A U.S. district court refuses to grant an injunction requiring the state to provide Medicaid benefits to an applicant who transferred her assets to a limited liability company (LLC). Shackleford v. Lake (U.S. Dist. Ct., W.D. Okla., No. CIV-15-0218-HE, Nov. 29, 2016).

In March 2013, assisted living resident Leola Shackleford executed an operating agreement to create an LLC. She transferred all of her personal and real property into the LLC in exchange for a 100 percent interest. The terms of the LLC provided that Ms. Shackleford could not transfer her interest in the LLC to a third party without unanimous consent of the members. Ms. Shackleford also established a trust and transferred 99 percent of her interest in the LLC to the trust while transferring the other one percent interest to her children. Her son became manager of the LLC. The articles of incorporation of the LLC were filed in April 2013.

Ms. Shackleford applied for Medicaid benefits, but the state determined that the LLC was a countable resource and denied her benefits. She sued the state in federal court, seeking an injunction ordering the state to grant her Medicaid benefits. She argued that the LLC is a non-liquid resource that cannot be converted to cash, so it is not a countable resource.  

The U.S. District Court for the Western District of Oklahoma denies the injunction. According to the court, because the LLC was not incorporated until April 2013, it wasn’t legally capable of taking title to property before that date, so the assets effectively remained in Ms. Shackleford’s control. The court also rules that the LLC is an available resource because it is a “trust-like device” due to the fact that the assets in the LLC were managed by Ms. Shackleford’s son and used for her benefit.

For the full text of this decision, go to: http://cases.justia.com/federal/district-courts/oklahoma/okwdce/5:2015cv00218/93112/59/0.pdf?ts=1480522827

A New Jersey appeals court rules that the state can attach a Medicaid lien to a deceased recipient’s elective share of his wife’s estate even though the recipient refused to claim the elective share. Matter of Estate of Brown (N.J. Super. Ct., App. Div., No. A-1086-14T4, Jan. 26, 2017).

Arthur Brown transferred his interest in a condominium to his wife, entered a nursing home, and applied for Medicaid benefits, which were granted. Mr. Brown’s wife died and Mr. Brown refused to take an elective share in her estate. The state claimed Mr. Brown’s waiver of his right to elective share of his wife’s estate was a transfer for less than fair market value that subjected him to a penalty period. Mr. Brown appealed, arguing that he was not entitled to claim an elective share, but he died before a final hearing on the appeal.

The state filed a lien against Mr. Brown’s estate for reimbursement of Medicaid expenses. The state claimed the lien attached to all assets in the estate, including Mr. Brown’s elective share of his wife’s estate. Mr. Brown’s estate argued that Mr. Brown did not have the right to an elective share because he did not exercise his right during his life. The estate also argued that the elective share statute did not apply because Mr. Brown and his wife were living separately at the time of her death. The trial court ruled in favor of the lien, and the estate appealed.

The New Jersey Superior Court, Appellate Division, affirms, holding that Mr. Brown was entitled to an elective share of his wife’s estate. The court rules that although Mr. Brown and his wife were living separately, their relationship “was not sufficiently removed from the normally thought of state of matrimony that would preclude [Mr. Brown] from claiming an elective share of [his wife’s] estate.” In addition, the court concludes that Mr. Brown’s elective share of his wife’s estate “was an asset in which he had legal title or interest at the time of his death, and it was an asset that was available to him during his lifetime.”

A U.S. district court in New Jersey denies a Medicaid applicant a preliminary injunction for the second time, holding that the state properly counted her late husband’s assets as an available resource because her husband was still living at the time of her Medicaid application. Flade v. Connolly (U.S. Dist. Ct., D.N.J., No. 16-4407, Dec. 23, 2016).

Shortly after nursing home resident Eileen Flade applied for Medicaid, her husband passed away, leaving $70,000 in assets. In his will, he left Ms. Flade the smallest share allowed under state law, but Ms. Flade did not claim her one-third elective share. The state denied Ms. Flade’s application because it found that all of Mr. Flade’s assets were available to Ms. Flade. Ms. Flade filed a second Medicaid application that was still pending.

Ms. Flade sued the state in federal court under 42 U.S.C. § 1983 and filed a motion for a preliminary injunction to prevent the state from treating the assets of her late husband’s estate as a resource that she had access to. The district court denied the motion, holding that even if Ms. Flade doesn’t have access to her husband’s assets, she made transfers that would subject her to a penalty period. The district court denied the preliminary injunction. Ms. Flade filed a second motion for preliminary injunction, alleging additional facts.

The U.S. District Court for the District of New Jersey denies the preliminary injunction. According to the court, at the time of Ms. Flade’s first application, her husband was still living, so his assets were properly counted as an available resource. The court notes that her husband’s passing could change how the assets are treated in the second application, but the second application is not a part of this case. The court also determines that it is not in the public interest to grant Ms. Flade a preliminary injunction because she has not “in good faith pursued all avenues of relief available to her” by not claiming the elective share and not appealing the denial of the first Medicaid application.

For the full text of this decision, go to: http://cases.justia.com/federal/district-courts/new-jersey/njdce/3:2016cv04407/335576/18/0.pdf?ts=1482574895