May 12

Court Must Open Medicaid Recipient’s Estate Before Ruling on Validity of Estate Recovery Claim

A Missouri appeals court reverses a lower court’s decision to deny the state’s Medicaid recovery claim against a Medicaid recipient’s estate because the court was prohibited from ruling on the validity of the claim at the initial hearing to open the estate. Estate of Tiefenbrunn (Mo. Ct. App., No. SD34045, April 6, 2016).

Shirley Tiefenbrunn executed a beneficiary deed that left her house to her daughter and son-in-law. Ms. Tiefenbrunn began receiving Medicaid benefits, and the state filed a lien on the property. After Ms. Tiefenbrunn died, the state filed a release of the lien, stating that Ms. Tiefenbrunn no longer owned the property.

A year after Ms. Tiefenbrunn died, the state filed a petition to open Ms. Tiefenbrunn’s estate and to recover Medicaid benefits paid on her behalf. Ms. Tiefenbrunn’s daughter opposed the petition, arguing that the release of the lien waived the state’s claim. The trial court entered judgment denying the state’s claim. The state appealed.

The Missouri Court of Appeals reverses, holding that the trial court did not have discretion to deny the state’s petition. According to the court, when an interested party timely files a petition to open the estate, the trial court is required to grant the petition and is prohibited from determining the validity of the claim at the initial hearing.

For the full text of this decision, go to:

May 9

State Not Required to Deduct Pre-Eligibility Nursing Home Expenses From Patient Amount

A Florida appeals court rules that the state is not required to deduct all of a Medicaid applicant’s pre-eligibility nursing home expenses from the applicant’s income when calculating the applicant’s monthly contribution to nursing home costs. Goodwin v. Florida Agency for Health Care Administration (Fla. Ct. App., 1st Dist., No. 1D12-4430, April 4, 2016).

After Gabrielle Goodwin injured her spinal cord, she entered a nursing home. She applied for Medicaid through a program that required her to contribute to her cost of care by paying a monthly co-pay that was based on her income. To calculate Ms. Goodwin’s patient responsibility amount (PRA), the state is required to deduct unpaid medical expenses from Ms. Goodwin’s income. The state calculated Ms. Goodwin’s PRA at $1,000.

Ms. Goodwin appealed, arguing that the state should have deducted all of her unpaid, pre-eligibility nursing home expenses — about $70,000 — from her income. The state denied her appeal, ruling that federal regulations require the state to deduct medical care not covered under the state’s Medicaid plan and that Ms. Goodwin’s care was covered. Ms. Goodwin appealed to court, arguing that covered care only included care the state actually paid for.

The Florida District Court of Appeal, First District, affirms, holding that the state is not required to deduct all of Ms. Goodwin’s pre-eligibility nursing home expenses. According to the court, because the state’s “Medicaid program routinely includes and covers the nursing home care that Ms. Goodwin received” before becoming eligible for Medicaid, the state considers them Medicaid-covered expenses.

For the full text of this decision, go to:

May 5

Lawsuit to Prevent State from Recovering Medicaid Benefits from Spousal Annuity May Proceed

A U.S. district court rules that a case by the family of a Kentucky Medicaid recipient challenging the state’s adherence to federal law regarding spousal annuities rather than to a less restrictive state regulation may proceed against the secretary of Kentucky’s Medicaid agency because the secretary does not have qualified immunity. Singleton v. Commonwealth of Kentucky (U.S. Dist. Ct., E. D. Ky., No. 15-15-GFVT, March 31, 2016).

Claude Singleton entered a nursing home and applied for Medicaid. His wife, Mary, purchased an annuity with herself as annuitant. Ms. Singleton wished to name the state as remainder beneficiary up to the amount of Medicaid paid on her behalf. State regulations provide that the state must be named remainder beneficiary for the amount of Medicaid benefits paid on behalf of the annuitant, and this did not change even after federal Medicaid law was amended in 2006 to require that states be named as a remainder beneficiary for Medicaid benefits paid on behalf of the institutionalized individual.  However, Ms. Singleton’s attorneys – the ElderLawAnswers member firm of McClelland & Associates, PLLC —  informed her that the state Medicaid agency’s branch manager would view structuring the annuity pursuant to the state’s regulation as a transfer for less than market value, so Ms. Singleton changed the state’s remainder beneficiary amount to Medicaid paid on behalf of Mr. Singleton.  

After Ms. Singleton died, her children, the annuity’s secondary beneficiaries, sued the secretary of the state Medicaid agency, along with other parties, arguing that state regulations may be less restrictive than federal law and that the branch manager’s alleged policy of rejecting annuities drafted pursuant to Kentucky’s own statute was improper. The state filed a motion to dismiss, arguing, among other things, that the secretary has immunity.

The United States District Court for the Eastern District of Kentucky denies the motion to dismiss the claim against the secretary in her official capacity. The court holds that because the Ms. Singleton’s children are seeking prospective injunctive relief by seeking to prevent the state from collecting any more than the amount paid by the state on behalf of Ms. Singleton, the secretary is not entitled to immunity.

For the full text of this decision, go to:

May 2

Bank’s Lien Has Priority Over State’s Medicaid Recovery Claim

A New York appeals court rules that a bank’s claim against a Medicaid recipient’s property has priority over the state’s claim for Medicaid recovery because the bank’s lien was filed first. In re Estate of Shambo (N.Y. Sup. Ct., App. Div., 3rd Dept., No. 521174, April 7, 2016).

Three years after Peggy Lee Shambo began receiving Medicaid benefits, Ms. Shambo and her husband took out a mortgage on their property with Wells Fargo Bank. Mr. Shambo died and the probate court authorized the sale of the property, but it was not sold.

Ms. Shambo died intestate and the state Medicaid agency filed a claim to recover Medicaid benefits paid on her behalf. The probate court permitted the claim, but Wells Fargo commenced a foreclosure action on the property. The state filed a motion for summary judgment, arguing that its claim had priority. The probate court denied the motion, and the state appealed. 

The New York Supreme Court, Appellate Division, Third Department, grants summary judgment to Wells Fargo. The court concludes that although Ms. Shambo received Medicaid before the mortgage was given, the state did not have a prior lien against the property.  Therefore, Wells Fargo’s prior specific lien gives it priority over the state’s claim.

For the full text of this decision, go to: