April 14

SSA Directs Local Offices to Give Specifics When Rejecting Trusts

The Social Security Administration recently issued an Emergency Message to all personnel requiring workers to specifically inform SSI applicants or beneficiaries of the reasons a special needs trust has been rejected by the agency.

In the past, when the SSA determined that assets in an SSI beneficiary or applicant’s trust were countable, the agency would frequently send a notice to the beneficiary or applicant telling him that he was ineligible for benefits because his assets exceeded the resource limit.  However, this notice almost never explained the reasoning behind the SSA’s rejection of the trust.

The new Emergency Message, which went out to all field level SSA personnel, requires caseworkers to spell out exactly what portion of the Program Operations Manual System (POMS) applies to the trust being rejected.  Unfortunately, the Emergency Message does not tell field workers that they have to explain their reasoning in plain English — merely citing the appropriate section of the POMS appears to be enough.  While this will make it relatively easy for professionals to determine what went wrong with a trust and whether an appeal is in order, it will likely give the layperson little if any guidance about his or her trust.

To read the Emergency Message, go to:  https://secure.ssa.gov/apps10/reference.nsf/links/03022016015517PM

April 11

Medicaid Applicant Who Transferred Assets in Exchange for Promissory Note May Proceed with Suit Against State

A U.S. district court holds that a Medicaid applicant who was denied Medicaid benefits after transferring assets to her children in exchange for a promissory note may proceed with her claim against the state because Medicaid law confers a private right of action and the Eleventh Amendment does not bar the claim. Ansley v. Lake (U.S. Dist. Ct., W.D. Okla., No. CIV-14-1383-D, March 9, 2016).

Beverly Ansley and her husband owned a farm. They loaned their children cash and mineral rights and received a promissory note in exchange. Ms. Ansley applied for Medicaid benefits, but the state denied the benefits due to a lease of the farmland and the promissory note.

Ms. Ansley filed a lawsuit in federal court against the state, asking for retroactive, injunctive, and declaratory relief. She argued that her husband had terminated the farming lease, so it was no longer an issue, and that the promissory note was not a countable resource. The state filed a motion to dismiss, arguing that the statutory and regulatory provisions at issue do not grant an enforceable right under § 1983 and that the Eleventh Amendment barred Ms. Ansley’s claims for relief.

The U. S. District Court, Western District of Oklahoma, denies the motion to dismiss in part. The court holds that federal Medicaid law regarding a Medicaid applicant’s eligibility for Medicaid after transferring assets does confer a private right of action under § 1983. While the court dismisses Ms. Ansley’s claim for declaratory relief, the court holds that the Eleventh Amendment immunity does not bar claims for injunctive or retroactive benefits.

For the full text of this decision, go to: https://scholar.google.com/scholar_case?case=2840169799270331621&hl=en&as_sdt=6&as_vis=1&oi=scholarr

April 7

No Undue Hardship Waiver for Medicaid Recipient’s Estate that Sold House Before Waiver Was Requested

Reversing a trial court, a Michigan court of appeals holds that the estate of a Medicaid recipient is not entitled to an undue hardship exception to estate recovery applicable to estates with houses of modest value because the house had been sold before the hardship waiver was requested. Ketchum v. Department of Health and Human Services (Mich. Ct. App., No. 324741, March 1, 2016).

Wilma Ketchum received Medicaid benefits until her death. After she died, her house was sold for less than half the average value of other houses in the county. The state filed a claim to recover Medicaid benefits paid on her behalf. Ms. Ketchum’s estate denied the claim, arguing that it was entitled to a hardship waiver. Under state law, an undue hardship exists if the estate consists of a home of modest value. State regulations provide that hardship waivers are temporary and expire when the reason for the waiver no longer exists.

The state denied the estate’s request for a hardship waiver because the house had been sold before the waiver was requested. The estate appealed, and an administrative law judge ruled in favor of the state. The trial court reversed, holding that state law required an exemption for houses valued at equal to or less than 50 percent of the average price of a home, and that regulations limiting that exemption were not valid. The state appealed.

The Michigan Court of Appeals reverses, holding that the undue hardship waiver did not apply because the house had been sold. According to the court, once a house has been sold and “turned to cash, the condition that caused the undue hardship, the presence of a home of modest value, no longer exists and the ability to obtain an undue hardship waiver necessarily expires.”

For the full text of this decision, go to: http://publicdocs.courts.mi.gov:81/OPINIONS/FINAL/COA/20160301_C324741_67_324741.OPN.PDF

April 4

Medicaid Applicants Entitled to Post-Default Notice Before Case Is Abandoned

A U.S. district court reverses a previous decision and grants a preliminary injunction to a group of Medicaid applicants who argued they are entitled to a post-default notice before their Medicaid application is considered abandoned. Fishman v. Daines (U.S. Dist. Ct., E.D. N.Y., No. 09-cv-5248(JFB)(ARL), Mar. 4, 2016).

Once New York State determines a Medicaid applicant is no longer entitled to Medicaid, it sends a letter notifying the applicant that he or she may request a fair hearing. The state then sends two more letters, notifying applicants that a fair hearing has been requested and scheduled. If an applicant misses the hearing, a default judgment will be entered against him or her.

Two Medicaid applicants initiated a class action against the state of New York, claiming that the state does not provide proper notice before entering a default judgment. The applicants asked for a preliminary injunction, requiring the state to mail a default notice to applicants before their appeals are abandoned. The state Medicaid manual provides that a case is considered abandoned after the applicant misses a hearing and does not respond to a mailing inquiring whether the applicant wishes further action. The U.S. district court denied the preliminary injunction, finding that the applicants received sufficient notice. The applicants appealed, and the U.S. Court of Appeals for the Second Circuit reversed and remanded, ordering the district court to consider whether the rights conferred in the federal regulations governing dismissal of appeals are broader than what is guaranteed by the due process clause.

The U.S. District Court, Eastern District of New York, grants the preliminary injunction, holding that the applicants have shown a likelihood of success on the merits based on federal and state regulations. According to the court, federal regulation requires that the state cannot dismiss a Medicaid fair hearing request without good cause and the state Medicaid manual requires that notice be provided before a claim is abandoned, so before dismissing an appeal as abandoned, the state must send out a post-default notice.

For the full text of this decision, go to: https://www.gpo.gov/fdsys/pkg/USCOURTS-nyed-2_09-cv-05248/pdf/USCOURTS-nyed-2_09-cv-05248-2.pdf