to pay for medical assistance benefits previously received by his deceased spouse. The North Dakota Supreme Court concluded the district court erred in ruling the Department is entitled to 100 percent of the net sale proceeds. For purposes of Medicaid recovery from a surviving spouse's estate, the Department's recovery from a deceased recipient's joint tenancy property is limited to the deceased recipient's fractional interest in the property. The matter was reversed and remanded fo the trial court to permit the Department to recover 50 percent of the net sale proceeds. View "Estate of Krueger" on Justia Law

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The issue presented for the Oregon Supreme Court’s review was whether an adult foster care provider claiming unjust enrichment may recover the reasonable value of its services from a defendant who, through fraud, obtained a lower rate from the provider for the services. Plaintiff owned two adult foster homes for the elderly. Plaintiff had contracted with the Oregon Department of Human Services to provide services in a home-like setting to patients who qualified for Medicaid. For those patients, the rates charged would be those set by the department. Isabel Pritchard resided and received care in one of plaintiff’s adult foster homes until her death in November 2008. Because Prichard had been approved to receive Medicaid benefits, plaintiff charged Prichard the rate for Medicaid-qualified patients: approximately $2,000 per month, with approximately $1,200 of that being paid by the department. Plaintiff’s Medicaid rates were substantially below the rates paid by plaintiff’s “private pay” patients. Prichard’s application for Medicaid benefits, as with her other affairs, was handled by her son, Richard Gardner. Gardner had for years been transferring Prichard’s assets, mostly to himself (or using those funds for his personal benefit). Gardner’s misconduct was discovered by another of Prichard’s children: defendant Karen Nichols-Shields, who was appointed the personal representative for Prichard’s estate. In 2009, defendant contacted the police and reported her brother for theft. Ultimately, Gardner pleaded guilty to three counts of criminal mistreatment in the first degree. Gardner’s sentence included an obligation to pay a compensatory fine to Prichard’s estate, to which he complied. After defendant, in her capacity as personal representative, denied plaintiff Larisa’s Home Care, LLC’s claim against Prichard’s estate, plaintiff filed this action, essentially asserting Prichard had been qualified for Medicaid through fraud and that Prichard should have been charged as a private pay patient. The Oregon Supreme Court concluded that, generally, a defendant who obtains discounted services as a result of fraud is unjustly enriched to the extent of the reasonable value of the services. The Court therefore reversed the contrary holding by the Court of Appeals. Because the fraud here occurred in the context of a person being certified as eligible for Medicaid benefits, however, the Court remanded for the Court of Appeals to consider whether certain provisions of Medicaid law may specifically prohibit plaintiff from recovering in this action. View "Larisa's Home Care, LLC v. Nichols-Shields" on Justia Law

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In several cases consolidated for review, the issue common to all was whether the Michigan Department of Health and Human Services could recover from beneficiaries’ estates an amount equivalent to certain Medicaid benefits paid to, or on behalf of, those beneficiaries during their lifetimes. Pursuant to the Michigan Medicaid estate-recovery program (MMERP), DHHS asserted creditor claims in the amount of those benefits against the estates of four deceased beneficiaries. In each case, the estate prevailed in the probate court and DHHS appealed. The Court of Appeals consolidated the appeals and reversed in part, concluding that DHHS could pursue its claims for amounts paid after MMERP’s July 1, 2011 implementation date, but not for amounts paid between that date and the program’s effective date, July 1, 2010. One estate appealed to the Michigan Supreme Court, arguing due process barred DHHS from recovering any amount paid before 2013, when the agency had directly notified the estate’s decedent of MMERP. DHHS applied for leave to appeal in all four cases, arguing that the Court of Appeals had erred in concluding that the agency was not entitled to recover the amounts paid between July 1, 2010, and July 1, 2011. The Supreme Court concluded DHHS was not barred from pursuing estate recovery for amounts paid after July 1, 2010. View "In re Gorney Estate" on Justia Law

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Petitioner Estate of Thea Braiterman filed a petition for writ of certiorari challenging a final decision of the Administrative Appeals Unit (AAU) of the New Hampshire Department of Health and Human Services (DHHS), that upheld the determination that applicant Thea Braiterman was ineligible for Medicaid-Old Age Assistance (Medicaid-OAA) benefits because her assets exceeded the eligibility threshold. On appeal, petitioner argued that the AAU erroneously found that the Thea G. Braiterman Irrevocable Trust (the Trust) was includable as an asset for the purpose of determining applicant’s eligibility for Medicaid-OAA benefits. Petitioner argued, and DHHS did not dispute, that petitioner’s challenge was not moot even though applicant had died prior to the conclusion of this matter. Given the facts of this case, the New Hampshire Supreme Court could not say that there were no circumstances under which payments from the Trust could be made “for the benefit” of the applicant. “Finally, we take this opportunity to stress that we have no doubt that self-settled, irrevocable trusts may, if so structured, so insulate trust assets that those assets will be deemed unavailable to the settlor.” The Trust in this case was not such a vehicle. In the Supreme Court's view, the Trust, as structured, allowed applicant “a degree of discretionary authority that would . . . permit [her] to enjoy her assets, preserve those assets for her heirs, and receive public assistance, to, in effect, have her cake and eat it too." As such, the Court denied certiorari. View "Petition of Estate of Thea Braiterman" on Justia Law

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Appellant James Corn appealed a circuit court order denying his petition to establish a special-needs trust pursuant to 42 U.S.C. 1396p(d)(4)(A). Corn was disabled because of a head injury from which he suffered short-term memory loss. Because of the severity of his injury, he received Social Security Disability (SSD) and Supplemental Security Income (SSI). Corn’s eligibility made him automatically eligible for Medicaid. However, SSI had an asset test which stated that Corn would become ineligible if he were to have assets of more than $2,000. Because of this, Corn’s partner, Ms. Yelvington, now deceased, established a special-needs trust for him. Yelvington also designated Corn as a beneficiary on life insurance policies and her bank accounts. There was approximately $260,000 that was not transferred into the special-needs trust created by Yelvington, and because Corn was designated as the beneficiary on these assets they would pass directly to Corn upon Yelvington’s death. Because these assets would be passing directly to Corn rather than through a special-needs trust, Corn would be ineligible to receive SSI benefits. In order to prevent this, Corn attempted to create a "D4A" trust. At the time of the circuit court hearing, Yelvington had passed away and her estate was in probate. Corn had not yet received any funds from her estate or from her beneficiary designations. In its order denying Corn’s motion for reconsideration, the circuit court found that the establishment of the trust would be against Arkansas public policy and that there was insufficient evidence presented to support that a special-needs trust should be established. The Supreme Court found that through his testimony at the hearing and by attaching letters from the Social Security Administration to his motion for reconsideration, Corn provided the circuit court with sufficient evidence of his disability. Therefore, the Court held that the circuit court erred in finding that there was insufficient evidence that Corn was disabled. The circuit court’s order was reversed and the case remanded for a determination of whether the proposed D4A trust met the requirements set forth in the statute. View "In re Corn" on Justia Law

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Plaintiff, the beneficiary of a testamentary trust, entered a long-term care facility in 2012, at which time she applied for financial and medical assistance under Medicaid. The Department of Social Services denied the application for Medical benefits, finding that Plaintiff’s assets, including the trust, exceeded the relevant asset limits. A hearing officer upheld the department’s denial. Plaintiff appealed, arguing that the trust was not an asset available to her as defined by relevant Medicaid regulations. The trial court dismissed Plaintiff’s appeal. The Supreme Court reversed, holding that the testator intended to create a discretionary, supplemental needs trust and, therefore, the trust corpus and income may not be considered to be available to Plaintiff for the purpose of determining eligibility for Medicaid benefits. View "Pikula v. Dep’t of Social Servs." on Justia Law

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Plaintiffs each applied for Medicaid institutional care coverage shortly after purchasing a short-term annuity. The Pennsylvania Department of Human Services (DHS) classified each of their annuities as a resource when determining Medicaid eligibility. This classification meant that the value of each annuity precluded them from receiving Medicaid assistance and resulted in a penalty period of ineligibility. The district court held that the plaintiffs’ purchases of the short-term annuities were sham transactions intended only to shield resources from Medicaid calculations, and affirmed DHS’s imposition of a period of Medicaid ineligibility, but held that, contrary to DHS’s arguments, a Pennsylvania statute that purported to make all annuities assignable was preempted by federal law. The Third Circuit affirmed in part, finding that the statute was preempted, but reversed in part, citing “safe harbor” provisions, under which, certain annuities are not considered resources for purposes of Medicaid eligibility, 42 U.S.C. 1396p(c)(1)(F). The court noted the qualifications for safe-harbor protection: the annuity must name the state as the remainder beneficiary, be irrevocable and nonassignable, be actuarially sound, and provide for payments in equal amounts during its term, with no deferral and no balloon payments. The court rejected the state’s argument that the annuities were “trust-like.” View "Zahner v. Sec'y Pa. Dept. of Human Servs." on Justia Law

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Pomianowski was 19 years old when she was in an automobile accident which left her a ventilator-dependent quadriplegic. She required total care in all aspects of daily living. A lawsuit filed against the County of Santa Cruz and Ford Motor Company, resulted in a settlement for $3,175,000.00. The court directed that the funds be deposited in a special needs trust (Probate Code sections 3600-3605). At age 23, Pomianowski died, with $1,294,453.23 left in the trust, which was ordered to reimburse the Department of Health Care Services for medical expenses paid on her behalf before her death. The trustee argued that the assets were exempt from reimbursement rights because the beneficiary was under 55 years of age when the services were provided. The court of appeal affirmed, holding that the Department was entitled to reimbursement under both the Medicaid statute, 42 U.S.C. 1396a, and the statutes and regulations implementing Medicaid through California’s Medi-Cal program. The statutes and regulations do not exempt beneficiaries under age 55, nor is there a public policy reason to shield the trust assets from recovery so that $417, 812.43 spent by the public can pass to the beneficiary’s parents along with the rest of the trust assets. View "Herting v. Cal. Dep;t of Health Care Servs." on Justia Law